Solid gold trumps paper money
CONFERENCE CORRESPONDENCE: Global stocks down another 90 per cent in the next few years as the world’s financial system continues to its eventual demise is just one of a series of dire predictions from Swiss-based Matterhorn Asset Management founder Egon von Greyerz.
Speaking at the 2012 Gold Investment Symposium at Sydney’s Luna Park, von Greyerz said the vote-losing austerity measures launched in Europe, particularly in Greece and Spain, have failed and will continue to do so, leading to accelerating deficits and the printing of more increasingly worthless paper money that will culminate in a hyper-inflation depression world-wide.
“How long will that take – who knows. The end of the Roman Empire took 500 years,” he said.
While claiming not to be a “gold bug,” von Greyerz sees a crucial component of any current investment should be directly held physical gold, not controlled by any second party in the banking system.
Underlining his dire global economic scenario von Greyerz points to a 97 per cent decline in all the major currencies against gold in the last 100 years.
Back in 1913, $US1,000 would buy 500 ounces of gold; in 2012, the same amount would buy about 0.6 ounces.
In recent years it has been debt that has been driving GDP, with $US1 creating 4.6 per cent of GDP between 1917-1952., that $1 now creating 0.06 per cent of GDP.
“The law of diminishing returns,” von Greyerz told conference delegates.
“It’s not just a European problem, as the US would have you believe.
“US debt per person is now higher than in any of the major European countries.”
Von Greyerz’ solution is a tad radical.
“A fire – let the whole system burn down to give the world a fresh start.
“Let the banking system disappear and start again.
“This will never happen, but it should, rather than rely on bits of paper that aren’t worth anything.”
For the near future von Greyerz sees global interest rates and taxes surging, along with unemployment, falling asset (property, stocks, bonds) prices in real terms, the collapse of pensions and social services, social unrest and eventually famine and war.
Von Greyerz said that in 2002, he and his company were recommending clients hold 50 per cent of their investments in gold.
“Today, it’s more like 80 per cent,” he said.
He likes gold and silver stocks at the present, but only in the short term, as they are being consumed by higher costs, rising as fast as the gold price.
His complete lack of faith in the banking system is such that he recommends the need to hold physical gold and to a lesser degree silver, in secure private situations, such as Matterhorn’s 2 vaults in Switzerland, one of them the biggest in the world.
And his other investment advice – farm land, presumably to offset the famine.
For a more immediate view of the gold price, global Swiss-based gold, silver and platinum refiner PAMP sees gold ranging between $US1,540 per ounce to $US1,900 per ounce, averaging $US1,720 per ounce; silver at $US26.37 per ounce to $US42 per ounce, averaging $US33 per ounce; and platinum at $US1,385 per ounce to $US1,790 per ounce, averaging $US1,550 per ounce.
By Mark Mentiplay
