This coming autumn we are likely to experience the beginning of the end to the biggest speculative bubble in world history. All bubble assets will implode and the financial system will come under massive pressure:
- stock markets will decline by 90% or more,
- bond markets will totally collapse,
- world trade will more than halve,
- the dollar will fall and so will many other currencies,
- money printing will follow, fueling the currency collapse and hyperinflation and, as a consequence,
- gold and silver prices will surge.
The above comments, and those below, have been edited by munKNEE.com (Your Key to Making Money!) for the sake of clarity  and brevity (…) to provide a fast and easy read and have been excerpted from an article* by Egon von Greyerz (goldswitzerland.com) originally entitled Gold – One World Two Markets and which can be read in its unabridged format HERE.
All of this seems unimaginable today but if someone had said in 1932 when the Dow was 40 (it is not a misprint) that it would reach 18,000 83 years later, no one would have believed that either…
Gold has now corrected for four years from the $ 1,900 peak in 2011. On most criteria gold is now oversold and undervalued. On a real inflation adjusted basis gold is now as cheap as it was in 2002 when it was $300. Speculators currently have an all time high short position in the futures market – and that doesn’t include the interbank market where the short positions are most likely a lot bigger.
The gold price bears no relationship to the real price of gold nor to the major and continuous very high demand for physical gold.
- The gold price is set in the paper market by the speculators and manipulators. The buyers of physical gold are very fortunate to be able to buy real gold today for prices which have nothing to do with the real value of gold. India and China, especially, understand this.
- Mine production of gold is around 2,500 tons annually. Only China buys 2,000 tons and India 1,000.
- In the last few years the demand for physical gold has substantially exceeded production.
- The sellers have been central banks which clearly only have a fraction of their stated figures. When China reveals their real holdings and allows an open audit, no one will believe that the USA has anywhere near 8,000 tons without an independent audit.
- What we also must remember is that the world has printed and borrowed another $60 trillion since 2008. This massive credit expansion is not reflected in the gold price. If there was no paper market in gold, the price today would probably be $ 8,000 since this is the correct price adjusted for real inflation.
…What we have seen in the last 100 years is totally unprecedented in world history. It has only been [made] possible by central banks creating a money bubble that has expanded far more than anyone would have thought was possible.
In my view this bubble cannot expand any further so like all bubbles it will either gradually implode or suddenly explode burst. Hopefully for the world, there will be an implosion so at least we will have a bit of time to adjust.
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