2023: As Markets Implode, Gold Is Poised to Explode
The comments below are an edited and abridged synopsis of an article by Egon von Greyerz
Egon von Greyerz and Matthew Piepenburg take a look at the risks of geopolitical conflict and a rising global debt crisis. Both trends point to an exploding gold market.
The lack of statesmanship and continued delivery of Western guns and money rather than peace negotiators to Ukraine suggest that this war runs an increasing risk of nuclear brinksmanship. Such an absurd risk in a world with over 13,000 nuclear weapons and almost zero leadership is beyond the pale.
What can be controlled, however, is investor recognition of, and preparation for, the toxic profile of global debt levels. Since 1971, global debt has exploded from $7 trillion to over $300 trillion. This is dwarfed by a nearly $2-quadrillion global derivatives market. When measured in gross counterparty terms rather than net exposures, the BIS fiction of ‘safe’ global derivative exposure completely ignores the extreme risk of these financial weapons of mass destruction.
As for the effect such distortions have on global markets, Matt sees growing desperation behind our leaders and their broken currency and inflation models. One example of this is the falsely telegraphed good news of a trend toward central bank digital currencies. Current rate policies to fight inflation are an equally flawed idea. Egon and Matt exchange thoughts on how these broken models will continue to destroy global credit and currency markets.
Of course, the distortions and imploding markets (property, credit, equity, cash) point to an exploding gold price. As Eastern banks and nations turn increasingly toward physical gold, the misdirected West seems history-blind as the slow move away from the US dollar continues its undeniable trend.
In short: 2023 appears to be heading into deeper and more dangerous territory for which gold offers obvious protection.
