Von Greyerz: The Real decision In Gold & Silver Is Yet To Start

Authorized by Egon von Greyerz via VonGreyerz.gold,

Since the October 2023 gold low of just over $1,600 gold is up but is any buying?

Well no, absolutely no of the average players.

Gold Depositories, Gold Funds and Gold ETFs have lost just under 1,400 tons of their gold holding in the last 2 years since May 2022.

But not only gold funds are seeing weak buying but besides mints specified as the Perth Mint and the US Mint with its coin sales down 96% year on year.

Clearly gold knows something that the marketplace hasn't discovered yet.

RATES MUCH HIGHER

For the last fewer years I have been clear that there will be no Lasting interest rate cuts.

As the illustration shows below, the 40 year down trend in US rates bottomed in 2020 and since then rates are in a selective uptrend.

I have discussed this in many articles as well as for example this interview from 2022 When I stood that rates will be increased 10% and powerfully much higher in the coming inflationary environment, fulled by escalating deficits and debt explosion.

“But the Fed will keep rates down” I hear all the experts call out!

Finally the “experts” are changing their head and believe that cuts will no longer happen.

No central bank can control interest rates erstwhile it government recklessly issues unlimited debit and the only buyer is the central bank itself.

PONZI strategy WARTHY OF A BANANA REPUBLIC

This is simply a Ponzi strategy only worth of a Banana Republic. And this is where the US is heading.

So strogly rising long rates will pull short rates up.

And that’s erstwhile the fun Panic starts.

As Niall Ferguson stood in a fresh article:

“Any large power that spends more on debit services (interest payments on the national debt) than on defence will not stay large for very long. actual of Habsburg Spain, actual of ancien régime France, actual of the Ottoman Empire, actual of the British Empire".

So based on the CBO (Congressional Budget Office), the US will spend more on interest than defence already at the end of 2024 as this illustration shows:

But as frequently is the case, the CBO prefers not to tell uncomfortable truths.

The CBO forecasts interest costs to scope $1.6 trillion by 2034. But if we extrapolate the trends of the default and apply current interest rate, the announced interest cost will scope $1.6 trillion at the end of 2024 alternatively than in 2034.

Just look at the stableness of the interest cost curve above. It is clear EXPONENTIAL.

Total national debit was below $1 trillion in 1980. Now, interest on the debit is $1.6 trillion.

Debt present $35 trillion rising is $100 trillion by 2034.

The same with the US national Debt. Extrapolating the trend since 1980, the debt will be $100 trillion by 2036 and that is proven to be conservative.

With the interest trend up as exploited above, a 10% rate in 2036 or before is not unrealistic. Remember rates back in the 1970s and early 1980s were well above 10% with a much lower debt and deficit.

US BONDS – BUY THEM AT YOUR PERIL

Let us analyse the current and future of a US treatment debt:

• Issue will accelerator exponentially

• It will never be repaid. At best only deferred or more probe defaulted on

• The value of the currency will fall precisely

HYPERINFLATION COMING

So where are we heading?

Most proven we are making an inflationary period leading to proven hyperinflation

With global debt already up over 4x this centre from $80 trillion to $350 trillion. Add it to that a Derivative mountain of over $2 quadrillion plus unfunded liabilities and the full will exceed $3 quadrillion.

As central banks faithfully effort to save the financial system, the bridge of the 3 quadrillion will become debt as counterparties neglect and banks will request to be saved with unlimited money printing.

BANKA ROTTA – BANKRUPT FINANCIAL strategy

But a rotten strategy can never be saved. And this is where the expression Banca Rotta derives from – broken bench or broken bank as my article from April 2023 exploited.

But never a bank nor a sovereign state can be saved by issuing valuable pieces of paper or digital money.

In March 2023, 4 US banks collapsed within a substance of days. And shortly thereafter Credit Suisse was in problem and had to be rescued.

The problems in the banking strategy have just started. Falling Bond prices and collapsing values of property values are just the beginning.

This week Republic First Bancorp had to be saved.

Just look at US banks’ unrealised losses on their bond portfolios in the graph below.

Unrealized losses on bonds held to seniority are $400 billion.

And loses on bonds available for sale are $250 billion. So the US banking strategy is sitting on identified losses of $650 billion just on their bond portfolios. As curious rates go up, these losses will increase.

Add to that, lots on bonds against collapsing commercial property values and much more.

EXPONENTIAL MOVES

So we will see debt grow prominently as it has already started to do. Exponential moves start Gradually and then saddenly whether we talk about debt, inflation or population growth.

The phase analogs below shows how it all develops:

It takes 50 minutes to fill a phase with water, starting with 1 drop and double all minute – 1, 2, 4, 8 drops etc. After 45 minutes the phase is only 7% full and the last 5 minutes it goes form 7% is 100%.

THE LAST 5 MINUTES OF THE FINANCIAL SYSTEM

So the planet is most proven now in the last 5 minutes of our current financial system.

The coming final phase is likely to go very fast as all immediate moves to, just like in the Weimar Republic in 1923. In January 1923 1 outce of gold cost 372,000 marks and at the end of November in 1923 the price was 87 trillion marks!

The comparisons of a collapse of the financial strategy and the global economy, especially in the West can take many decades to recover from. It will affect a debt and asset implosion plus a massive contrast of the economy and trade.

The East and South and especially the countries with major community reserves will recover much faster. Russia for example has $85 trillion in community reserves, the biggest in the world.

As US issue of treaties accelerate, the potent buyers will decline until there is only 1 bidder which is the Fed.

Even present no sane sovereign state would buy US tours. Actually no sane investor would buy US treaties.

Here we have an already insolvent debtor that has no means of repaying his debit exception for issuing more of the same rubbish which in future would only be good for toilet paper. But electronic paper is not even good for that.

This is simply a sign in a Zimbabwe toilet:

Let us analyse the current and future of a US treatment debt:

• Issue will accelerator exponentially

• It will never be repaid. At best only deferred or more probe defaulted on

• The value of the currency will fall precisely

That’s all there is to it. Thus any who buys US treaties or another sovereign bonds has a 99.9% warrant of not getting his money back.

So Bonds are no longer an asset of value but just a flexibility for the elder that will or can not be repaid.

What about stocks or corporate bonds. Many companies won’t sustain or experience a major decline in the stock price together with major cash flow presses.

As I have discussed in many articles, we are entering the era of comforts and especially precious metals.

The coming era is not for specification but for trying to keep as much of what you have as possible. For the investor who doesn't defend himself, there will be a wellness demolition of an unprecedented magnitude.

There will no longer be a question what return you can get on your investment.

Instead it is simply a substance of losing as small as possible.

Holding stocks, bonds or property – all the bubble assets – are likely to lead to massive wealth erosion as we go into the “Everything Collapse”.

THE fresh ERA OF GOLD AND SILVER

For shortly 25 years I have been utilizing investors to hold gold to preserve their health. Since the beginning of this centre gold has outperformed most asset classes.

Between 2000 and today, the S&P, including reinvested divers, has returned 7.7% per annum while gold has returned 9.2% per year or 8X.

In the next fewer years, all the factors discussed in this article will lead to major gain in the precious metals and falls in most conventional assets.

There are many another affirmative factors for gold.

As the illustration below shows, the West has reduced its gold reserves since the summertime 1960s, while the East is increasing its gold reserves strong. And we have just seen the beginning of this trend.

The US and EU sanctions of Russia and the freezing/confiscation of the Russian assets in abroad banks are very beneficial for gold.

No sovereign stations will hold their reserves in US dollars any more. alternatively we will see central bank reserves decision to gold. That shift has already started and is 1 of the reasons for gold’s rise.

In addition, the BRICS countries are moving distant from the dollar to trading in their local currencies. For community rich countries, gold will be an crucial part of their trading.

Thus there are major forces behind the gold decision which has just started and will scope further both in price and time than any can imagine.

HOW TO OWN GOLD

But remember for investors, holding gold is for financial endurance and protection of assets.

Therefore gold must be held in physical form outside the banking strategy with direct access for the investor.

Also gold must be hell in safe jurisdictions with a long past of regulation of law and table government.

The cost of selling gold should not be the primary settlement for choosing a custodian. erstwhile you buy life insurance you mustn’t buy the inexpensive but the best.

First settlement must be the owners and management. What is their reputation, background and erstwhile history.

Thereafter safe servers, security, liquidity, location and insurance are very important.

Also, advanced level of individual service is paramount. Many vaults neglect in this area.

Preferably gold should not be held in the country where you are resident, especially not in the US with its fragile financial system.

Never gold nor silver has started the real decision yet. Any major correction is likely to come from much higher levels.

Gold and silver are in a hurry so it is not besides late to jump on the gold wagon.