- What is coming economically and financially?
- How do I protect myself?
Answers to these questions can be provided, however, the validity of such answers is questionable. Anyone is entitled to an opinion and that is all anyone can provide at this point. The answers to these questions are subject to future political decisions and economic events which are not knowable today.
All answers are subject to assumptions regarding these unknowables. Judgment is important in making such assumptions, but even wise men are dealing with probabilities rather than certainty.
Jim Sinclair provides the expectations of Egon von Greyerz below. Greyerz outlines what he expects. In my opinion, his take is as good as any. There are a few things I might modify below, although that does not mean I would be more correct.
Printing Money – Price of Gold – Preservation of Wealth
October 9th, 2012 by admin golds
by Egon von Greyerz – October 2012
1. Worldwide money printing continues unabated
2. Just In 10 years $120 trillion have been printed making global debt $200 trillion
3. World GDP has gone from $32 trillion to $70 trillion 2001-2011
4. Thus $120 trillion debt is required to produce a $38 trillion annual increase in GDP
5. The marginal return on printed money is negative in real terms
6. Thus the world is living on an illusion of paper that people believe is money
7. This illusionary paper wealth will implode in the next few years
8. The initial trigger will be the collapse of the world’s reserve currency – the US dollar
9. The dollar is backed by $120 trillion of US government debt and probably NO gold
10. All currencies will continue their race to the bottom and lose 100% in real terms against gold
11. This will create a worldwide hyperinflationary depression
12. All assets financed by the credit bubble will go down in real terms
13. This includes stocks, bonds, property and paper money of course
14. The financial system is unlikely to survive in its present form
15. The banking system including derivatives has total liabilities of around $1.2 quadrillion
16. With world GDP of $70 trillion, the world is too small to save a financial system which is 17x greater
17. This is why there will be unlimited money printing and hyperinflation
18. The only asset that will maintain its purchasing power is gold Click here for chart
19. Gold has been money for 5,000 years and will continue to be the only currency with integrity
20. Western countries’ 23,000 tons of gold is probably gone. See recent article by Eric Sprott.
21. The consequence is that most of the gold in the banking system is likely to be encumbered
22. This means that Central Banks one day will claim it back against worthless paper gold IOUs
23. Thus gold and all other assets within the banking system involve an unacceptable counterparty risk
24. Gold should be held in physical form and stored outside the banking system
This plausible collection of statements is something you might want to discuss with your financial advisor. Financial advisers are mostly technicians, trained to deal with normal conditions. What is coming is not going to be normal.
How well he/she can accept these outcomes, even hypothetically, and then provide alternative strategies in the event they do occur, is a reasonable way to evaluate your financial adviser. In terms of what is coming, it is unlikely that most financial advisers have had any preparation. You want to make sure your man is able to think outside the box, and then pray he doesn’t have to.
Whether the above scenario rolls out as above or not will eventually be known. But be assured, something no one alive today has ever seen is heading our way. Be alert and agile.