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GOLD IN A RESET & The Bank’s Secret Plan…Egon von Greyerz & Lynette Zang

Coffee with Lynette Oct 19, 2021

Questions on Protecting Wealth with Gold & Silver?

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Egon started Matterhorn Asset Management (MAM) in 1999 as a private investment company for high net worth individuals, pension funds etc. all based on wealth preservation principles.

He is an educator, prolific writer and popular guest on many YouTube channels, like King World News, Greg Hunter Watchdog USA and ITM Trading.

 

TRANSCRIPT FROM VIDEO:

Lynette Zang:

I’m Lynette Zang, Chief Market Analyst here at ITM Trading, a full service, physical gold and silver company, specializing in strategies. And on today’s edition of coffee with Lynette, I have a very special guest, definitely one of my tippy top favorites, Egon Von Greyerz. Thank you for coming on Egon. He started Matterhorn Asset Management back in 1999 as a private investment company for high net worth individuals, pension funds, etcetera, all are based on wealth preservation principles, which could not be more significant than it is today and right now he is definitely an educator, a prolific writer with some fabulous work out there. So, I mean, I would imagine everybody knows you Egon, but if not, you have all of the links to go and see his work, read his work. So thank you so much for being here today.

Egon von Greyerz:

It’s a real pleasure always to speak to you Lynette. And even more so today, because every time it gets better and more interesting for both of us. And you know we have so much that we want to tell the world about and educate the world about and help people to actually preserve their wealth and therefore their happiness.

Lynette Zang:

Let’s talk about all of the distractions that are, that the governments and the central banks, you know, are using. Would you, would you like to make a comment on that or I do have another question regarding that and the central, the central banks. Okay. Well, I think this is like a huge distraction and I don’t think it’s new information necessarily, but all of the comments and all of the news that are coming out now about the fed, those that make all the decisions, the FOMC board and all of the trading and how much money they’ve made when they can manipulate and manage the markets. Do you think that’s a form of distraction and do you think that they intended for that to get out or, you know, what do you think about that?

Egon von Greyerz:

Well, you and I have talked about for a long time now, how we live in a fake world and where most of the actions as well as the statements are manufactured in a way to distract that there are, you know, there’s no real values in mark. It says, we know there are the actions of the, of central banks are, really totally ruining the financial system by, creating money and creating assets and creating full statements that benefit a few and that gives the masses and enormous debt that they are not even aware of. So, we are now in a state where the rich are extremely happy because all the actions of central banks are benefiting the wealthy and the the bankers and stock investors and the poor, they think also they’re fine because they don’t realize that they’re actually now getting more and more debt everyday not their own personal debt, only because that’s nothing compared to the debt of the country where they live. And, but nobody’s aware of that. And nobody is aware of the fact that the fiber has to be paid. And that’s what we’re going to see in the next few years. And of course the whole system is now built on distorting these facts. Nobody tells you the truth. Nobody tells you the truth about, about the economic situation. Nobody tells you the truth about the debt. Nobody tells you the truth about, you know the vaccines and the effect of vaccines, etcetera either. And you know, and that is really the story throughout now most people’s lives today, that nobody is aware of what is happening because this propaganda is, greater than, than any time in history and people don’t not see that propaganda, you know, even here in Switzerland now, you know, you’re going, like you having the us you’re going to a restaurant and, you know, they ask for your papers, you know.

Lynette Zang:

That scares the crap out of me. If you want to know the truth.

Egon von Greyerz:

Yeah, yeah, no, totally. I agree with you. And it is unpleasant, you know, can we see your vaccination, can we see your ID can we see your, and that’s to go into a restaurant. And that’s even in Switzerland, which I actually never expected though, the Swiss parliament would approve this vaccination requirement to go into a restaurant. You know, I’m also Swedish, so I spend time in Sweden and there, there are no requirements whatsoever. You can go into a restaurant, you can, you know, there are no lockdowns, you don’t, nobody wears masks anywhere. In Sweden, I was there a big part of the summer was based, there never wore a mask anywhere in department stores or restaurants or anywhere. So, you know, but that’s an exception, interestingly enough, of course, Sweden has actually have lower frequency of COVID unless that’s that than most other countries. So, you know, there’s no correlation between the actions governments are taking like in Australia and what happens to the casualty rates. Okay. I know this is a sensitive, but politically sensitive area. We’re not supposed to touch on that, but I’m really mentioning that as again, another signal of oh, this is it. It’s a total censorship really.

Lynette Zang:

Isn’t it though?! It is.

Egon von Greyerz:

So, yeah but you know, coming back to your base question it’s very hard for people to actually navigate through this jungle of fake news on a daily basis. And, you know, nobody understands the financial or economic situation. The world is in either nobody understands what’s going to hit us all. And that’s, really, you know, what you and I are trying to do to educate the very, very few at this point. You know, we have both other people we talk to, but relatively that’s, that is the half a percent of wealth financial assets that listen to us, they’re the same half of the percent, that hold gold.

Lynette Zang:

Right?

Egon von Greyerz:

So yeah you know, I’m saddened by all of this, but we can’t be victims. We have to do what we can do. We have to help the people who want to be helped and educate the people that need to be educated. And the rest you know, people will discover it sooner or later and probably sooner.

Lynette Zang:

Yeah. Unfortunately, I mean, it’s hard to predict the exact moment that it’ll get recognized, but I’m really kind of wondering, you know, there’s an issue that’s coming up with social unrest. So because really the whole system was designed to create this bifurcation in wealth and in income. I mean, so for them to talk about fighting that now when they’re doing everything they can to exacerbate that is really ridiculous, but what do you think the risk is of broad scale social unrest?

Egon von Greyerz:

Well, I’m very clear about that Lynette, and I’ve been talking about it for years and years that it’s inevitable in my view, that we are now in a period where, as I said, the masses are really poor. But they’re not aware of it because nobody tells them that as a debt here that you need to pay and instead the central banks are continuing their folds actions by pretending they’re making everybody rich by printing money to cover everything, you know. Nobody understands in the U.S. You’re printing half of all of the budget outlets you’re printing half of that, making money out of nothing out of thin air and then that goes then to pay for all the expenses that, that the country is wasting. Half of the budget? That’s just unbelievable has to be printed or borrowed. So at this point, people are not aware and, and the money temporarily or in temporarily is for us is it’s a very long time. It’s taken a long time for currencies to reflect this and for the value of money to reflect this, we see it, you and I who measured against gold. And of course, gold since 2000 is up or the dollar is down since 2000, well, 85%. against gold. So that’s the real purchasing power of the dollar. And and since 71 is down 98% and nobody sees that because most Americans, or some that don’t have a passport or a very high percentage, doesn’t have a passport. And so therefore nobody sees, or they’re actually getting poor by the day. I mean, I, I said in an article recently that Swiss traveling to America, I mean, for them, it’s 80% cheaper than it was in 1971 because of the dollar having weakened, by that extent to the Swiss frank and for cost of the Americans coming to Switzerland, the other way around, you know, the dollar is worth 80% less. Nobody sees that. But I think the real coming back to the social unrest, the real problems will arise. When the currency starts collapsing inflation goes up, I’m a hundred percent certain that we will have very high inflation and probably hyperinflation. And now we are seeing all the signals today of that everywhere in society, but it’s, it’s everywhere where you go, there are shortages of goods, raw materials are going up. And you know, everything, every, every shop you’re going to the prices are higher or the quantities are lower. So the food prices are going to rise dramatically.

Lynette Zang:

All prices are, I mean, do you think that we could possibly be in the beginning stages of a hyperinflationary event with the spike? I mean, do you think they’re going to be able to get the inflation rate under control?

Egon von Greyerz:

No, definitely not, but they will try of course, but, you know, I’m just getting to the point, first one was saying that this food inflation and this price inflation, which is now going to escalate, you know, of course they will do all the tricks and the books will be there. They will create, that’s not gonna happen overnight, but then the next two or three years, maybe it digital money, they’ll put the old debts in a separate basket and say, we don’t need to pay repay that versus the new dollar now, the digital dollar, etcetera, but all of that will be fake of course. And all of that. That’s just another form of Fiat money that will be worthless. So, even if whatever actions they take could last a very brief period of time when people think now it’s okay, but it’s the same old tricks just you know, the different disguise and therefore the currency, whatever it is, the old currency, the old dollar or the new dollar world collapse, and people will not be able to afford their daily living, which is the food the rent etc. And this is, you know, coming back to social unrest. So it’s, it’s when you have empty stomachs, that’s when you start seeing a real social unrest you know, whenever we’ve seen now, it has, has common gone, nothing has lasted. And whether it’s, you know, we’ve seen them the major protests in America, we’ve seen the yellow vests in France, etcetera, and in all countries, similar things, but that hasn’t lasted because we’re still haven’t we are not seeing empty stomachs. And I think that to me will be the real signal when there is not enough food for people, as you said, there are already shortages today. And the prices are going up but this is just the beginning. Now, either the timing is impossible to forecast. That’s the one thing I’ve learned, you know, you gotta be patient here because the fact that we are seeing something today, or we saw something five years ago, 10 years ago, it doesn’t, you know, in history afterwards, everybody will say, of course it had to happen, but we, when we arrived in the middle of it, seems to take a very long time because my view is that we are at the end of a very long cycle, it could be a 2000 year cycle even. And again, only future historians will tell us about that, but, that, that means that, you know, the cycle doesn’t die overnight and we’ve seen, I mean, basically we’ve had a hundred years of it slowly dying. With currencies collapsing dramatically over that period and in particular over the last 50 years. And so we are going to go through the next phase of that and whether that starts tomorrow or in two years time, I don’t know what you do know is once inflation starts and hyperinflation starts, it goes very, very quickly. It all happens within a couple of years. Basically I of course I lived in the UK in the seventies and I saw an average of 15-17% inflation over seven, eight years. I saw it happening. I saw the prices going up. I saw the, you know, the people suffering. And of course at the same time, it always happens. Energy prices went up dramatically or the oil went up for, from a few dollars versus to $20 and then to two $40. And now, again, the world survived because at the same time, of course the dollar has just gone off the gold backing and therefore all the old currencies is in the world. So therefore that’s, as we know when the real trouble started for the world, because this is when the money printing started and we need now been through and I’ve been, you know, I was there, I was there. My working life started in 69. So I’ve, I’ve seen it. I remember gold at $35 even during my working life. And I’ve seen it all happen. I was seeing the currencies talking to collapsing, not all at the same time, you know some faster than others. I remember how the pound totally collapsed. But you know, they, they will be leapfrogging each other, but that race to the bottom that is set as we said, because those currencies have gone down in the last 50 years by 97 to 99%, you know, the final couple of percent it’s going to happen now, but the final 2% or so is a hundred percent from here. And that’s what people don’t realize. And that’s when we will get the hyperinflation whether it starts, as I said tomorrow, or in a couple of years time, it makes no difference what we are looking at. And this is what you and I tried to explain to people, what we’re looking at here is buying insurance, protecting your assets for you know, we don’t think it’s an eventuality. We think it’s a certainty. We will have real problems at hand, very high inflation hyperinflation may be collapse of the financial system. And, you know, we don’t, if we are prepared then to take the stars that this is a long-term insurance, we don’t have to worry about the value, the dollar or the value of gold today or tomorrow. And look at the prize. We don’t even have to worry about timing. If we buy it today or, or get always going to be lower tomorrow, it’s totally irrelevant. When all this starts unraveling and that’s really how people should look at it, to just buy your protection and then enjoy life. I mean, that’s how we look at it.

Lynette Zang:

Oh, absolutely. I mean, I can sleep. I don’t have to worry about the price fluctuations because I know those aren’t real either. It goes back to a distraction, stay away from gold, but you made a comment. That’s really interesting. And I’d like to go back to that. And that was when they come out with an, and this is obviously not verbatim, but when they come out with the new CBDC’s the central bank digital currencies, they’ll take the old debt and they’ll put it in a basket. And you think they’ll, they’ll say, well, we don’t have to pay that because now we have a new currency. Could you talk about that more? Because that’s really an interesting concept to me.

Egon von Greyerz:

Yes, of course. You know, they have to continue the trickery here and the thing is that you can’t make debt disappear. You can pretend that you put it aside and that’s old debt and old money. That’s, you know, we don’t have to worry about that. We don’t have to repay that because we have a new currency now, but what the disregard, when they do that, is that all of that debt has been used to finance on hundreds of trillions of assets

Lynette Zang:

Fiat assets in tangibles, particularly well realistic. No, you’re right.

Egon von Greyerz:

The markets, you know, property market, bond markets. And if you say that you don’t have to worry about that debt, because that also means that, of course you realize that the debt is totally worthless. And if the debt that has been used to inflate all of these assets that we’ve talked about, then the assets will also be near to worthless. And therefore, you know, the world would realize if you used fake money to buy assets out in a massively inflated price that inflated price will also go down to virtually zero, which means that in the next X years, whether that’s five years or a bit longer 10 years, you know, the, in my view property stock market, etcetera, will lose 90% or more against gold because you know, gold so far has not reflected the massive bubble that we see in other assets. And therefore gold is now and I show that several times in the graph that I repeat many times, this is gold in relation to the U.S. Money supply and gold in relation to you U.S. Money supply is today, as cheap as it was in 71, when gold was $35 or in 2000 when gold was $300. I mean, we are, as cheap as that today, nobody realizes that gold is now unloved and undervalued to an extent, as I said, in one article is dirt cheap. It’s, it’s absolutely. So, you know, the people who haven’t protected themselves now is really been the time to do it. And it’s not too late, not too late at all, because the gold is going to start reflecting what’s going to happen to other assets or the other way around, you know, the other assets are going to comedown dramatically in relation to gold. And you know, I’m not like I’m not a gold bug. Really. I’m just, someone would just analyzes risk and looks on the, we went into gold, not because we were gold bugs, just because we saw that as the best instrument to protect against what we see happening in the world economy in coming years.

Lynette Zang:

Exactly. Because you’re all about wealth preservation. I mean, right that’s your mission. And you know, what I also think is really interesting is, is when we talk about gold, we’re kind of, most people are referring to the nominal spot price, which is a contract price, right. Can you just kind of expand on that a bit?

Egon von Greyerz:

Yes, I definitely can. Now the gold price is not the same as the price of gold.

Egon von Greyerz:

You know the gold price that you see on the screen, it’s a paper price that has nothing to do with a real price of gold or the value of gold. Sadly, you’re dealing here with an instrument that where 95% of the daily turnover is in paper. And therefore the price determination and price discovery is non-existent, you know, that this price we’re seeing in gold has nothing to do with a real market. So when we are seeing gold coming down and we’ve seen enough of these corrections or in the last few years.

Lynette Zang:

Even over the last few weeks!

Egon von Greyerz:

Yeah, absolutely every time it reaches a level, they hit it straight away. And that’s and of course we like you, we’re not seeing any sellers in the physical market. The physical market is not selling, right. It’s just the paper market that is, they’re speculating and manipulating the gold price. And therefore the people who actually understand the role of gold and the role of physical gold, you know, they don’t worry about the price on a daily basis. You know, it’s so easy. We can go back 5,000 years. We can go back 2000 years and go back a hundred years. And it’s all the same. Gold is gold is not an exciting investment, you know, it’s not a Bitcoin gold is just the only money that has survived in history and the only money that reflects stable purchasing power.

Lynette Zang:

Right.

Egon von Greyerz:

And as, as we know that an ounce of gold has bought the same suit for a man or any cereal, you know the price has been the same for thousands of years in measured in gold. So that old is old gold does. I wrote an article recently, you know, don’t buy gold if the government, if there are governments surpluses, and if government debt and private debt doesn’t go up more than inflation. And you know, and if there are some monetary policy and no money printing, and of course if inflation is zero or virtually zero, remember that even at 2% inflation, which is a ridiculous target that many countries have.

Lynette Zang:

Now they’re going to an “average.”

Egon von Greyerz:

I mean, you know, and that means that prices double every 36 years!

Lynette Zang:

yeah.

Egon von Greyerz:

2% inflation.

Lynette Zang:

If they actually hit that.

Egon von Greyerz:

So is that desirable and we know inflation is much bigger than that. So, you know, if all of those conditions are met, you shouldn’t own gold, but right now it’s the opposite debts is absolutely, you know, going up exponentially deficits. As we said, U.S. deficit, half of the budget spending is actually a deficit and interests are manipulated low and bond prices are massive. And it’s all because of this manipulation. You haven’t got any of the conditions here that would satisfy not owning gold on the contrary. You have all the conditions that will make gold. Absolutely go crazy at some point, but we’re not buying it for that. We buying it to protect what we have. We’re not worried about if gold, you know, I always say don’t wish gold to go to 10,000 hundred thousand, hundred million or trillion. Because if it does, life is not going to be as pleasant as it is now. So don’t wish for it, but be prepared that it could, and therefore you should be protected. And that’s really what we are looking at here. Don’t look at gold as an investment that you want to go up. Just as pure protection against a totally sick monetary and financial system.

Lynette Zang:

Well, you know, I’d like to ask you because I never hear anybody talk about this, except I talk about it. Why has gold never gone to zero in 5,000 years?

Egon von Greyerz:

Yes. Well, it’s very simple gold at a very early stage became money. And of course it is also an asset. You actually have to do some work to extract it out of the ground, there’s scarcity also, of course. And in order for, for money…

Lynette Zang:

Real scarcity. Instead of manipulated scarcity, actual real scarcity

Egon von Greyerz:

Therefore so if you know to give an asset or like money and intrinsic value but there has to be scarcity because if now a normal, normal money money, you know, you, whatever you need, you print it, you need, you need more money for weapons. You need more money for food. You need more money for budget deficits, that’s printed, printed, printed. And of course, anything that’s fabricated out of nothing is worth nothing. And I mean, that’s a point that I make all over and over again. And you too, don’t think that this money is worth anything. It’s just an illusion. People can live under illusions for quite a long time. And the world has.

Lynette Zang:

Yeah a lifetime really.

Egon von Greyerz:

But that illusion illusion, well, sometime not too far away will disappear and it would just be gone. And that means that the values of that illusion represented will also be gone. And therefore, it’s very simple. You take, I wrote in a recent article about, for example you know, the soldiers, I mean, you take the soldiers in empires, like the Roman empire. Soldiers are always paid in gold and there was an emperor around 100 and something, A.D. Septimus and he said, he said to his sons pay your soldiers in gold and nothing else. And don’t worry about the others. Because he knew that if you want to have the soldiers loyal, you got to pay them in real money. And even soldiers in those days understood that that was the only real money, not debt instruments or not promises of future payment. If they didn’t get their gold, they walked away. And the soldiers, I mean, they were bold you and there wasn’t a conscripted army. And most of the time was, they were both. So, you know that’s why there’s a history that makes gold the combination of the scarcity. And the fact that, as I said, it does, you have to do some work to get it out of the ground and make it look like gold, but then its history and tradition, that is actually made gold to what it is. And, and that’s so fascinating. And there’s nothing that can replace 5,000 years of history when it comes to money. I mean you compare this, every single currency that has ever been created, except for gold has gone to zero every single occurrence

Lynette Zang:

Without exception.

Egon von Greyerz:

And that’s so simple, but it’s not different today. You know, Bitcoin might go to a hundred thousand or a million or whatever it is. But Bitcoin might be fantastic speculation. And it has been for a lot of people already, but it doesn’t have the history yet while we can rely on it as, as future money. And, and I’m sure that it will be replaced if it survives, it will be replaced while a lot of other things in the digital form and coming years. And, and I certainly, you know, I wouldn’t want to use my computer when there is a crisis and there is no electricity. I wouldn’t like to go with my telephone and pay something.When actually, you know, nobody’s interested in getting paid, but you might not even have electricity to, to actually pay the amount, the inquest. So I certainly, you know, in emergency, you stick to what you understand and what has a real value not to digital entry on a computer that could be anywhere in the world.

Lynette Zang:

But the other thing that I look at when I think about gold is its utility, not just as money though, that is, you know, the strong foundation, why all the central banks are accumulating it, but also its utility that they’ve never been able to duplicate in a lab. So, I mean, you can stretch it out and do all of these wires. So it’s used in electronic, it’s used in medicine, it’s used in jewelry. I mean, it’s just used across the entire spectrum. Therefore, you know, for me, when I look at that, I say, well, it’s got the broadest base of buyer. Therefore, what do you want in a crisis? You know, something that is only utilized in one area or something that has the broadest base of buyer?

Egon von Greyerz:

Absolutely true. Although of course, most of the gold today becomes investment gold that is being made. And, you know as opposed to silver, of course, where the, most of it is industrial and on demand, as we both know for silver with the old electronics and of course solar panels, etcetera, and electric cars and that’s massive and it’s going to increase dramatically. And so there is already now major shortages of silver. So silver will be an interesting investment, you know, I would say as a secondary to gold because I wouldn’t, you know, silver, I think we’ll go up a lot more than gold, but I always tell people just hold a lot less silver than gold because of the volatility, if you want to sleep well at night. It is exciting when it goes up, but it’s horrible when it goes down. And, and when it moves, silver moves twice as fast up or three times as fast up as gold and it goes down at the same speed in relation to gold. So therefore it’s not for normal investors to sit and hold it, but just a wealth preservation asset in silver, in my view that it should be much more apart than gold.

Lynette Zang:

I think of silver as my barterable position and gold is my wealth preservation position. And I’ve done a study, which I think we’re going to republish aren’t we on what happens to gold and silver historically during currency resets, which is significant. So people look at the gold silver ratio and they go, oh, well, silver is a lot cheaper, and it’s going to go up a whole lot more. But if silver gets to $10,000 an ounce, what are you going to do? Covert it into Fiat? It has no value. And actually that’s not what happens. Gold, always outperforms or historically has always out performed during a currency reset, but that’s what they reset the currency against.

Egon von Greyerz:

That’s exactly right. And that happened all of a sudden the, and the Weimar Republic, for example, the gold silver ratio. I think he went up to over all over 200 and then went up dramatically. So, so then it was all gold for a certain period. And that’s absolutely correct. So the way I look at silver is if the gold silver ratio goes down from, from the seventies down to 30 or 15 or 20 where it’s been historically, I think I would get out of my silver much earlier and, and switch it into gold. Because as you say, when there’s a real crisis, gold will go up a lot more than silver,

Lynette Zang:

Right? Plus, you know, when you’re talking about the assets and how they’re overvalued now, and they’re likely to drop 90%, and of course, we also have to see who and what is going to survive this mess. That’s really where you have the opportunity with gold to convert into those other assets once, you know, they’re going to survive.

Egon von Greyerz:

Yes, absolutely. No. I mean, this is what we said to our investors that at some point, that gold, you know, you’re not going to sit on the gold forever you to have a core position, but at some point you will turn your gold into income producing assets, whether that is bonds in a restructure world yielding 20%, like, like in 1980, you know, you could actually when gold was 850 and bond bond rates were approaching you know, 15 to 20% depending on the country, then of course, it’s a wonderful time to switch then. And the same if property values is collapse and you buy rental income properties, good quality ones, etcetera. So there’ll be so many opportunities for the people who have the liquidity on the cash. and that will be very exciting for the ones who have excess cash with it. Some people might need to adjust for survival. And that’s, that’s the number one criteria. And for of course, the wealth preservation, first of all, you need to survive. And then you’re looking at alternative use of your money.

Lynette Zang:

Exactly! That’s kind of why I went in you know, to develop the mantra, which is, you haven’t been here yet, but, you know, hopefully that’ll happen at some point, but it’s food, water, energy, security, barterability, wealth, preservation, community, and shelter, because that’s what we need to survive this mess. We need to be as independent as possible. And the gold. And you know, for me silver is about barterability because how much silver would you need to buy a piece of property versus, you know, the same value in terms of gold. It’s just easier to transfer to, you know, to hold more wealth in a much smaller package and therefore have the ability to buy those assets when they’re really cheap.

Egon von Greyerz:

Yeah, no, that that’s, you know, first of all, we need to survive. And secondly, you know, it’ll be, those opportunities will be mean that will be an opportunity and well, not just in our lifetime in generations you know, way asset prices, because as we said before, if you had been printing, you know, the, I mean, just global debt, just between turn of the century. And today global debt has gone from a hundred trillion to 300 trillion. And that’s what put pushed asset prices up. It’s just manufactured and borrowed money that’s inflated asset prices. They’re not worth more than all of these assets, not at all. It’s just the money is worth less, and therefore you need more of the money. And then you think that because you need more of the money to pay for the assets, you think the assets are worth more, but they’re not, you’re just paying it, buying it with fake money that you know, when, when things really start happening that we’ll have zero value, that’s why I said, these assets are going to come down dramatically in price. Nobody believes that, of course you know.

Lynette Zang:

Isn’t that funny?!

Egon von Greyerz:

Yeah, that’s it’s always, it’s always different today. Everybody thinks, because I live today is different. But if you study history, it isn’t exactly the same, you know, the financial markets. I mean, they were sophisticated several hundred years ago. You know, when you, when you looked at the (inaudible) in Holland in the 1600’s you know, you had futures markets, you had options markets even the. So there’s no difference, but people think that these are all different today because of computers, etcetera. But it isn’t, you know, the fundamentals are still the same. It’s just that, you know they call it, different things. And but all markets over time always act predictably. And you know, since we have, we have unlimited records of currencies collapsing since every single currency that’s ever existed has collapsed. You know, you don’t hear a central bank chief, talk about that. Do you? You don’t.

Lynette Zang:

Oh no! Well, you know, I wanted to ask you going back to the debt. With all of that global debt. And I mean, this is not a, well, I guess, relatively speaking, it is a large rise in interest rates. You know, the fed will, and actually global central bankers are trying to manage both the long and short, but what do you think the rise in interest rates were at what level rise in interest rates do you think will completely explode this debt bomb that they’ve created? You know, I guess I’m asking you, do you think they’re going to lose control?

Egon von Greyerz:

Yes, of course. There are going to lose control because you know, you’re not looking at mortgage rates in Europe, for example, in most countries you can get 10 year money 1%, for example you know, you know, so that’s so artificial of course, if money costs nothing, of course, it means that the assets you’re buying, you can buy unlimited amounts of it. And but it doesn’t have the value that you believe that it has. and I think they’re going to try to continue to control short-term rates. Of course, but I will. I think that the pressure will be coming from, from the long end of the bond market. and people will start dumping the long end. And especially that us debt foreigners will dump it. They already have, of course the Russians have the Chinese have reduced, even the Japanese have reduced a bit, not much, but all of these holders of U.S. Stature or any longterm debt, that’s why the pressure will come because, you know you will be as an, as an investor and as an institutional investor you will be seen as totally irresponsible when inflation starts going up. If you hold onto these bonds that have had basically a 40 year bull market since 1980 or 81 and you know that now we got to the end of that, and we are not going to have a whatever 40 year bond market in bonds and you know, rates going up to levels where the world will not be able to cope. And that is what will create of course a collapse in the system because governments are not going to initially of course, continue to print unlimited amounts of money. But that’s going to have no effect because the print will have no value the world would realize that at anyway you know, the government, nobody can pay interest. People can hardly afford interest now at 1% or 0% for governments and if it then goes to what level it starts hurting. I mean, I would say, you know, if it went as high as 5%. I mean, nobody can, nobody in Japan or the U.S. or the EU, they wouldn’t survive, and that’s 5%. And as I often, and I think I’ve told you often say, you know, in 1974, I mean, I had my first UK mortgage, I got in 73, in 74, I paid 21% on that mortgage. And we survived. It was a bit tough, but we survived. And today, most people can’t/wouldn’t be able to cope with a two or 3% mortgage, nevermind a 10% one or so. So that’s why, you know, there is no chance that this system can survive in my view, I’m absolutely a hundred percent convinced because when reality hits the system and markets start to correct to do the values that they should be, and people start dumping debt and interest rates go up you know, all hell will break loose.

Lynette Zang:

Like a domino effect. But the other thing that is kind of interesting, and I don’t, I’ll just throw it out here, for you to think about. And, you know, part of the genius of the inflation system was that governments get to tax the inflated value as the dollar sings and therefore, you know, grow their tax revenues. And if people start to dump these assets and let’s assume that they bought them at a lower price, I mean, you think about the tax ramifications of that on top of the asset prices declining. I mean.

Egon von Greyerz:

Yeah, people won’t pay the taxes and people won’t be able to afford to pay the taxes.

Lynette Zang:

But if they’re digital, won’t they just pull them out of the accounts?

Egon von Greyerz:

Well, they will obviously continue faking it and creating money that doesn’t exist. And of course, in a hyperinflationary economy, that the one that stands near as the printing press you know benefits for a few minutes and you take Zimbabwe was always near as the press. So he got his money in local currency, and then he bought dollars of gold straightaway. But as soon as the money got to the people, it was worthless. They didn’t even want the money. It was just bartering, as you know, and gold was used has been used a lot in Zimbabwe and that’s, what’s going to happen now also. So, you know, it has value for you know, a few minutes and the government then prints the money and then hands it out. But once it’s handed out, it’s worth nothing? And we’ve seen that.

Lynette Zang:

Yeah, by the time they print the new bills, they have no value. They have to even go bigger, add more and more zeros. And, but a zero times 10 trillion is still a zero.

Egon von Greyerz:

Yeah and this is all a bit digital of course, people won’t even see it. They won’t see these big bills because it’s all on the computer. And so therefore nobody will see that ridiculous loss of value and the money that they get like people haven’t seen it now, nobody understands that the money has lost almost a hundred, 98% since 71.

Lynette Zang:

That’s official. It’s probably worse than that. That’s the official rate, you know, that they, they tell you that it is that it’s lost. It’s amazing!

Egon von Greyerz:

I know, but still most people don’t, aren’t aware, of course people are totally unaware.

Lynette Zang:

Right?

Egon von Greyerz:

Yeah. So, I mean, you know, we are, I know sometimes you try to listen to yourself and you know I hate to come across as profit of gloom and doom, but, you know, the main purpose of what you and I are doing is not telling people how terrible things will be. It’s just a warning people about the risks that we have and to protect themselves against that. And then, and then we hope that we are totally wrong in our predictions. And it won’t happen. I doubt that will be the case, but it doesn’t matter, you know, you just, just protect yourself and then live your life. And, and, and if nothing happens, you’re protected, you don’t have to worry

Lynette Zang:

Exactly. You know, it’s like, it’s like the bug out house. Well, guess what? It’s a great vacation house. And I hope I never really need to use it for the real reason why I bought it. And I would much rather have that than Fiat money.

Egon von Greyerz:

Yeah, exactly. Yes. So, you know, we told them about insurance. It is insurance. Now, when you buy fire insurance for your house, you don’t hope that your house will burn down. But you know, and if it does, it’s very good to have your insurance. And this is exactly the same we talk about now, I think, because what has happened to gold and, and the price of gold in the last 20-50 years you know, that is not reflecting. The price of gold is not reflecting the real value of gold. And I think that relativity gold will go up by more than inflation, much more than inflation, because there will be a, such an enormous physical shortage. And if you want to cover even part of the paper gold, which is in part will be impossible, but on top of that, I talked about before, and I have to come back to that you know, institutional investors, they have a responsibility to look after their stakeholders and protect part of the portfolio against inflation. And they are now starting. I mean, they take a long time to make decisions, and I’m very few, we’ve seen very few institutions buy physical gold. You know, there’ve been maybe sort of three and stored outside the banking system. That’d maybe, you know, a handful, not even that in the world, but that’s going to happen. So, institutions are going to start buying gold and, you know, now the average investment into gold, as you know, and it’s half a percent of wealth financial assets. So if institutions went from half a percent to 1%, you know, that won’t be enough gold in the world, of course, to satisfy that demand. And the only way it can be satisfied is by much higher prices. If they want a ton of gold and instead of paying $60 million for a ton of gold to today they invest $60 million and they get half a ton or you know a quarter of a ton that’s, what’s going to happen. They’ll, they’ll invest a 60 million now, but they will not get their ton. And that’s what we’re going to see. And you know, that the whole of the demand from the institutional side, they’ve said and they will never, of course buy 10 or 20 or, or 30, or even more percent gold that many of our investors about the, you know, as, as we said, just by increasing it by a fraction of a percent the demand will be so great that that will put additional pressure on the gold price. And on top of, as I said, the whole of the paper market, having to be either carbon with physical, which, or which is probably going to bankrupt a lot of financial institutions or there will be defaults, which is the same as bankruptcy.

Lynette Zang:

Exactly. Wow. I mean we’ve covered a lot. There’s more questions to ask you, but our time, I want to, you know, I want to respect your time. And so, is there anything else that you would like to say that we didn’t get to talk about today that you think viewers need to know about?

Egon von Greyerz:

Well you know, I always talk about, and I probably have many times with you also, it might sound a bit repetitive, but I really mean it that remember that the real values in life that you should worry about, and I’m sure you will have what you need a roof over your head on you need food, but then otherwise the most important thing in life is family and friends. And then, you know, the, there are a lot of free things in life books, nature, music, etcetera. And therefore, you know, we have not had a period, a long period of where life is based on the golden coffin and a lot of material things. But I think it would be wonderful again, to get back to real values, even if it will be an odd time. But often in hard times when people talk about war as something that they will get together and they all actually, you know, help each other, etcetera, and this is going to be a type of world. So and, you know, the ones who have these strong ties with family and friends etc. and have other interests and values. They’re the ones who are going to survive. You know, there’s no use being a victim here. You’ve got to look after yourself. There’ll be no one else to look after you. There probably won’t be any pensions that won’t be any bank savings. Your asset, your asset prices or values have gone down on, on your debt is still outstanding. So therefore, you know, think about just don’t focus on money, just focus on other things that will actually make, make you survive and live with the difficult times that we’re going to have.

Lynette Zang:

I cannot agree with you more. That’s why, you know, for me, community is key and community is, you know, the way that we’re going to survive it. I remember my, my family talking about their time when they lived through the depression and they lived in the ghetto and there would be hobos that would come through on the trains, and then they would, you know, jump off at Kingston, you know, and my grandmother, I remember my mother saying this, she never turned a hungry person away, and they didn’t have anything either, but what they had, they shared.

Egon von Greyerz:

Yeah, yeah, yeah. Wonderful. Yeah. And that concept is totally disappeared in today’s world. And you know, so, and it will come back on. I’m certain, you know.

Lynette Zang:

It’s only, it hasn’t totally disappeared and hasn’t totally…You and I are sitting here talking and sharing it. Hasn’t totally disappeared. And we’re not the only ones right? So there’s still that little pilot light of community. And I think that that can grow into a big flame. I hope it does. I hope it does really.

Egon von Greyerz:

Yeah. Yeah. No, I agree with you. Yeah.

Lynette Zang:

Thank you so, so much for coming on today. I know that everybody got a great deal out of it. The links to all of Egon’s work are below. So just follow those links read his work and everybody else there that writes there because you really have quite a talented team. And thank you for joining us. Until next we meet. Please take care. Bye-Bye.

Egon von Greyerz:

Thank you Lynette. Thank you very much.

Lynette Zang:

Thank you Egon.

 

SOURCES:

Website: https://goldswitzerland.com

Twitter: https://twitter.com/goldswitzerland

YouTube Channel: https://www.youtube.com/user/egonvg/videos

Thumbnail Photo We believe that everyone deserves a properly developed strategy for financial safety.

Lynette Zang

Chief Market Analyst, ITM Trading

Sources & References In This Article

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