Global Debt Is A Pest That Must Be Eradicated
The comments below are an edited and abridged synopsis of an article by Egon von Greyerz
It is not a question of if, but rather when, gold and silver will surge. Initially, the revaluation of precious metals will have nothing to do with an investment mania but with the total mismanagement of the world economy. A spectacular rise in the metals is just a reflection of the mess the world is in. As the paper market fails, there will be panic, and manic markets.
So has the Silver Rocket just started? We could be seeing the beginning of it right now.
Von Greyerz discusses the gold:silver ratio; the one solution to the global mess; the 1970s—market crash, oil crisis, miners’ strike, and a 21% mortgage rate; Nixon throwing the dollar to the wolves; US rates breaking a 30-year downtrend; the 4 dominant trends in the coming 3 to 7 years; and the US as an accident waiting to happen.
The US is a potential disaster, with debts and deficits running out of control. The budget deficit for 2018 will break $1 trillion. The August deficit alone was $214 billion. In the last 12 months, US debt is up by $1.6 trillion. It will increase by at least $2 trillion annually in coming years. As rates rise, tax revenue won’t even cover the interest costs.
It’s the end of a secular super-cycle in the world economy, so the topping action could last a bit longer, especially in stocks. But market risk is at an extreme, and investors must consider whether they should ride a potential final small wave, or batten down the hatches and take all the protective measures at their disposal.
With risk at a historical extreme, wealth protection is critical. In virtually every crisis in history, physical gold and silver have served as the best insurance available. There is no reason why it would be different this time.