On the heels of the news that more European central banks are coming under enormous pressure to repatriate their gold held abroad, today Egon von Greyerz said we are closing in on absolute panic in the gold market. Below are his comments about the stunning ramifications of what is transpiring.
Greyerz: “Eric, I think 2015 will be the year when the world finally discovers that the emperor has no clothes because there is a total disconnect between reality and financial markets around the globe. We have stagnant growth and there is no net investment anywhere in the West, and there is no investment in infrastructure in the West. Private debts are at record highs and public debts are even bigger, and none of this will ever be repaid. This is the backdrop even as financial markets hit new all-time highs….
Continue reading the Egon von Greyerz piece below…
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“I’ve said many times that you cannot create wealth by printing money. Government debts are enormous and will fall on to the backs of ordinary people who can’t afford to pay their own debts. So, Eric, I ask myself, what kind of world are we handing over to our children and grandchildren? The excesses of the last 40 years will sadly lead to a world that will see severe hardship for most nations and individuals.
Just look at Japan. They are printing more money than ever, so the one quadrillion yen debt they have will grow exponentially. The Bank of Japan creates worthless pieces of paper out of thin air and then they buy worthless Japanese government debt that future generations cannot and will not repay. And an increase in interest rates to only 3 percent in Japan will require 100 percent of taxes just to pay the interest.
China is also under pressure and they just lowered their interest rates. The balance sheet of the Bank of Japan is up 9-times since 2000. This has created a massive bubble in China, both in financial markets and in property. China will also devalue its currency and all Asian countries will follow.
When we look at Europe, Germany, which was the only strong economy in Europe, is now faltering. The weaker yuan will also cause more problems for Germany and the European economy. But Draghi has said he will do whatever is needed to raise inflation in Europe. And growth in the United States has been completely fabricated. Inflation-adjusted sales by U.S. corporations have not been growing at all.
In my canton in Zurich, the ten richest people in this canton own the same as the 500,000 poorest. This is a very dangerous trend and of course it is a worldwide trend. In Switzerland, the high income earners are against the Swiss Gold Initiative and the low income earners are for the initiative. This is because the money printing only benefits the higher income earners. So let’s hope that the support from the ordinary Swiss citizens will be enough this coming Sunday, which is the final day of the gold referendum.
Looking at the gold market, Marine Le Pen in France followed the example of the Germans, Dutch, and what the Swiss are trying to do, which is to demand the French gold be brought home to France. She also demanded that France stop selling gold and said that they should use forex reserves to buy more gold.
But here is where she has had good advice, she wants a complete audit of France’s 2,400 tons of gold. This will be an independent physical audit with bailiffs attending. She also wants to revers any gold leasing and get back the physical gold. So she actually understand what is happening in the gold market.
No single country in the world has had a public physical audit of its gold and a public audit regarding all lending, leasing, etc. It’s only at that point that it will be revealed the Western central banks clearly don’t have the gold they claim to possess. Western central banks refuse to have the audit because all of this will be exposed. When that is proven it will lead to absolute panic in the gold market.”
Greyerz also added this key note regarding Swiss gold refiners: “In the last few weeks Swiss gold refiners have been working around the clock because of extremely strong demand from the Far East, India, and the Middle East. And they have indicated to me that they expect the strong gold buying to continue into next year. So despite the recent weakness in price, 2015 is setting up to be an explosive year for the gold market.”
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