12.10.2020 – Special Report. The price of the yellow metal has been stuck below the $2,000 an ounce mark for a while now. But the real move is yet to come – at least if the super bulls have their way. According to this, the price of gold could soon shoot up exponentially. Because in their opinion, the monetary system is entering its final phase – we are seeing the catastrophic boom.
“The exponential phase has begun”
The initial situation is known: In the wake of the corona pandemic, governments and central banks around the world have cut interest rates and adopted new stimuli. The expansion of the money supply is leading to a devaluation of paper money. Investor Egon von Greyerz (EvG) benefits from this trend, his Matterhorn Asset Management stores tons of the precious metal deep in the Swiss Alps for solvent private investors. EvG told the blog USA Watchdog.com this: “You are looking at… the money supply, which has been going up for 50 years, but now… it’s going up in a straight line. So, we are now entering into the exponential phase of this financial system. We are seeing unlimited money printing, helicopter money like Ben Bernanke (former Fed Head) called it. Then we are going to see accelerated debasement of the currency. The real moves in gold and silver haven’t started yet.”
The next move will be a global phenomenon: “The bond market is going to collapse, and interest rates are going to go a lot higher…”. And further: “Inflation is going to go a lot higher, and, eventually, the currency collapses, and it is a collapsing currency that leads to hyperinflation. When the currency falls, we will see hyperinflation.” EvG added that in the past there have been individual countries with major problems such as economic collapse and hyperinflation. But the whole world has never been too keen on a problem of collective over-indebtedness. Therefore, the entire crisis would assume far greater proportions than ever before.
Gold at 20.000 – silver at 600
And then EvG’s apocalypse statement: “We are at the exponential point, and the super exponential point of money printing, deficit and of currency collapse. Gold should currently be trading at a minimum of $ 10,000 per troy ounce – and on an adjusted inflation basis it should be as high as $ 20,000. Not only gold will be in demand in this total, global collapse: silver will rise to at least $600 an ounce.
The disaster house
Shanmuganathan Nagasundaram from the blog InternationalMan.com recently took a similar view. He suspects a “crack-up boom”, which Ludwig Heinrich Edler von Mises from the Austrian School once formulated: If public opinion is convinced that the increase in the money supply will never end and that prices for goods and services will therefore continue to rise, everyone will consume as much as possible to keep cash levels low. The result would be a catastrophic boom – if inflation gets out of control and can no longer be contained, economic agents would lose confidence in the paper currency and therefore try to exchange their money for tangible assets. As a result, a lot of money flows into a limited supply of shares, which is why their prices rise very sharply – even when the fundamental outlook is poor. The catastrophic bull market heralds the final phase of a fiat money system. At the end of the boom, the bankrupt state could only implement a currency reform. According to Nagasundaram, the “crack-up boom” is no longer just a theoretical fiction. The exploding money supply in the USA is proof of this.
Heroin for the zombie economy
The dominoes are ready, InternationalMan.com said: “Bubbles are everywhere – in the housing market, cars, student loans, on the Nasdaq, junk bonds. And these ensured that the Fed would have to continue providing its “monetary heroin” to keep the zombie economy alive. All in all, gold is cheaper today at $2,000 than at $35 in 1971. Apparently, a lot of retail buyers believe such gloomy predictions. As Bank of America’s Global Commodities Research recently noted, it is mainly private buyers who are currently buying physical gold.
Our conclusion: prophets of doom are often ignored because their worst case scenario only occurs once. But this does not mean that they are wrong in the end. The Bernstein Bank keeps an eye on the matter for you and wishes you successful trades and investments!
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