The Biggest Wealth Transfer in History—As the Bull Dies
The comments below are an edited and abridged synopsis of an article by Egon von Greyerz
Since writing this article about Alfred in February 2019, the economic and geopolitical situation has deteriorated dramatically. In the US debt is up by 35%, inflation is surging and a major conflict, even a world war, looms.
Also, the Western monetary system has shot itself in the foot. Currencies like the dollar, euro and yen, which rest on a foundation of debt, will soon have no relevance. They are now on the last leg of their final journey to zero.
The bubble bull markets in stocks, bonds and property will suffer excruciating losses that few investors will be able to live with.
Physical precious metals and precious metals mining stocks will be the big winners in the coming months/years. Gold, unloved and massively oversold relative to money supply, will emerge as an important pillar of a new commodity-based currency system.
The world will undergo the biggest wealth transfer in history as the bull market in stocks, bonds and property die. Most investors will lose a lot of money; a few will build substantial and sustainable wealth.
“Imagine a casino full of slot machines that all guarantee a constant high return. All you need to do is to put in a bit of money and you will get an incredible income stream for life.”
“Well, this is exactly what the stock market is, namely a remarkable slot machine with a continuous flow of guaranteed payouts. No skill is required, and relatively little money. And the wonderful thing is that you don’t even need to be lucky since the machine just continues to spew out money without the need for either a strategy or dexterity.”
Up for discussion: Alfred—a stock market winner with zero talent; Alfred is a permabull in spite of many 40%-60% drawdowns; Alfred outperformed 99% of all investors; professional investors first line their own pockets; stocks always go up, driven by credit expansion; stocks overbought on many measures; stocks to fall 98% against gold; Alfred has never thought about risk or wealth preservation; and gold—the ultimate insurance.