Confidence and Euphoria Will Turn to Fear and Despair
The comments below are an edited and abridged synopsis of an article by Egon von Greyerz
Investors today have Hobson’s Choice (take any horse in the barn as long as it’s the one closest to the door), but they still don’t understand the options open to them.
Von Greyerz lists the choice of asset classes available to investors today, and in which 99% or more of global liquidity is invested. The problem is that these assets are massive bubbles as a result of unlimited credit creation and money printing in the last few decades.
If we assume that the horses in the stable represent the asset classes below, they will all be a poor choice regardless of which one is nearest the door:
Stocks will decline by 75-95% in real terms as the stock market bubble implodes; bonds will lose 90-100% of their value as sovereign and private borrowers default; property values will implode by 75-95% with rates at 15%+ and no credit available; private equity investments will lose 70-100%, slaughtered by high leverage and rates; cash will either be bailed in or lost in bankruptcy of banks or totally debased by governments.
Up for discussion: Everyone will take it and no one will leave it; cash will be worth less; the stock markets’ final innings; unlimited money printing; leave Hobson and take gold; gold’s next target is $1,600 to $1,750; be ready for a silver explosion.
Holders of physical gold and silver will not only protect their assets, but they are also likely to see the price of both metals reach levels that are difficult to fathom today.