Central Banks Are Now in The Endgame
The comments below are an edited and abridged synopsis of an article by Egon von Greyerz
Since the Great Financial Crisis started in 2006, the balance sheets of the four biggest central banks have gone up 6X. Since the current crisis accelerated in 2019, the growth has been explosive. The world has become a bubble.
It took 2,000 years to reach $100 trillion in global debt, and most of that has accumulated since 1971. Fifty years on, it has trebled to $300 trillion.
Von Greyerz projects $2 quadrillion or more in debt in the next 4 to 9 years. It sounds massive, but the math is simple. If we add unfunded liabilities of at least $200 trillion globally, plus total derivatives of at least $1.5 quadrillion, that takes us to $2 quadrillion.
As the derivatives bubble explodes, or rather implodes, as we hit the central bank endgame, all that money will be printed by central banks in a futile attempt to save the financial system.
Things generally take longer than we expect. But when the hyperinflationary central bank endgame starts, things will happen quickly. Hyperinflationary periods are typically 2 to 4 years.
Von Greyerz has invested seriously in physical gold since 2002. He has studied global risk and researched the best way to protect against it. He concludes that the financial and currency system is unlikely to survive. He sees owning physical gold as the best protection against the consequences of another failed financial and currency system.
Gold has been in a secular uptrend since 1999 and no action by central banks can stop the move to levels that are unthinkable today. But investors shouldn’t focus on what price gold could reach, but instead how far their assets (stocks, bonds, property) measured in dollars or euros can fall. That number could be between 50% and 90%.
Physical gold, securely vaulted in a safe jurisdiction, has always been the best protection against a failed currency and financial system. This time will not be different.