Greyerz - Expect Frightening Wealth Destruction As Gold Soars
Today Egon von Greyerz told King World News that going forward the world is going to witness, “...unprecedented wealth destruction.” Greyerz, who is founder and managing partner at Matterhorn Asset Management out of Switzerland, also said to KWN that gold will soar, but in the midst of the rise, “There will be failing economies, higher unemployment, more QE, and extraordinary levels of social unrest.”
Here is what Greyerz had to say about the ongoing financial crisis and where we are headed: “Right now the world is on the edge. When Draghi says something it hits the wire and gold goes up and the dollar goes down. Market participants are sloshing money around from currency to currency, but, in the end, all of the currencies will experience a massive decline.”
Egon von Greyerz continues:
“Virtually every economic figure published worldwide shows there is a rapidly declining global economy. We all know that Southern Europe is a basket case, but Germany is starting to suffer now. Then we go to the UK and that’s a disaster waiting to happen.
I believe the UK is already in a depression....
Continue reading the Egon von Greyerz interview below...
“GDP in the UK is down four out of the last seven quarters and the economic situation in the country is really dire. China is also releasing weaker figures and real numbers are probably worse than what they are publishing.
I would say that from now on, any economic number being released which is showing an improvement is probably either a fluke or a phony figure. We are not going to see growth in the next few months or even the next few years. If you look at the US, home sales are down 8%, durable orders are down, and debt is continuing to increase.
In the last five years debt in the US has increased by over $1 trillion, and, remember, total debt in the US in 1980 was only $1 trillion. You have the municipal bankruptcies and four to five banks are going under every week in the United States.
This is a sign of what’s going to happen on a much larger scale in the whole banking system. But these bank failures are always released on a Friday night so most people are not even aware of it. Also, real inflation in the US is running at between 8% and 10%. I also believe that real GDP in the US is negative.
While the official situation in the US may not appear that bad, the reality is things are deteriorating rapidly. We already have high inflation and now we are about to have more monetary inflation. All of this is part of the beginning of the hyperinflationary depression we have been talking about.
I believe that in the autumn of 2012 we are going to see real problems in the world, and there will be a series of negative events. There will be failing economies, higher unemployment, more QE, and extraordinary levels of social unrest. When QE is announced, I see a temporary rally in stocks. But at some point stocks will collapse. I’m not talking about mining stocks, but common stocks outside of the mining sector.
How will all of this affect gold? Well, if you look at gold in Swiss francs and euros, we are only down a few percent from the all-time highs. So gold is very strong in most currencies and remaining at a high level. So KWN is providing a great service because you are making people aware of the severity of the world’s financial problems. You are helping people to understand the unprecedented wealth destruction that is in front of us.
All of the assets which have been inflated by the credit bubble will implode. This means tens of trillions of dollars of wealth will disappear out of the world economy. As an example, stocks still have to decline 90% vs gold. We also know the bond market is a massive bubble, and I believe interest rates are headed to 15% to 20% in the next few years. Bonds will absolutely implode.
So we are back to physical gold, which is the only investment that eliminates counterparty risks. We are talking here about physical gold held outside of the banking system.”
Greyerz also added: “From a technical point of view, I now see gold starting to breakout. I would like to see confirmation with a weekly close above $1,660. I think we have a very good chance of getting that next week. That will break us out of this eleven month triangle, and it would mean the start of a much bigger move to the upside. So the real move in gold is likely to start very soon.”
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