- A Stock Market Collapse and Surge in Gold is Imminent
by Egon von Greyerz, http://www.24hgold.com/
At last we are here. It has been a long wait for gold and silver holders. For the wealth preservationists who have held gold/silver since the beginning of the 2000s, it has just been tedious since the highs in 2011. What has happened in the last four years in the world economy has confirmed the importance of capital preservation. But for precious metals investors who came in nearer the top, it has clearly been a nerve racking time.
Whenever you invested in gold or silver won’t matter in the next few years. Because we are likely to very soon start the rise of the precious metals that in all likelihood will lead to new highs by 2016 or maybe even before.
Governments are destroying the value of money
Since 2008 central banks, governments and commercial lenders have been competing in throwing cheap or free money at the world of an unprecedented magnitude. They have increased world debt in the last 7 years by almost 50% to nearer $ 220 trillion. So that is a fresh $ 70 trillion that has been created from nothing. No goods were produced, no services were provided against these $ 70 trillion. Money is supposed to be a medium of exchange and a store of value. It does act as a medium of exchange today but since governments are determined to mismanage the economy and to issue fresh money whenever they run out, it is the most useless medium of exchange imaginable.
Just in the last 100 years since the creation of the Fed, all currencies in the world have lost 97-99% of their real purchasing power. Any cash saved for the last 100 years is today virtually worthless.
That automatically deals with the point of money NOT being a store of value. As long as the world has irresponsible governments, and that is the rule rather than the exception, then money will never be a store of value. So paper money, although convenient, is useless as a medium of exchange for normal people. For governments it is a convenient short term method for buying votes. For savers it has been a disastrous store of value but for the wealthy and the risk takers it has been a marvellous way of multiplying wealth using leverage and debt.