Gordon T Long, Co-Founder of FRA interviewed Egon von Greyerz in Zurick. Egon Von Greherz is the founder of Matterhorn Asset Management who has worked as a financial director for over 17 years in Geneva, and has been advocating for wealth preservation through Gold for over 13 years. MAM now has plans in over 40 countries for investors to place their savings into physical Gold storage for preservation in the world's largest Gold vault in Switzerland.
Egon says that approximately less than half a percent of assets are invested in Gold today by the people and that most of them do not own any Gold whatsoever. Even with the risky stock market in recent months we have not seen a significant increase in the purchase of Gold as an investment itself. However the increase in Gold purchases is linked more closely to the retail market for public use. Von Greyerz expects the market stocks to drop further down below their current value and is viewing the current spike in stocks as a mere bear trap, insisting that following this we may see a rise in purchases for gold.
"Less than half a percent of world financial assets are of gold today and that's absolutely nothing!"
It is necessary to understand that gold is not to be viewed as an investment but for insurance purposes against all the property investments and bonds that you may have currently. For over 5000 years the price of gold has only gone up and the value of money has been decreasing ever since. With the expectation of the stock market dropping by at least 50% in its current state, having even 10% of your assets in gold will ensure the safety of your portfolio. The reason being that with the drop in stocks the price of gold compared to the dollar could be at a 1:1 ratio like the 1980's meaning Gold will outperform all the other assets.
With only a .5% of current assets invested in Gold there is no current risk of a shortage of physical Gold. However, in the near future with the price of Gold expected to rise rapidly there is a certainly a risk of there being a shortage. If institutions, governments and pension funds begin to hedge their assets in gold there will never be enough Gold to satisfy their needs. Alongside rapid printing of money there will be no way to control the rapid increase other than to increase the price of gold itself to purchase smaller amounts of physical gold but for much larger prices to ensure that there is no shortage of real Gold.
"In the next few years it will be hard to get a hold of gold, as there will be a time when there will be no price offered in the market for gold due to its shortage"
Thoughts on NIRP and the cashless society
There are no positive consequences for this situation, Japan had other options but chose this disease which again will make no difference to either economy in the world. The negative interest rate will however stop withdrawals and place cash limits in Europe since people would rather take the money out and hold on to it rather than pay interest on it. But we should still expect more countries to go into negative interest rates even though it is hard to imagine this central bank policy to solve our economic problems.
Unfortunately there are not many other options for investors at the moment to encourage them to place their money elsewhere outside of the collapsing banking system. To avoid possible 'bailins' people can invest in property, fine art, and precious metals but not much else to be safe from this risk. Gold on the other hand has not seen a significant price increase and shows just how powerful it can be in the future. It is like holding real money it has the equivalent purchasing power to any currency in its history for the past 5000 years and does not devalue over time.
Even in the event that a bank does not have money to exchange for your gold you may still use it as barter, it has had this function throughout its history and will remain this way. It is an excellent opportunity for insuring your wealth and having liquidity at the same time. This is away from the banking regime and does not need to be declared to the IRS either for further taxation.
Furthermore, there is no safe spot currently to store your wealth other than a select few countries with good law and politics to ensure you get to keep what you've earned. Switzerland currently holds 70% of all the gold bars in the world and is by far the most secure location for storing wealth in long term.
Egon does not think that the current primary elections going on in the United States will have any effect on the current economic situation of the world. Referring to the fact that there is simply too much debt at this point and no difference will come from the selection of a new president. He suggests that there needs to be a complete systemic overhaul of the way the economic system works.