Commodity Trade Mantra: Only Gold and Silver Investors Will Sleep Well

Article by Egon von Greyerz in Commodity Trade Mantra

Most of the investment industry is just a massive system of mediocrity, self-interest and navel-gazing. And this is done at the expense of ordinary people and pensioners who lose a major part of their potential return or pension by paying massive fees to an inefficient and poorly performing industry.

So we have a mediocre asset management industry achieving poor returns on average at a time when all asset markets are setting records. What will then happen when stock markets turn down. Even worse, what happens when markets crash which is extremely likely to happen this year or at the latest in early 2020.

And what happens to the asset management industry when we have had a secular bear market for a few years and stocks around the world lose on average 75-95% in real terms? Because, that is the most likely scenario in the next few years. In the first year or two, all investors will buy the dips. This has worked for years or even decades so why wouldn’t it work this time? Well, it will work for a very limited time when central banks around the world print additional 10s of trillions or maybe even 100s of trillions as the derivate bubble implodes.

For decades the central bankers have got away with printing money that they told the world has real value. Gold has of course always revealed the deceit of central bankers by destroying the value of paper money. But since virtually nobody owns gold (less than 0.5% of global financial assets), very few understand that their paper money has against gold lost around 98-99% since 1971 and 75%-85% since 2000. 

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