Sunday , 21 April 2024

von Greyerz’ Advice Regarding Gold: “Don’t Wait For the Storm to Pass – Learn to Dance In the Rain!”

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…What we are seeing now is, in my view, a suckers’ rally in stocks that will end in a devastating and a massive shock for dip buyers and perma-bulls alike…just like in 1929 when the Dow plunged from 381 to 190 and then rallied 50% to 300 before crashing to 40 in 1932.

A bull market normally ends first with panic selling and then with a strong rally that sucks everyone back in – and this is exactly what we have just seen in the last 5 weeks:

  • The Dow Jones has rallied almost 6,000 points in the last 5 weeks and
  • the FAANG stocks (Facebook, Amazon, Apple, Netflix, and Google) have surpassed their all-time high.

It appears like happy days are here again, at least for the permanently optimistic stock market investors who believe that all the money printed by the world’s central banks will again create another 10-year bull market. 

The long term Dow chart below shows a recent turn in the quarterly MACD which is very significant. There have been two previous downturns in this indicator this century:

  1. The first one was at the end of the tech stock bubble in 2000 which led to a 40% fall in the Dow.
  2. The second one was during the subprime crisis in 2007 with a 55% fall.  

Today the MACD has turned from a much higher level and the fall is likely to be much greater.

Since I believe we are now at the end of a major 300-year cycle, or possibly even longer, the fall this time will be greater than the 1929-32 fall of 90%, at least in real terms, measured against gold.

  • During the coming hyper-inflationary depression the Dow might not decline >90% in nominal terms but gold will likely have a price with many zeros…
  • However, since I expect that the relatively brief hyper-inflationary period, maybe 1.5 to 3 years, will be followed by a deflationary implosion of assets and debt, we could very well see the Dow going down to the 500 to 1,000 level where it was in the 1970s until the early 1980s. That would be a 98% fall from here.

The massive money printing by the world’s central banks provides the perfect backdrop for the accelerated debasement of currencies and the rise of gold. Indeed, since 1971, the dollar is down 98% against gold, which is the only money that has survived in history and, in just the last 20 years, the dollar is down 83% vs gold.

…In just under a year gold has gained $350 and is now at $1,700. We are now likely to see a relatively fast move up to $2,000 and beyond…

Many people are asking what I am forecasting regarding the gold price for this year and coming years…but it is totally irrelevant if gold goes to $10,000 or $100,000 in today’s money or billions or trillions in hyper-inflationary money…because one holds physical gold to protect against a rotten financial system and currencies which will be printed to death…

My Advice

Don’t look at gold as a conventional investment and worry about where it is going or try to finesse the entry price….[because] the alternative of not owning gold is not worth thinking about…so don’t wait for the storm to pass – learn to dance in the rain.

The above article is an edited ([ ]) and abridged (…) version of the original article by Egon von Greyerz, to ensure a fast and easy read.  Please note that this complete paragraph must be included in any re-posting to avoid copyright infringement.
Editor’s Note: The author’s views and conclusions in the above version of the original article are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

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