Egon von Greyerz, market analyst and founder of Matterhorn Asset Management, is predicting the collapse of the central bank system in the next few years due to an increasing issuance of currency and debt. Von Greyerz states that in the face of an economy with no buyers, the only hedge will be tangible assets, including gold and silver.
The Collapse of ‘Everything’
Egon von Greyerz, the founder of Matterhorn Asset Management, has recently expressed his worries about the situation of the central banking system in an article titled “The Everything Collapse,” where he details how the economy could collapse in the coming years, calling for people to hedge their savings in gold and silver.
Von Greyerz states that the current macroeconomic problems are derived from the uncontrolled issuance of fiat money and debt, manipulated by the movements of central banks.
He believes that the 2008 market collapse, the subprime mortgage crisis, the wild swing in the rates of treasuries, and the inflation boom have all been produced by the current central banking system. Von Greyerz states:
The debt which has built up has now reached levels which means the financial system is now too big to survive.
Von Greyerz explains that central banks are vigilant to stop bank collapses, as evidenced by what already happened with Silicon Valley Bank and Credit Suisse. However, he believes the issued controls, like the insurance set by the Federal Deposit Insurance Corporation (FDIC), which insures only 0.7% of the $18 trillion in deposits, are posed to fail.
This means governments will have to start printing more money in order to save the system.
Gold and Silver: The Ultimate Hedge
In his article, Von Greyerz notes that all assets are priced at the margin, and while investors exit the stock market and other markets, like the real estate market, it is possible for assets to plunge by 70% or even to zero. He states:
If there is one seller and no buyer in the housing market, the price of all houses will go to zero. The same is true for the stock market. But as investors run for the exit, most will not get through since there will at some point be no buyers at any price.
In this hypothetical situation, Von Greyers recommends paying all debts in order to avoid suffering bank repossessions, and jumping to tangible assets. However, in the long run, he recommends a flight to safety by investing in precious metals like gold and silver, before the demands leave the current supply at zero. He concluded:
Currently, all production is absorbed and any increase in demand cannot be met by increased supply but only by much higher prices. We could reach a situation when there is no silver or gold available at any price.
What do you think about the potential collapse of the financial system discussed by Von Greyerz and the value of gold and silver as protection for investors? Tell us in the comments section below.