Things To Come:

This Will Be Spectacular And Frightening, Plus China Has More Than 20,000 Tonnes Of Gold

Egon von Greyerz

 “Since the Great Financial Crisis started in 2006, global debt has more than doubled from $125 trillion to $260 trillion. The more money that has been printed, the lower interest rates have gone. In 2006 US short term rates were 5% and between 2008 and 2015 they were ZERO. Today they are at 1.5%. But at the same time almost $13 trillion global debt stands at negative rates. 

So the world has manufactured $135 trillion debt with the push of a few buttons and at ZERO cost since 2006. This means that more than 2x annual global GDP has been created at no cost and with no service or goods produced. Instead fake money has been printed which corresponds to TWO YEARS’ global production but no one has done a day’s work or manufactured a single product, so this money has been created out of thin air…

Global working population is estimated at 3 billion. Let’s assume on a conservative basis that on average a person works 200 days per year. That would make 1.2 trillion man days for two years. So central banks and governments can with some hokus pokus do the work of over 1 trillion man days. Well, that certainly beats working and is in line with MMT (Modern Monetary Theory) which states that countries can print themselves to prosperity. 

Well, this seems to have worked quite well since the Fed was created in 1913 and even more so since 1971 when the debt explosion started in earnest. For the ones who have forgotten, 1971 was when Nixon closed the gold window which allowed central banks to create unlimited money and debt. 

Here we are at the end of the second decade of this century. In the last twenty years we have seen the collapse of a tech bubble and we have experienced the implosion of fake debt aka (also known as) the sub prime debt collapse. Central banks have skillfully but deceitfully navigated between Scylla and Charybdis as in Homer’s Odyssey and managed to avoid the total and final collapse of the system. 

There are rumors in the market that China is planning to announce a gold backed yuan supported by gold holdings in excess of 20,000 tonnes. If that were true, this would be very supportive for the gold price and also extremely negative for the US dollar. The US supposedly has 8,000 tones of gold. But they have not had a physical audit since the 1950s when Eisenhower was president. 

Most market experts doubt that the US still has 8,000 tonnes. A major part has been leased to bullion banks and is now in China. All that the US government has is an IOU from a bullion bank that could never return the physical gold. Some of the US gold has also been sold covertly. If China announces a gold backed yuan supported by 20,000 tonnes of gold or more, the US will be at pains to prove that they actually hold 8,000 tonnes of gold. 

The secular bull market has been kept alive with massive money printing combined with financial as well as verbal manipulation of markets. It is not easy to kill a secular bull which has survived for centuries. Fundamentally and technically we are now at the end of the end of this incredible bull market. It is ending with a bang and does not have far to go.  The market could top at any time between the second half of December and first half of January. 

We are not just talking about the US market topping but all stock markets globally. Even the UK market which is now in a short term euphoria due to the Boris Johnson election victory. There are a number of technical signals, both long and short term, pointing to this coming top. It is the end not only of a multi decade bull market but most probably also a multi century top. Many historians will write about this in coming years and decades. 

The coming secular bear market will be both spectacular and frightening. Very few investors are prepared and when it all starts, most people will believe that they will be saved by central bank  money printing. So we will see a lot of bottom fishing in the stock market  which will turn out to be many fathoms from the actual bottom. Buying the dips will end up in tears this time and exacerbate the losses that stock investors will suffer. 

So 2020 seems to be the very early beginnings of the worst global depression that the world has ever experienced. It will be devastating for everybody. We can all prepare financially by holding some physical gold and silver which is the best insurance anyone can buy against what is coming.

The world is now at the end of a decaying era of free money due to unlimited printing and credit expansion combined with no cost of money. But none of this has reached ordinary people, but only the wealthy. Normal people have just ended up with a massive debt, both public and private, that will never be repaid.