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Silver Enters Its |
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Gold: Long Sideways Moves Marked by Explosions
Gold makes powerful moves and then goes sideways for long periods. After the gold explosion from $35 in 1971 to $850 in 1980, gold spent 20 years correcting until 2000.
That was the time that we decided that gold was now ready for the next run at the same time as risk in stock markets, debt and derivatives was starting to look dangerous.
So in 2002 we made major investments into physical gold at $300 for investors and for ourselves. At the time I recommended up to 50% of financial assets into gold based on wealth preservation principles and also the fact that gold at the time was unloved and oversold and thus represented excellent value.
We have liftoff!
Since gold went through $2,100 in early March, gold has moved up another $200 but that is the mere beginning of a secular move.
After the move from $300 in 2002 to $1920 in 2011 gold had a long correction again between 2013 and 2016. The break of the first Maginot Line (see chart) was predictable. Then in March 2023 it was clear that the second Maginot Line would break and we were seeing the beginning of the demise of the financial system as four US banks and Credit Suisse collapsed within a matter of days.
Holding Gold Requires Patience
The message I want to convey with the two graphs above is that gold investing requires patience and obviously timing of the entry points. But in the long term investors will be extravagantly rewarded and at the same time hold the best insurance against a rotten system that money can buy.
Gold has consolidated under $2,000 since August 2020. The recent breakout is extremely important and not the end of a move.
No, this is the beginning of a move that will reach heights that today are unfathomable.
I am in no way intending to be sensational, but just trying to explain that fundamental and technical factors are now pointing to a secular bull market in gold and silver.
Also, normal measures of overbuying will not be valid. Gold and silver will in the coming months be overbought for long periods of time.
But don’t forget that there will also be vicious corrections, especially in silver which is not for widows and orphans.
I want to emphasise again that our intention to invest heavily in gold and much less heavily in silver (much more volatile), was primarily for long term wealth preservation reasons. That reason is more valid than ever today.
The Everything Collapse Will Come
Since we have been expecting the “Everything Bubble” to turn into the “Everything Collapse” (see my article April 2023), all the bubble assets like stocks, bonds and property are likely to decline substantially in real terms which means measured in gold.
I willingly admit that I have been premature in predicting the Everything Bubble to collapse in nominal terms. But in real terms almost all major asset classes have underperformed compared to gold since 2000 including stocks.
It is only the illusion of growth and prosperity based on worthless money creation that keeps this circus travelling on. But the circus acts will soon run out of tricks as the world discovers that this is only a mirage which has totally deluded us.
If we take stocks as an example, gold has outperformed the Dow and S&P since 2000.
Here is what I wrote 2 weeks ago:
The world’s best kept investment secret is GOLD.
- Gold has gone up 7.5X this century
- Gold Compound annual return since 2000 is 9.2%
- Dow Jones Compound annual return since 2000 is 7.7% incl. reinvested dividends
- So why are only 0.6% of global financial assets in gold?}
- The simple answer is that most investors don’t understand gold because governments suppress the virtues of gold.
Stocks are now in position where we could have a major decline/collapse at any time.
Wolves in Sheep’s Clothing
So back to the circus. The leaders of the Western World, whether we take the U.S., UK, Canada, Germany, France etc., are mere clowns trying to fool their people with fake costumes (wolf in sheep’s clothing) and fake acts whether it is:
Money printing, debts, vaccines, climate, war, migration, more lies, propaganda, moral and ethical decadence to mention but a few of the problems that are leading us to the collapse of the Western World.
Real clowns would probably do a better job than current leaders. They would at least entertain us instead of bringing the misery that a majority of people are currently experiencing.
Yes, I am aware that there is a small elite that is benefiting dramatically from the shameful mismanagement of the world economy whilst the majority suffers badly from inept leadership around the world.
So how will this end? In my view, as I have outlined in many articles, it can only end one way which is a total collapse of the financial system as well as of the political system.
Will we first have hyperinflation and then a deflationary implosion or will it go straight to the implosion. Will there be a global war. Well, the US and most Western leaders are doing their utmost to start a World War against the will of the people. There is absolutely no attempt to find a peaceful solution.
Instead it is more weapons and more money to escalate the war as well as pushing as many countries as possible into NATO. Both Biden and Stoltenberg (NATO leader) also want Ukraine – a warring nation – to join NATO.
And with today’s sophisticated and dangerous weapons, no one can win a war.
Obviously, China, Russia, North Korea and Iran would win a war with boots on the ground at a cost of 100s of millions of lives. But modern wars are won in the air. And with around 15,000 nuclear warheads, the world can be destroyed many times over in a few minutes.
The world has never had a global economic and political crisis of this magnitude with so many destructive weapons, both financial (debt, derivatives) and military.
So to forecast the outcome is clearly impossible. One can only hope that people power will prevail and that incompetent leaders will be pushed out.
Otherwise there is little us ordinary people can do.
Wealth preservation in the form of physical gold, owned directly and in a safe jurisdiction (countries like the U.S., Canada or the EU are not safe politically) is clearly the best insurance investors can buy.
Also we must assist family and friends in the difficult times ahead and make that circle the kernel of our lives (if it isn’t already).
And remember that most of the wonderful things in life are free like nature, music, books etc.
Egon Von Greyerz
Substack & Grey Swan
P.S. from Addison: “Things are going down,” writes reader Robert P.
“Bessent will wait until things really break or when he gets Trump’s tax and debt package passed, whichever comes first. That package will allow the U.S. to create more debt, and they will say, ‘they don’t have a choice’.”
Mr P’s forecast:
“Bessent will monetize U.S. assets and break things further. Gold will shoot up in either case, and then he will reprice, not revalue, U.S. gold to market, updating quarterly.
“Start sweeping up the glass and build a new society with less cost.”
Some days, that feels like a long shot… a true Grey Swan event.
Did you notice Egon’s calculation of gold's current worth based on money supply growth? It’s consistent with our own research, where we calculated gold’s possible move to over $20,000 per ounce in the years ahead.
With the metals space in mind, our portfolio director, Andrew Packer, will be attending the Rule Investment Symposium in Boca Raton next month.
The Symposium is Rick’s continuation of the Agora Financial Symposium we co-sponsored in Vancouver with him for a decade in the early 2000s.
Now, in Boca Raton, it’s a five-day affair featuring in-depth research from dozens of small-cap resource companies, including gold and silver mining companies, but also copper, uranium, and other critical commodities we’ve explored in-depth in our research over the past year. Click here to view the stellar speaker line up and learn how you can attend yourself.
Your thoughts? Please send them here: addison@greyswanfraternity.com
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: feedback@greyswanfraternity.com
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