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IPFS News Link • Gold and Silver

Gold - The Only Money That Can't Be Debased

• By Egon von Greyerz Gold Switzerland

In 1980, global assets, including property, were less than $20 trillion. Today almost 40 years later they have grown to $524 trillion. That is a compound annual growth rate of 9% which is quite remarkable for a 38 year period. Global assets have gone up 26 fold during this period.

In the same period, gold went from an average price of around $650 in 1980 to $1,300 today. So whilst global assets have gone up 26x since 1980, gold has just managed to go up 2x. Admittedly gold started at $35 in 1971 so it had already benefitted from a substantial rise by 1980. Nevertheless, since 1980, gold has been totally ignored both as an investment and as insurance or wealth protection. The massive increase in money supply through credit expansion and money printing has gone into conventional assets such as stocks, bonds and property but not into gold.

Gold has been a forgotten asset and investment for 38 years and has not even kept pace with inflation with gold's 1.8% annual growth rate since 1980. So there has been very little interest in gold whilst other investment assets have surged. We identified gold as a strategic investment for wealth preservation in 2002 at $300 and recommended to our investors to put a substantial percentage of their assets into gold with a minimum of 25%. Since then gold has been performing better than most investment classes. But the rise so far is totally insignificant compared to what is going to come.

BIGGEST WEALTH TRANSFER IN HISTORY

Because, between now and 2025, we are going to see the biggest transfer of wealth in history. The coming transfer will affect global investment markets in a way which will be totally shocking to most investors. All conventional markets, bonds, stocks and property will lose at least 50-75% and possibly more. At the same time, gold and silver will not just catch up with the underperformance since 1980. The precious metals will experience a totally unexpected investment mania of spectacular proportions.

As stocks and bonds fall precipitously, the markets will be overcome by a fear that the world hasn't experienced since the 1929 crash. But this time it is likely to be much worse.

WORLD FINANCIAL ASSETS (INCLUDING PROPERTY)

Table 1 below shows global assets at $524 trillion currently. A major part of that is property which is a massive bubble in many countries like the US, UK, Australia, New Zealand, China, Hong Kong, Sweden, Switzerland etc. Low interest rates and unlimited credit have driven property prices to dizzy heights. So dizzy that they are now ready to fall down to earth very fast.