Living And Dying By A Central Bank Sword

September 9, 2020
Founder @ Matterhorn Asset Management & GoldSwitzerland

In this second MAM Chat, Egon von Greyerz and Matthew Piepenburg swap thoughts on the seductive yet dangerous 2020 market melt-up. Not surprisingly, all patterns point toward the case for precious metals.

Matt reveals how the forces sending markets higher—namely 1) central bank rate suppression and 2) record-breaking fiat money creation—are the very same forces that will send markets and economies to historical lows. Unlimited fiat currency creation loses its allegedly “magical” impact when faith in paper money (and its declining purchasing power) collapses. Similarly, the so-called “benefit” of rate suppression (and negative yielding bonds) ends when those once compressed yields spring higher in the backdrop of rising inflation and increasingly waning faith in bonds as a “safe-haven” asset.

Egon addresses the technical and fundamental tailwinds behind the market melt-up and the possibility of even greater crescendos in the backdrop of inflationary trends and continued QE policies–the primary tailwind for risk assets, whose valuations are now totally divorced from reality.

Matt places such dangerous boom/bust (credit/liquidity crisis) cycles into historical context, from needle-peak moments preceding the 1929 market implosion to the Nikkei of 1989, the NASDAQ of 2000 or the S&P of 2008. As for the 2020 needle-peak in risk assets, COVID snuck in as an ironic tailwind (i.e. excuse) for greater market support via greater liquidity/QE, all of which points toward a heightened need for gold as a hedge against increasingly diluted global currencies.

Finally, Egon explains why precious metals, unlike risk assets, are not a mere “melt-up” asset, but an undervalued remedy for the current insanity in the broader markets, giving particular attention to the DOW/Gold ratio and gold as the historically confirmed antidote to the destruction of paper money.

Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management
Zurich, Switzerland
Phone: +41 44 213 62 45

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Egon von Greyerz – Founder and Managing Partner of Matterhorn Asset Management (MAM) and GoldSwitzerland based in Zurich. Egon forecasted the present problems in the world economy already in 2002 when he recommended to investors to allocate 50% of assets into physical gold (at $300) stored outside the banking system. Egon began as a banker in Geneva and was thereafter Finance Director and Vice-Chairman of a FTSE 100 company in the UK.  He makes regular media appearances  on CNBC, BBC and King World News and speaks at investment conferences around the world. MAM (founded in 1999), specialises in wealth preservation. GoldSwitzerland buys, sells, transfers and stores physical precious metals for private investors and institutions outside the banking system. His website is www.goldswitzerland.com

China has only 2% of its Total Foreign Reserves in gold.

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