…Currently investors love the stock markets around the world and why shouldn’t they. Everyone is making so much money…that their greed prevents them from looking at the risk.
This version of the original article by Egon von Greyerz has been edited ([ ]) and revised (…) to ensure a faster & easier read. It may be re-posted as long as it includes a hyperlink back to this revised version to avoid copyright infringement.
For investors who don’t worry about risk, the current period is absolute heaven. Stocks, bonds, property and bitcoin just goes up and up and up. You just can’t lose!
Whatever investors touch today turns into gold – but it isn’t real gold. The winnings today are fake gold in the form of inflated and heavily leveraged paper assets.
Like all bubbles this can continue further but whenever it turns, and we are not far from that point, the move in the opposite direction will be so fast that it will be impossible to get out.
Also, like for most of the last 30 years, investors will be certain that central banks will save them but, this time, it will really be different because the next round of trillions or quadrillions of paper money will only have a very short lived effect. At last the world will understand that printed pieces of paper that governments call money are really worthless.
The coming collapse in all bubble asset markets will therefore be greater than the 80% fall of the Nasdaq in the early 2000s and greater than the 90% fall of the Dow in the 1930s. Most investors will laugh at this in disbelief. We will see who has the last laugh.
The contrarian road to wealth protection
With Nasdaq up 5x since 2009, investors are oblivious of risk. Silver on the other hand is down 65% since 2011. The chart below shows the Silver / Nasdaq spread. Silver has crashed against the Nasdaq since 2011 and is almost down to the 2001 level when the silver price was $4. This spread is likely to have bottomed and the next move should be back to the 2011 high – a 450% move.
Wealth preservation investors should of course not go short Nasdaq (the bubble can get bigger) but if they get out of their stocks and buy silver, they are likely to avoid the most massive wealth destruction in the next few years.
munKNEE should be in everybody’s inbox and MONEY in everybody’s wallet!
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