Egon von Greyerz: "Too Late To Jump On The Goldwagon? "

Tyler Durden's picture

From Egon von Greyerz of Gold Switzerland

Too Late To Jump On The Goldwagon?

The Stealth Market in Gold

Gold has gone up for 12 straight years in a stealth market. In the last ten years gold has had a compound annual growth of 20.5%.  This is an absolutely outstanding return but investors should not look at gold as an investment but as money. Gold reflects governments’ deceitful actions in totally destroying the value of paper money by printing unlimited amounts of it. With gold up 7 times since the bottom in 1999, is it too late to jump on the Goldwagon?

The answer to the above question is a categorical NO. Virtually no major investor group has participated in gold’s spectacular rise. In spite of a seven fold increase in the gold price, only circa 1% of world financial assets are invested in gold. Whenever I talk to major institutional investors, not only do they not own gold, but they don’t understand gold either. I was speaking at a conference for Family Offices recently where there were circa 250 family office managers present representing substantial funds. Not only did no one own gold, but they had no understanding of gold’s role as an investment class or the fact that measured in real money, i.e. in gold, their investments were declining precipitously. It must be unprecedented that an important asset class can go up for such a long period with so few investors participating. In my view this is the most bullish sign ever for gold. The mess the world is in will lead to unprecedented money printing in the US, EU, the UK and many more regions. And gold will continue to reflect the destruction of paper money. In addition, investors will increasingly mistrust paper gold and invest in physical gold only. Due to the very limited availability of physical gold, the increase in demand can only be satisfied at substantially higher prices.

Gold price projection

There are many ways to project how high the gold price can reach. Adjusting gold for real (not the published, manipulated) inflation the price would be circa $7,500. At the recent GATA conference, Adrian Douglas put forward a target of $53,000 an oz based on M3. He said that that out of every 33 oz of gold traded 32 oz are paper gold, which would lead to a price projection of $53,000 also, if all trading were backed by physical gold.
The following chart shows where gold would be if the US gold reserves were at the same percentage (52%) of us debt as in 1913 when the Fed was founded. Gold would then be $27,000 today and going up to $33,000 in 2015 with a projected increase in debt of $ 6.5 trillion (6.5T).

All of the above projections are subjective and therefore somewhat arbitrary. However, whatever method is used, gold is undervalued on any measure.  We are not just talking about a substantial undervaluation but more importantly that paper money is likely to be totally destroyed in the next few years with the gold price reflecting this obliteration. It is absolutely impossible to forecast how much money will be printed but the flood of paper could lead to many zeroes being added to the gold price just like in any hyperinflationary economy. For example, in 1923 in the Weimar Republic gold reached 100 trillion marks. Gold (and silver) is a critical asset to hold in order to preserve wealth against such a hyperinflationary destruction of paper money.

Physical versus Paper Gold

Circa 96% of all gold trading is paper. For anyone who demands delivery, there will be no gold to deliver. At the GATA conference in London Jim Rickards stated that currency wars will lead to the US government taking back (confiscating) whatever gold it has lent to bullion banks as well as gold it holds for other nations (most of Germany’s gold is said to be held in New York). He also mentioned a potential 90% windfall tax on gold. In a subsequent King World interview (click to listen), Eric King discussed with Rickards that the US government has keys to Via Mat’s US vaults.
It is of course not possible to predict what desperate governments will do, nor is it possible to protect yourself against every eventuality. What is very clear is that simple action can and will give investors a better chance of preserving wealth:
  • Only buy  physical allocated gold/silver bars or coins
  • Store the gold outside the country where you are resident.
  • Store the gold in a country with a stable political system (like Switzerland)
  • Store the gold outside the banking system in vaults with no US connection.
  • Make sure you have personal access to your gold and/or silver

Gold Making New Highs

Gold has recently made new highs against most currencies. In addition, after longer consolidations, the Dow is breaking down against gold (down 85% in 12 years), and gold is breaking up against both Oil and the Swiss Francs.

These break outs are potentially very significant and will most probably lead to a strong up-move in the gold price in the next few months.

Kicking the Can

The world is in an absolute mess, economically, financially, politically and morally. And let me be very clear; this has been evident for at least 10-15 years. The only thing that has not been clear is how long governments and central banks could deceive the people by kicking the can down the road in an endless creation of worthless pieces of paper that they call money. The lone voices of some market analysts, forecasting that the manipulation and mismanagement of the people’s wealth would end in disaster, have for long been silenced by the establishment in order to betray the gullible masses.

Intellectually dishonest and corrupt politicians and bankers have devised a system which has created perceived, debt-based wealth for the people whilst buying votes and generating massive wealth for the bankers.

But this Ponzi scheme is now coming to an end. When printed money can only be repaid with more printed money and when there are no buyers for the worthless debt instruments created by governments except for the government itself, then we have reached the end of the road with a “can too big to kick”.



Two years’ ago in the summer of 2009, I wrote an article called “The Dark Years Are Here” which outlined the likely consequences of the excesses of the last century. Let us just look back to understand the historical perspective.

Throughout history there have been regular periods of credit creation and money printing resulting in a collapsing currency. This happened for example as the Roman Empire was disintegrating starting circa mid 200 AD. So destruction of money is not a new phenomenon as Voltaire said already back in 1729 “Paper money eventually returns to its intrinsic value – ZERO”. But so far in history these events have normally been limited to one country or region. Never before in history has there been a financial system which has made it possible for the whole world to simultaneously create unlimited amounts of debt.

The graph below shows the effect of this money creation in the US but the same applies for many parts of the world. Between early 19th century and early 20th century there was virtually no inflation. A house cost the same in 1910 as in 1810. But then in 1913 the fraud in the financial system started. Private bankers in the US created a private central bank owned by the bankers and for the benefit of the bankers. This was when the Federal Reserve Bank was created with ultimate power to print money and thus destroy the value of paper money. This was the most perfect way for private bankers to control financial markets with the total blessing of the government. Thus started a worldwide credit manufacturing scheme that eventually will lead to a collapse of the financial system. In order to inflate this bubble even faster, Nixon abolished gold backing of the dollar exactly 40 years ago on August 15 1971. Nixon should not have been impeached for Watergate but instead for destroying the world financial system and world economy for many generations. Since the closing of the gold window in 1971, total US Debt (private and public) has gone from $10 trillion to almost $60 TRILLION today.


What has taken place in Washington in the last few weeks is absolutely disgraceful. Irresponsible politicians have been spending months bickering about the debt ceiling and disagreeing until the very end how to solve a crisis that will bring the US down. It is appalling that they, out of self-interest, take this issue to the wire when the country is in the process of going under. The whole procedure is only about political posturing and buying votes rather than caring about the good of the country. The politicians are rearranging the deckchairs on the Titanic whilst the country is sinking into the abyss.

The debt ceiling is totally irrelevant. US Federal debt has increased every year since 1961. Thus for 50 years the debt has gone up yearly and during that time the debt ceiling has been raised 79 times! The real issue is that the US is bankrupt and raising the debt ceiling only exacerbates the gravity of the country’s problems. What they should have agreed instead is a substantial reduction of the debt ceiling. But that doesn’t buy any votes.

Another debt rise agreed of $2.4 trillion (in two stages) will probably last a year at best. Proposed spending cuts of $2.1 trillion will almost certainly never happen but if they do they will be after 2013 and probably mainly take place at the end of a 10 year period starting from now. In the meantime the debt is likely to increase by tens of trillions of dollars.

Sadly it doesn’t matter what the reckless politicians do. This situation is unsalvageable.

The exponential growth in debt in the last 100 years has created a false prosperity by mortgaging the future for many generations for the benefit of current consumption. Wealth based on credit does not only steal from future generations but creates the wrong values based on debt, greed and materialism. Values such as honesty, integrity, courteousness, righteousness, respect and kindness have totally disappeared in large groups of the population. And the family is no longer the kernel of society. Recent social unrest and riots in the UK is an inevitable consequence of this social decadence. With youth unemployment at 25% in many countries and as high as 50% in the major cities, this problem will become unmanageable in the next few years. Failing economies and empty stomachs will exacerbate the situation dramatically.

Also, since government (and the bankers) control the system by creating money out of thin air, major resources in the economy are transferred from the productive and innovative private sector to the totally inefficient, unproductive and bureaucratic public sector. The public sector only consumes wealth and does not produce anything. By taking invaluable resources from the private sector, consuming most of what it takes and then giving the rest to the most unproductive part of society (the weak, sick, unemployed, work shy etc.), government perpetuates the worst part of the economy and destroys the ability of the nation to expand.

The point I am making is that the last 100 years are exceptional in history because this period is based on an unprecedented worldwide debt creation and money printing but not on the natural laws of supply and demand or saving and investment. Exceptional things never last since the laws of nature can only be broken for a limited period. And we have now come to the end of the world’s largest, government sponsored, Ponzi scheme ever. The consequences will be felt in all aspects of society and most likely last for a very long time, at least for several decades and maybe longer.


Add to the US debacle, the problems in Europe which are almost of the same severity. The European money markets are now starting to seize up as pressure mounts on the Italian, Spanish and French banking systems. It will be impossible for the milk cow of Europe to continue to support all the weak European countries. Initially the EU will accelerate the money printing because of political pride. But like all grandiose political unions, the EU will eventually break up.

Courtesy BOB – Daily Telegraph

The world is now staring into the abyss and we are most likely entering the Dark Years which I wrote about two years ago. The consequences will almost certainly be unlimited money printing and a hyperinflationary depression.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
traderjoe's picture

Gold Bitchez!

- sorry, couldn't resist...

Misean's picture

Tell 'em about the twinky Egon.'s picture

And don't cross the streams. It would be bad.

MachoMan's picture

I collect spores, mold, and fungus

Bastiat's picture

Oh man, that Milk Cow!!!!


CapedCrusader's picture

It's never too late to jump on the Gold bandwagon.  Ebay and the Gold informercials tell me so.  Always buy gold and never sell good.  Total debt up 6x and gold up 50x.  Gold is not a bubble.  Just buy.  Don't sell.  Just think how rich you'll be.  lol.



spartan117's picture

First, the gold infomercials you are referring to are selling gold-clad coins.  Not the same as REAL gold.  Second, cash 4 gold stores are popping up all over California.  Can't speak to the rest of the country, but if my neck of the woods is any indication, I'd say people are SELLING their gold, and not buying any.  Third, gold is not up 50x.  As a percentage to total US debt, both public and private, the total value of gold has fallen in the last 10 years.  Fourth, and perhaps the most important of all, you're a moron.

Thomas Jefferson's picture

All the commercial vacancies resulting from the crash of 2008 have been filled with "We Buy Gold" stores.  It is a nationwide phenomenon.

MachoMan's picture

I'm wondering how the hell people are still liquidating their gold at this juncture...  I would have thought they would have liquidated their entire stocks by now, but apparently the bubble (much of the stuff probably still has a credit card balance) was larger than I guessed.  If these people weren't pissed off yet, I'd think they'll be really pissed off if grandma's old ring could be traded for a house only a few years after selling it...  

Precious metals holdings necessarily require other liquid assets so as to not force yourself into a liquidation...  if you're buying an insurance policy, better make sure you can pay the premiums between now and your casualty.

Doña K's picture

Those selling gold, need the money. Unemployed, underemployed, unfotunate, on and on. People who have something left from paying taxes and the debasement of the dollar, buy gold and silver to preserve the purchasing power of their savings.

Bring the Gold's picture

While your entire argument is very accurate, I felt that point four was really the clincher Spartan.

greased up deaf guy's picture

my "is gold in a bubble" gauge is craigslist. i do a search for "gold coins" in the local area and the ads posted by prospective buyers versus prospective sellers is usually about ten to one. if the day comes when there are more ads posted by sellers as opposed to buyers, only then will i even start to consider gold to be in a bubble. my guess is that will be never.

Snidley Whipsnae's picture

Gold/silver are headed East. When a weak hand in Cali or elsewhere sells 'scrap' gold, who is the end purchaser? Of course China/India are the big buyers but all of SE Asia, the Mid East and Europe must be considered for all of these soverigns have a long history of fiat failures and there populations do not trust paper money...for good reasons.

"Vietnam to buy 5 tons of gold to ease market crunch"

If you want to understand the demand for PMs, look East... Americans are almost totally clueless about PMs and will only realize what has happened after it has happened...

newstreet's picture

Carthago delenda est.

choorles's picture

"The [way this] negative real interest rate story relates to gold is very interesting, because [people equate] the negative real interest rates with deflation and they equate deflation with an environment that is poor for gold. Historically, however,  negative real interest rates or ‘deflation’ are actually the best time to be buying gold … So gold is [increasing] in either deflation (which is really another word for hyperinflation), hyperinflation or inflation … So there is really a no lose situation. There’s no top on gold, because there is no amount of destruction that one can imagine won’t visit the fiat currencies around the world because the fiat currency grid is going to go the way of the dodo … There is no top on gold, $10,000/oz for gold, yeh of course, it could go a lot higher because fiat currencies are going to zero … It has run it’s course, it’s finished, it’s over, the 25 year paper bull market is finished”

Remember, it’s just a ride…

 The monetary revolution will not be televised. You need ¡SilverRevolución!

 Help us follow the paradigm shift towards a decentralized monetary system.

zorba THE GREEK's picture

I read this article earlier on 321 Gold and found it pretty well sums up most of the

extremely negative scenarios that have been bouncing around the Blogosphere for

the last couple of years. What frightens me the most is that, through a process of

eliminating unlikely outcomes due to unlikely actions by TPTB, it is basically the same

conclusion that I have come to believe. I continue to read on several sites hoping to

find another less dire, plausible outcome for society based on information that I was

unaware of or had overlooked. In the meantime, I have taken several precautionary

measures and will continue to prepare for the inescapable chaos and hardships which

lie ahead.

GFKjunior's picture

So what's up with Switzerland? I mean they seem safe and smart with tons of gold in their banks and a well armed populace. When SHTF it seems like a good place to be, or am I missing something?

Thomas Jefferson's picture

Attention to detail.  US gov has keys to the ViaMat vaults.

Barmaher's picture

US Gov has keys to the US ViaMat vaults.  Not the ViaMat vaults in Europe.

Sophist Economicus's picture

Yup. And they'll get a full marching band welcome at Zurich international and a ticker tape parade as they march to the vaults to carry the stuff back to the states

Pegasus Muse's picture

Wrote GoldMoney this morning on this issue.  Just got their reply.  The bolds are mine.



The last week or two there has been a issue floating around on Precious Metal websites.  In a recent interview with Jim Rickards on KingWorldNews either Jim or Eric mentioned something about 'the US government has the keys to the ViaMat Bullion Vault'.  Now I'm reading the same thing in the comment section of von Greyerz's latest article, posted on ZeroHedge:

You guys need to detail what the truth is on this matter and the potential impact for GoldMoney customers.  If the US government (or any other government) has access to the vault in which a customer's bullion is stored they may need to consider other storage arrangements.

Perhaps Mr Turk can address this on video so people will have the correct answer 'from the horse's mouth' so to speak.  Otherwise rumors will just continue to spread. 


pegasus muse


Dear Mr. Pegasus Muse,

Thank you for your message.

Please note GoldMoney will not offer bullion storage in any country where the government requires the vault operator to give the government a key to the vault, unless we disclose to our customers this condition of storage. 

We can confirm that this condition of storage does not apply to the vaults operated by Via Mat in London, Zurich and Hong Kong. If there is a change, we will notify our customers of this change as soon as we are advised.

GoldMoney operates on the island of Jersey – one of the British Channel Islands – and follows Jersey law. While the future cannot be predicted, it is worth noting that gold has never been confiscated in Jersey.

How gold confiscation would affect customers will depend largely on the scope and specifications of the restriction. For example, if gold were to be confiscated in the US, there may not be any repercussions for US customers holding gold in vaults outside the US.

It is therefore difficult for GoldMoney to mitigate against all possible outcomes. However we do aim to provide our customers with as many options as possible to enable them to diversify their assets by class, storage location, and by offering the option of taking physical delivery.

GoldMoney provides its customers with the facility to purchase gold, silver, platinum and palladium and the opportunity to diversify and optimise their investment portfolio. Furthermore, you have the ability to choose between storage locations in London, Zurich and Hong Kong, which affords geographical diversification.

Furthermore, GoldMoney operates under the laws of Jersey, one of the British Channel Islands, and is subject to the exclusive jurisdiction of the Courts of Jersey.

GoldMoney never discloses any customer details to any third party, government or tax authority and would not do so unless obliged to by law. There is no history of gold confiscation in Jersey, the British Channel Islands or the UK.

Jersey is a politically and economically stable jurisdiction that has become a major financial centre because its legislation relies upon the principles of common law, which prioritises property rights.

For additional information please refer to our Privacy Policy:

We appreciate you taking the time to share your concerns. Please do not hesitate to contact us if you have any additional questions.

With kind regards.


Senior Relationship Manager – GoldMoney

Bárðarbunga's picture

+1 Zorba

The Ponzi will break down. The big question is when. What has to happen to get it rolling?

On the author's use of "circa" I'm guessing he found himself a new word this week.

Doña K's picture

IMHO, it will unravel very fast, as soon as one peripheral European country bails out of the EU and prints its own money, or the German people throw out Merkel.

Circa=Castillian expression for approx. 

His use in English is incorrect  as it is not followed by a date.


7bit's picture

Judging fom his name the native language of the author is German. The use of the word "circa" for "approximately" would be absolutely correct in *german*, its used very often in the german language. This is probably just one of these "false friend" mistakes/mistranslations that happen to everybody who is not 101% versed in a foreign language.


Snidley Whipsnae's picture

The Ponzi is breaking down as we watch. Every week, and sometimes daily, we see headlines that would have been seen only in 'The Onion' four years ago.

Here is Jim Rickards on CNBC telling the bobble heads what is going to happen and, of course, the bobble heads are in denial. Rickards tells it like it is... Soverigns have to default on their bonds, big banks have to be broken up, bank stocks have to be defaulted on, bonds of big banks have to be defaulted on... Or we are all are in for 20 years of hard road.

The bobble heads say "we will go the muddle through route" with more printing, more fiat weakness, punish savers, punish Main St, etc. Rickards tells them that the WWW is going to stop that approach by soverigns, that everyone now has a megaphone and everyone is calling for an end to saving the banksters to the detriment of all others. Rickards tells them that gold will save the day and will be the new backing for new currencies...

The bobble heads are dumbfounded... lol...

AmazingLarry's picture

The whole article attempts to refute it's title: there's no goldwagon. 

Just for fun, I carried a $50 Eagle around with me one weekend and showed it to a number of people. No one had a clue what it was "worth." Only one person correctly identified it. 

But I agree, buy some gold plated clad, and try to flip it as real. You know it's the Amerikan way.



zorba THE GREEK's picture

Larry That would bring you bad karma, and the last thing you want to have when TSHTF is bad Karma.

Troll Magnet's picture

that is NOT the american way, my friend. that's the CHINESE WAY!

vast-dom's picture

Fuck gold! Silver is the move!

Manthong's picture

When I started really into this last year, mostly with Ag, $10,000 gold seemed absurd.

The more I learn about the fundamentals of the many dilemmas we are in, the more I am convinced that this number is reasonable and may very well be conservative.

I forget who said it, but one of the axioms I heard was “Gold will make you sleep well, but silver will make you rich”

Keep in mind that even with a 40:1 Ag:Au ratio $10,000 gold gets you $250.00 silver.

I find the arguments for the ratio to be lower, even to parity, credible.

That having been said, the circumstances leading to $10,000 gold require consideration of the Pb:PM ratio.


Doña K's picture

The silver drawback is the price to weight ratio when you're on the move.

A 5' long 1-1/4"D PVC pipe full of 1oz. of gold maple leaves = $1 Million - Painted dark gray in a roll bar of your Jeep or in the kitchen plumbing under cabinets and a thousand other ways to keep it close when you have to.



Manthong's picture

No argument on the weight and bulk of gold if you need to bug out with max value and lowest profile.

For less than absolute Armegeddon, the silver probably will provide the best bang for the buck as fiat fizzles.

PaperWillBurn's picture

The silver drawback is that silver is best used as a commodity. Central banks don't stash silver in their vaults..they store gold. A consumable does not make a good referance point. The global economy needs a new reference point and CB's are loading their vaults with it as we type.

Manthong's picture

"The global economy needs a new reference point and CB's are loading their vaults with it as we type."

Agreed, but..

Silver is speculation to be sure, but a good one.. it is slowly going away and that means it is becoming relatively more rare. The GS ratio is lilely to narrow and... silver alway was and always will be money.

Ketsa's picture

The problem with silver, at least here in Switzerland, is that you have to pay VAT on transactions.

Gold is not subject to VAT here. not sure about anywhere else.



Bansters-in-my- feces's picture

"also since the Government creates money out of thin air"...???

Stay away from the dope dude,,,,I'ts too strong for you.

dark pools of soros's picture

riddle me this..  if everyone is suppose to buy gold, then who is selling?  If the thought is to tell everyone to buy gold then wouldn't those people tell the sellers to NOT sell?

Is it the thought that 'the common man is getting over on the central bankers' by buying their gold stash?  hrmmm no

Are we all buying it up hot from the miner's depths? Well that is NEW gold so won't that dillute gold once the manic buying stops?

Or is this like any other greater fool theory and we are all just loading up to sell the bubble right before it pops??

Or, lastly, we are buying all the central banker's gold so they can use all this fiat money while it can still buy them hookers and coke. Then, when it is time to make a new currency they will just trade that new 'more valuable' paper for our gold so we can finally try to have some fun with those now worn out strippers and our old ass bodies?


just food for thought on why you are here and what your plan is

Hulk's picture

fiat money buys fiat gold...

greased up deaf guy's picture

please allow me...

if everyone is suppose to buy gold, then who is selling?

dealers who make their living on volume and private owners who think it's had a good run and is overpriced.

If the thought is to tell everyone to buy gold then wouldn't those people tell the sellers to NOT sell?

see above. they're making a market. by the way, who are "those people"? the only person you should answer to for your financial decisions is you.

Are we all buying it up hot from the miner's depths? Well that is NEW gold so won't that dillute gold once the manic buying stops?

like oil, production will follow suit once demand diminishes. my question to you is what will be produced more in the foreseeable future? gold or fiat?

Or is this like any other greater fool theory and we are all just loading up to sell the bubble right before it pops??

maybe, but to each their own. personally, i won't be selling any gold until there is something else of tangible value that i can quickly purchase after converting that gold to FRNs or whatever the bartering medium is at that time.

Or, lastly, we are buying all the central banker's gold so they can use all this fiat money while it can still buy them hookers and coke. Then, when it is time to make a new currency they will just trade that new 'more valuable' paper for our gold so we can finally try to have some fun with those now worn out strippers and our old ass bodies?

the sooner, the better ;).

Doña K's picture

There is a government obligation to sell coins. Of course they can stop if they want. Futures big game is played by those who need to liqidate for cash to be used as a medium of exchange like land or company aquisitions.

I for one, once I could buy a 65' ketch for 100-1oz gold coins, I become a motivated seller.

kito's picture

german business groups now pushing eurobonds. just a matter of time before fiscal consolidation in europe becomes reality

Thomas Jefferson's picture

Martin Armstrong offered this as a solution to the Euro crisis.   Interesting to see it being implimented so quickly.  Not surprised though.  The solution is always further consolidation of wealth and power.  Welcome to the NWO.

sgorem's picture

my gold stays with me. fuck switzerland. and i think the author was trying to say "circa jerk".

scratch_and_sniff's picture

Yeah, storing gold with the swiss, that worked out well for the jews.

doggings's picture

to be fair, they had bigger problems than their banks at the time

Pay Day Today's picture

Shit. That makes me worry now.