The Dark Years Are Here II

Published by Egon Von Greyerz | Sep 10, 2018 | Articles 2427

Hindsight is the most exact of all sciences. Most people who live their life backwards have a miserable life. Having been around for a while, I tend not to look back, especially not at negative events. Much better to embrace uncertainty since everything going forward from here is uncertain. We can’t do anything about the past but we certainly have more control over our future. And looking at the next few years, it does seem that these are going to be extremely turbulent both economically, socially and politically.

In spite of not normally looking back, I have had a look at a Newsletter that I wrote in July 2009 when gold was just over $900 and the Dow 9,100. It was called “The Dark Years are here” and received quite a lot of attention at the time. This was at the end of the sub-prime crisis when the Dow had just declined by 60% and gold had risen from $250 in 1999 to $925.

I am clearly putting my head on the block here because like with most forecasts, the timing of my predictions contained many errors. But we must remember that protecting risk is more important than being right on timing.

At the end of the article I am drawing some important conclusions.

September 6th 2018

Rereading the 9 year old article, there are very few words I would change. Around 98% of the article is extremely valid today. What of course is very wrong are the dates. By just changing a couple of dates, the article could have been written today.

The gold forecast was acceptable as gold more than doubled from $900 in 2009 to $1,920 in 2011. But the stock market forecast was seriously wrong. This shows that we are gold experts and not stock experts! It also shows that stocks are in a massive bubble.

So what have I/we learnt 9 years later?

Firstly, most obvious lesson is of course that forecasting is a mug’s game.

Secondly, as this is likely to be the end of a major super-cycle, whether it is a few hundred or a couple of thousand year cycle, we must realise that things often last longer than the brief horizon of a human being.

Thirdly I, like many people who analyse risk, underestimated the ability of governments and central banks to kick the can down the road by doubling global debt since 2006 and taking total liabilities to quadrillions of dollars, including derivatives and unfunded liabilities.

Fake money, fake news and manipulated data have greatly contributed to misleading the world that “All is well on the Western front”.

But things are certainly not well in the West, nor in the East.

Risk was very high in 2009 but the Powers That Be managed to postpone the inevitable for nine years. 2007-9 was just a rehearsal. Today in 2018, the risk is exponentially higher. Rather than worrying about when the financial system will collapse, we must worry about the massive risk and the consequences of a systemic failure.

It is already happening in the periphery and it will spread to the centre. Look at Venezuela, look at Argentina, or Turkey, Brazil, Indonesia. These countries are badly affected already. It will reach Italy and Japan and the US and, and….. It is not a question of IF but WHEN. In most of these countries the Dark Years have already started.

Also in the West, ordinary people are suffering with real income stagnant and prices going up for decades and with debts that they can never afford to repay nor even service the interest. The $125 trillion increase in global debt since 2006 has landed most ordinary people with a burden that will break them. The wealthy however have used this massive increase in credit to leverage their assets and amass unimaginable fortunes. Most of these fortunes will implode in coming years.

Risk protection must be acquired before the event. There is still time to buy “insurance” at a very low price. Once you have the insurance, in the form of precious metals, put it at the bottom of your wealth pyramid and leave it there.

So buy physical gold and some silver now. Store it safely outside your country of residence. Don’t wait since there will be exchange controls as all currencies will be debased. At that point it is too late.

Then enjoy your life. Because at some point in the next few years, times will be a lot more difficult for many of us.

"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." - Ludwig von Mises


Original source: Matterhorn - GoldSwitzerland


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Egon Von Greyerz  Goldbroker.com Board Member - Founder of MAM

   

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