FX168 Financial News Agency (Asia Pacific) According to legend Egon von Greyerz, who successfully predicted quantitative easing policies and historical currency fluctuations, issued a warning to the market this week that as the collapse of the Western financial and political system is happening now, wealth preservation has a completely different meaning. Since the gold window closed, US debt has grown by 5900%. He predicted that the rise in gold is unstoppable. On the product structure side, the operating income of 10-30 billion yuan products is 401/1288/60 million yuan respectively.
Egon pointed out that the West is entering a period of political and social unrest, which marks the end of an era. This is the result of deficit spending, extensive debt expansion, currency devaluation, inflation, and thus political and economic turbulence and suffering.
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He emphasized: "The political situation in the West is a mess. No matter which party comes to power, deficit spending will accelerate, and it may even increase exponentially. The situation in the United States, the United Kingdom's new Labor Party-led government, France's chaotic coalition government, and the United States are all certain. In any case, the United States will face an unsolvable debt crisis."
He warns that in the coming months and years, the financial markets will reflect this chaotic situation.
"In the next few years, anyone elected as the president, prime minister or prime minister of Western countries can only serve for at most one term, but it is more likely to be dismissed before that."
"For example, the new British Prime Minister Keir Starmer won an overwhelming majority in Parliament with only 33% of the vote, and even more surprisingly, 80% of voters did not support him."
"Politically, a day is a long time. Five years ago, the Labor Party was defeated by the Conservative Party, so much so that no one thought the Labor Party would come back in the next 10 or 20 years."
After the November election, the United States will face similar problems. At present, it seems that Trump will win, although there may be many things happening before that. But even if Trump wins, his majority vote may be very weak. Therefore, about half of the people will oppose him. If the Democratic Party wins, Trump's supporters will never accept the result.
In France, Macron suffered a disastrous defeat in the first round of elections. However, by clever political maneuvering, Macron may successfully become a member of the new coalition government and get the weak support of left and right. Therefore, although Le Pen's National Alliance is the largest party, the order in the first week below the cartoon has now been reversed. When the French presidential election is held, Le Pen will have a greater chance of winning, but the probability that the alliance will collapse before that is not high.
Egon pointed out that it is important to understand that few new governments in the West are produced through elections. Instead, those elected are the current government. The British are tired of the Conservatives, the French hate Macron, the Germans do not respect Schulz, and the Americans are in an awkward position to choose between two octogenarian, or new Democratic candidates, none of whom are respected by other countries in the world.
"At present, we are witnessing the decline of the American empire, which is a financial empire, not a territorial empire. Most European governments are slaves under the American hegemony. They almost obey all American orders, whether they are financial orders such as the Foreign Account Tax Compliance Act (FATCA) or political directives such as freezing and confiscating Russian assets."
But with the bursting of the US debt bubble, its financial advantage will quickly disappear.
Egon continued: "For 25 years, I have been standing on the stage promoting the importance of using physical gold to preserve wealth to investors. During this period, although gold has performed better than most asset categories, including the Standard Poor's 500 Index in terms of dividend reinvestment, the proportion of gold in the world's financial assets has remained at 0.5%."
From 2000 to today, the standard and poor index, including dividend reinvestment, has an annual return rate of 7.7%, while the annual return rate of gold is 9.2%, which is 8 times.
"As the world is about to end an era, it is interesting to observe how investors perceive it. Recently, I spent a few days attending a family office meeting and gave a speech on wealth preservation and gold. It is disappointing that people are completely lacking in fear or risk awareness."
"The wealth accumulated by ordinary investors is larger than at any time in history. Most investors believe that they are the masters of the universe, and their investment trees will grow to heaven."
He said that for these investors, wealth preservation means diversifying risks between multiple investment categories such as stocks, bonds, private equity, real estate, etc.
The typical spread of the family office is: stocks 32%, bonds 18%, private equity 18%, real estate 10%, cash 10%, hedge funds 6% plus gold, precious metals, art, commodities and antiques a total of 3%.
It can be said that as much as 80% of the asset categories mentioned above are related to each other, as they are influenced by credit expansion or currency printing. Cash is also interrelated because the actual value of cash (measured in gold) decreases as the money supply increases.
Since the closure of the gold window, US debt has grown by a factor of 59. As the chart below shows, total US debt has grown from $1.7 billion in 1971 to the current $100 trillion.
As shown below, the stock market needs to constantly inject debt drugs in order to operate and grow.
This is how every US government has bought votes, just by expanding credit and artificially raising stock prices. The success of the Ponzi scheme is amazing until investors realize that the entire market is built on quicksand. But it won't be long now.
(Source: Gold Broker)
A simple way to measure the large-scale destruction and transformation of wealth that especially the West will experience in the coming years is the Dow Jones/Gold Ratio. This ratio reached 1:1 as early as the early 1980s. Therefore, the gold price was $850 and the Dow Jones index was 850 points. The long-term trend line target is now 0.5:1.
As shown below, the gold price may be $10,000 and the Dow Jones index may be $5,000, or the gold price may be $20,000 and the Dow Jones index may be $10,000.
(Source: Gold Broker)
Egon mentioned: "As we enter the golden age, the BRICS alliance continues to increase its purchases, and central banks around the world are selling US Treasury bonds to buy gold. No country, no central bank will hold the US dollar as a reserve asset in the future."
As in history, physical gold is the only appropriate reserve asset.
In addition, the total amount of gold held by the US averages 40% of the balance of US debt.
Today, this ratio is only 7%.
If gold were to reach the average level, its value would need to appreciate at least six times, with a gold price of $16,000. If the gold price were to rise 19 times to reach the 140% level of 1979-1980, the gold price would need to rise to over $40,000.
The speed of silver liquidity can be faster, which is evidently not a prediction but a result of gold returning to its historical norm as a reserve asset. However, investors should not focus on potential targets for gold or silver.
Instead, just consider gold as financial life insurance. As in history, it can at least protect investors' assets, but it is likely to appreciate as well.
The only question is what percentage of gold should be in financial assets.
"In my opinion, 20% is the minimum, but considering the severity of the upcoming crisis, 50% or more may be the cheapest insurance investors can buy."
Egon reminds investors: "Remember to store physical gold and silver in the safest vaults and under the safest jurisdiction."