Misery Or Fortune: The Choice Is Yours
The comments below are an edited and abridged synopsis of an article by Egon von Greyerz
Von Greyerz makes a clear, data-supported argument for gold ownership and the binary outcomes of misery or fortune for investors in the context of a market distortion.
He begins this risk analysis with the mismanagement of the global monetary system by the world’s central bankers. He reminds us that such ‘experts’ have never correctly called a boom or bust, but merely masked their own faults by misreporting inflation realities stemming from profligate and unprecedented monetary expansion.
Central bankers cannot hide from other obvious risks, including massive bubbles in global stock, bond and property markets. From the 1989 Nikkei, the dot.com era, 2008’s subprime bubble and the current everything bubble, the lesson is the same: All bubbles pop. Tracking indicators like the bearish divergence in stock price to momentum or the ratio of equity values to GDP, we see just how distorted risk asset markets are today—each set for inevitable implosion.
Von Greyerz notes the dramatic rate of money supply growth as a dangerous inflationary indicator. Previous money supply growth rates of 6% per annum have skyrocketed to 126% rates in the last 2 years. This trend began in September 2019, and not as a result of Covid alone. The system was sick before the pandemic came along.
Central bankers have already printed $25 trillion since 2007 and they will continue to print, debasing currencies worldwide. Debt and risk are the core themes around the globe, having grown 3X in the last 20 years. Tacking on unfunded liabilities and derivative exposures to the $300 trillion global debt tally make it unsustainable. The same is true for debasement of global currencies that, when measured against gold, have lost 98% of their value since 1971.
Given the counterparty risk in bloated risk assets, derivative markets, banking systems, currency markets and sovereign balance sheets, gold is a necessity. Fortunately, it is currently priced at a level that has never been more opportune. Von Greyerz breaks down the data as well as the core reasons for owning gold. In short, he presents advice based on facts to help investors land on the right side of misery or fortune.
