There’s a high quality line between happiness and misery, as Dickens describes in David Copperfield. Copperfield’s landlord, Mr Micawber, was just on the fallacious side of happiness by six pence.
In a recent article called THE END OF THE US ECONOMIC AND MILITARY EMPIRE AND THE RISE OF GOLD, I stated: “Unsustainable deficits and galloping debt levels, combined with a crumbling military, are the right recipe for the tip of an Empire.”
So, we’re obviously not talking a couple of six-pence deficit within the case of the virtually bankrupt US empire but as an alternative a couple of debt that’s growing exponentially, now by several trillions of dollars annually.
History doesn’t just rhyme, but it surely repeats itself again and again and once again.
Let’s just take a look at the ultimate stages of a debt crisis.
The table below shows the disastrous results of irresponsible governments throughout the last 54 years.
Governments never tell their those who they consistently destroy the worth of the people’s money.
In 1971, when Nixon took away the dollar’s gold backing, he said: “YOUR DOLLAR WILL BE WORTH AS MUCH TOMORROW”.
If Tricky Dick was still alive today, he can, in fact, argue that he didn’t lie.
Because a dollar today remains to be value a dollar, he would argue. But he wouldn’t tell anyone that the dollar 53 years later has lost 99% of its purchasing power.
Gold is up 78X since Nixon closed the gold window in 1971. The following phase shall be acceleration.
As I explain in this text, gold will rise by multiples in the approaching years (obviously with corrections).
The Roman emperors who ruled the Roman Empire from 190 to 290 AD could argue the identical, although the Denarius silver coin went from almost 100% silver content to zero.
The identical was true for Friedrich Ebert, the president of the Weimar Republic within the early Nineteen Twenties. He would have argued that a Mark is all the time a Mark, even when it has lost 100% of its purchasing power.
But gold doesn’t lie. Measured in real money, an oz. of gold in 1923, was value 87 trillion Marks.
Until a currency totally dies in a hyperinflationary collapse, the deceit of the leaders is rarely revealed to public.
But we mustn’t ever forget what Voltaire said in 1729 – “Paper money eventually returns to its intrinsic value – ZERO.”
When have we ever heard of a frontrunner telling us that we must protect ourselves against the fraudulent destruction of our wealth by consistently debasing the worth of cash?
As Alan Greenspan said in 1967:
“Within the absence of the gold standard, there isn’t a strategy to protect savings from confiscation through inflation. There isn’t a secure store of value…The financial policy of the welfare state requires that there be no way for the owners of wealth to guard themselves. That is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is solely a scheme for the confiscation of wealth. Gold stands in the best way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
Have a take a look at the tables above again.
These are but just a few examples of 1000’s of currencies having been destroyed throughout history.
Governments create inflation by printing money and by allowing the economic system to create unlimited amounts of credit within the fractional reserve banking system.
In brief, it signifies that banks and other financial institutions receive a deposit of, say, $100 and may lend 10 to 50X or $1,000 to $5,000 against that. Add derivatives, which allows the system to create trillions of dollars out of thin air.
This immoral and totally undisciplined financial model doesn’t just create unlimited leverage for financial players, whether or not they do it in banks, hedge funds, private equity, or any a part of the shadow banking system.
That is how the whole global debt of $350 trillion probably is within the quadrillions of dollars if we include all these creative “financial weapons of mass destruction”, as Warren Buffett called them. See the debt pyramid below.
Until now, conventional investment assets like stocks and property have been excellent protection as they’ve gone up substantially consequently of the constant growth of credit and money supply.
So, this massive liquidity injection has created colossal paper fortunes for many investors.
WHEN WILL IT END
That party is now coming to an end. Valuations of those bubble assets are actually at perilous levels. History tells us that manias all the time end badly.
But history doesn’t tell us when they may end. Will it’s tomorrow, in six months or several years?
So, can we forecast the tip?
Well, essentially the most exact of all sciences is hindsight. With the good thing about this very accurate method, many individuals will tell us afterwards that the crash was certain to occur.
Sadly, nobody realises that this time, dip buying will fail. Still, investors will buy dip after dip until they’re exhausted. So when the market has fallen further than anyone expects most investors will sit tight based on greed and FOMO (fear of missing out). And just at that time, the largest wealth destruction in history will happen.
Only a few will think of other investments like gold to preserve wealth until it is just too late.
And at that time, gold can have gone up a lot in value with only a few participating. Everyone will find gold too expensive. Only a few will realise that gold isn’t going up, but paper money is down.
A FASCINATING JOURNEY LEADING TO A POT OF GOLD
I used to be born in Sweden and have dual Swedish / Swiss citizenship. I began my profession in banking in Switzerland after which in corporate life within the UK.
In 1972, I used to be offered a job by a bank client, a small listed retail company called Dixons. I became Finance Director in 1974 on the age of 29. I used to be thereafter appointed Vice-Chairman.
We made the corporate to be the largest electric and consumer electronic retailer within the UK and a FTSE 100 company.
It was an incredibly stimulating time constructing a dynamic business each organically and by acquisition. As business leaders we experienced adversity as a positive challenge. We sold electrical goods including televisions by candle light in 1974 when there was only electricity for 3 days per week attributable to a serious coal miners’ strike. And we grew by contested takeovers of corporations much greater than ourselves.
Corporate life in a dynamic business is amazingly exciting. But since I began that profession in my late 20s, I felt it was time to do my very own thing in my early 40s.
So, within the Nineties, I began investing my very own funds in addition to the capital of some wealthy friends.
I actually have all the time been focused on understanding risk and protecting the downside, each in banking and in corporate life.
Within the 90s I began to be concerned in regards to the growth of debt and derivatives. So I used to be taking a look at the very best ways of preserving wealth.
Having experienced Nixon closing the gold window and the next 24X growth of the gold price from $35 in 1971 to $850 in 1980, I had all the time been fascinated by gold.
Seeing debt and particularly derivatives growing with no shackles and particularly tech stocks becoming a large bubble within the late Nineties, I used to be convinced that gold par excellence was the very best asset to preserve wealth.
Having experienced gold go from $35 in 1971 after which correct from $850 in 1980 to $250 in 1999, I used to be closely watching the gold price for confirmation of a bottom. So in early 2002 we invested heavily into physical gold at $300 for ourselves and a bunch of co-investors that we were advising.
We haven’t looked back since and only increased our investment in gold through the years. Since we had created an excellent system for getting and storing physical gold based on our stringent wealth preservation principles, people around the globe began to ask for help. That led to the creation of Matterhorn Asset Management / GoldSwitzerland. The name was modified firstly of this yr to VON GREYERZ AG.
Today we have now clients in over 90 countries and are probably the largest company on the planet outside the banking system for HNWIs acquiring and storing gold.
We’ve been actively involved in gold for soon 1 / 4 of a century and experienced almost 10X growth within the gold price since we began the business.
Still, we imagine that the gold journey is barely starting now.
Why, you might ask.
Well, gold is the best-performing asset class on this century, higher than the S&P including reinvested dividends and still NOBODY OWNS GOLD.
Only 0.5% of world financial assets are invested in gold.
It is completely incomprehensible that gold has gone up 9.5X. This century, investors are usually not even taking a look at it.
So why is gold still so unloved?
Gold held within the investor’s name in secure vaults and jurisdictions outside the economic system is the final word type of wealth preservation.
But asset managers and banks dislike gold since they will’t churn commission with an asset that may’t be turned over at regular intervals. So no commission and no performance fees. Also, only a few people understand gold.
In my opinion, gold is now able to explode, measured in paper money.
I actually have explained the rationale for gold’s coming explosion in lots of articles, including this recent one.
But do not forget that gold never goes up. All it does is to reflect governments’ and central banks’ destruction of fiat money.
Gold is just stable purchasing power in a world where goods and services go up exponentially in price because the cash you purchase it with all the time goes to ZERO.
Having said that, I do expect gold to do higher than simply keeping pace with purchasing power in the following few years.
Again let me make it clear – no paper money has ever, ever, ever survived in history (in its original form).
With such an ideal record of destroying money, why should we imagine that the FED, ECB, BoE (Bank of England) or BoJ (Bank of Japan) or every other central bank will stand a likelihood to avoid wasting the worldwide economic system with $2-3 quadrillion of toxic exposure?
Well, I can personally guarantee that they won’t.
Keep in mind that destroying the worth of cash by printing quadrillions is a technical default, although no central bank will call it that.
And creating digital money for the central bank is only a technical diversion.
Debt can never be written off without totally destroying the worth of the assets it supports. That’s how a balance sheet or double-entry accounting works.
So, this global economic system will collapse, as all of them have. But that is the primary time it has been global.
BRICS countries can even suffer, but not as much because the West.
The approaching era shall be commodity-based. Take Russia, for instance, with $85 trillion of natural reserves. They shall be one in every of the main winners in the approaching commodity era. In addition they have low debts.
So, let’s take a look at the risks.
WAR RISK
There are today two major wars that could lead on to global conflicts and potentially nuclear war.
The US is directly involved in each conflicts with weapons and money, although US territory will not be threatened. The perfect likelihood for the world to avoid a world conflict is for Trump to be elected. He has each proven and stated that he’ll stop the war, especially in Ukraine. Harris is not going to change the direction of Biden and the neocons, which suggests a much higher risk of world conflict.
COLLAPSE OF GLOBAL FINANCIAL SYSTEM
As outlined above, this collapse is inevitable. The one query is when and to what extent. I strongly imagine that the majority of the BRICS countries will suffer less from the collapse and emerge from it much faster.
The West, with its massive debt bubble and moral decadence, has already began a serious secular decline that might last for hundreds of years.
WEALTH PRESERVATION
Gold will not be the panacea for the issues outlined above. Nevertheless, history proves that in any period of crisis, gold has all the time stood as a protector, each financially and for private safety.
But what’s more vital than the rest is protecting and helping family and friends.
Strong family ties and a bunch of close friends are more vital than all gold on the planet.
As Dickens said:
