42% of All the Gold in the World Buys Five Companies Only
“This is the new normal” is what a professional advisor stated at a recent conference in London after von Greyerz outlined the global risks due to the credit and asset bubbles, and this is what is so frightening about any top in the economy: Peak optimism and peak asset prices normally go hand in hand.
Von Greyerz discusses a mature and overextended stock market; does the stock market always go up; the Dow running on empty; how central banks will lose control of rates; and how most assets will be bought at 90% (measured in gold) within 5 years.
“Many Silicon Valley companies are today in a similar situation. Massive valuations, negative cash flows and no profit. In my view, we will have another 2000 collapse but much worse. Also, the big NASDAQ companies are in total bubble land when it comes to valuations. Apple at $770 billion, Google at $648 billion, Microsoft $533 billion, Amazon $450 billion and Facebook at $433 billion. These five companies are valued at $2.8 trillion. That is twice Russia’s GDP and 42% (71,000 tonnes) of all the gold ever produced. I certainly know what I would prefer. No, not Russia, but the gold. Because within five years, the value of these five companies will be down at least 90% against gold, which means they can be bought for 6,800 tonnes of gold or less. This massive transfer of wealth that the world will experience in the next few years will come as a massive shock to most investors.”