How Global Markets Fail And Gold Succeeds: Debt, Derivatives & Politicized (I.E., Dishonest) Central Banks

Matterhorn Asset Management’s founding partner, Egon von Greyerz, joins Darryl and Brian Panes of As Good as Gold Australia for an in-depth discussion on the state of global financial markets and the inevitable demise of paper currency and rise of physical gold.

In an alarming backdrop of falling markets, open war, pandemic overreach, record-breaking debt levels and increased supply chain pressures, the Panes ask the obvious question: What and who led to this now undeniable global mess? As indicated by a recent observation in The Economist, the main culprit offered therein is the absolute mismanagement of fiat currencies by central banks around the world. Such mismanagement (living on deficits rather than surpluses) has been the direct cause of equally unprecedented and unsustainable global debt levels of which no intelligent business or family could ever conceive and yet which governments around the world pursue on a daily basis.

Egon, of course, is glad to see more periodicals like The Economist finally addressing such issues, but these central-bank-driven boom and bust cycles engineered by grotesque levels of fantasy/mouse-clicked fiat currencies and unpayable debt levels are forces of which he has been warning for over 20 years. All fault and responsibility easily begins with the money printers in general and the Fed in particular. But as political rather than financial players, central bankers will do what all politicians do—assign blame elsewhere.

Toward that end, the crippling inflation, currency, market, pension, trade and suicidal energy policies pursued by the EU under the misguided pressure of the US will be blamed on Putin today (COVID yesterday and global warming tomorrow) rather than decades of the self-destructive debt-print-and-spend policies of the global central banks.

Turning to gold, Egon draws careful comparison to the DOW/gold ratio and argues for a dramatically falling DOW and equally dramatic rise in the free-pricing of physical gold once paper currencies and futures contracts in the soon-to-implode derivatives markets lose all credibility.

Markets have enjoyed a “stay of execution” by inflationary central bank money printing for far too long, and this has exponentially increased the global debt levels and hence global risk levels. Again, and as Egon reminds, this is a direct result of years of central bank madness. In the end, however, history is a clear guide of the inevitable consequences of such policy insantiy, namely the ruin of paper currencies and the rise of real, physical assets, including monetary metals like gold.

Gold Switzerland

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