QE

The Chinese government saw already 48 years ago that Nixon’s decision to end the gold backing of the dollar would be the end of the dollar and the Western monetary system. No one believed their prophecy at the time. But they are being proven right.

Gold is a highly liquid yet scarce asset, and it is no one’s liability. It is bought as a luxury good as much as an investment. As such, gold can play four fundamental roles in a portfolio: a source of long-term returns, a diversifier that can mitigate losses in times of market stress, a liquid asset with no credit risk that has outperformed fiat currencies, and a means to enhance overall portfolio performance.

Mario Draghi, head of the European Central Bank, must be thinking that one can’t get anything for 2.6 trillion euro, nowadays! This astounding amount is the ECB’s QE or, in other words, all the bonds it has bought since March 2015 – with a printing press.

We are now in the very final stages of the most remarkable era of alchemy in the history of finance. This cycle started in 1913 with the creation of the Fed and had its death knell in 1971 when Nixon took away the gold backing of the dollar. It has been a long and slow 50 year death of the world economy and the patient has only been kept alive due to the creation of fake money, fake assets, fake (paper) gold, fake wealth, fake valuations, fake balance sheets, fake bankers, fake politicians all built on a colossal mountain of fake debt.

We have had a hundred years of excesses in the world and artificial wealth creation. Now, in the coming years, we will have a very long period of the opposite. Wealth will disappear. Gold will break free from LBMA Casino, leading to much higher gold price.

In this interview, Max Keiser and Egon von Greyerz discuss gold and several hot topics that will have major influence on the world economy in coming years.

The time of easy gains in markets is now over. With the Fed and other central banks tightening and with the 35 year interest cycle having turned up, the party is over.

The end of an empire is a dramatic but also drawn out event with very few willing to face the facts. As the end is getting closer, denial is at its peak. We can probably figure out how it will end but not quite when. Looking at the facts, the beginning of the end is here.

Dominique Strauss-Kahn, Ray Dalio, Jeffery Gundlach and Nouriel Roubini all share pessimistic views. Let’s examine together the basic economic reasons for their thinking.

Many emerging markets are now turning to submerging markets as country after country is experiencing falling economies, currencies and stock markets.