Published on May 12, 2015
What could cause the gold market to erupt? Look no further than the bond market says gold expert Egon von Greyerz, “I had somebody, in the last few days, say to me we should probably write off all that debt, and forget about it and write it off, but there is another side to every balance sheet. If you write the debt off, what about all the people lending against that debt? What about all financial institutions that are leveraged against that debt? You are talking about government bond market of something like $60 trillion. The total bond market worldwide is over $100 trillion. So, if you think about that $60 trillion just in government debt, then you look at what the investors have done with that debt. That is collateral for leveraging 3, 4, 5, 10, 20, 40, 50 times, depending on the institution, and if the values of that debt start declining and it is guaranteed to decline . . . and we haven’t even talked about the derivatives, the combination of all that, and the leverage of the implosion will be so big the world will never cope with that.”
So, if so-called collateral of the bonds (debt) is impaired, that leaves gold as the last man standing as the anti-debt. Von Greyerz contends, “The trigger will never be gold. The move up in gold is the consequence of these problems.