Credit Suisse & USD Policy: Signposts of Systemic Implosion to Gold Explosion
The comments below are an edited and abridged synopsis of an article by Egon von Greyerz
Egon von Greyerz and Matthew Piepenburg of Matterhorn Asset Management discuss a range of current themes, including the most recent Lehman moment at Credit Suisse amid falling markets, imploding currencies, steady inflation, heightened geopolitical risk and a beleaguered global population limping into a winter energy crisis.
Piepenburg addresses the implications, causes and consequences of the current strong-dollar policy behind Fed Chair Jay Powell’s hawkish rate increases. The bearish ripple effects of this policy are evident in every asset class and every currency but the US dollar. Of course, a temporarily strong dollar has also hampered gold priced in dollars. However, gold in other currencies has remained strong as other asset classes/currencies around the world weaken rapidly. As for the dollar and dollar-priced gold, von Greyerz and Piepenberg address why current dollar headwinds will be short-lived as the dollar weakens and the current greenback headwind becomes a historical and explosive tailwind for gold.
Timing these systemic shifts in a global economy drowning in over $300 trillion in debt within a rising interest rate environment is a mug’s game. Nevertheless, von Greyerz and Piepenburg address near-term tipping points and risks. Foremost among such risks is a war in Ukraine, for which the US-led West is offering zero legitimate solutions for peace as nuclear and financial brinksmanship over Ukrainian politics threatens the entire globe.