6-1-2017 Dow/Gold Ratio 17 to 1 (rounded)

GOLD’S DAYS OF GLORY BEGINNING AS DOLLAR’S ARE ENDING

by Egon von Greyerz

Since the 2011 tops, precious metals investors have had their patience severely tested. Six years later, silver is down 66% from the $50 peak and gold 35% off the $1,920 peak. We mustn’t forget off course that these metals started this century at $280 and $5 respectively. But that is no consolation for the investors who got in near the highs. The best time to buy an asset is when it is unloved and undervalued like gold and silver were in the early 2000s. What few investors realize is that the current levels of gold and silver, when real inflation is taken into account, are very similar to where the metals were in 2000-2. Thus gold at $1,265 and silver at $17 is an absolute bargain and unlikely to remain at these levels for long.

With most asset markets surging since 2009 why haven’t gold and silver. To answer that question, we need to take a slightly longer perspective. Since the beginning of this century, gold has outperformed most asset classes. The Dow for example is down 61% against gold since the beginning of 2000. Thus, gold has been an outstanding investment as well as being the ultimate wealth preservation asset in the 2000s.

6-1-17
Updated Monthly

Secular Market Top - Since January 2000

From High to Low

+339.2% Gold

+207.8% Transports

+156.4% Utilities

+  88.8% Oil
+  82.7% Dow

+  64.2% S&P 500 

+  63.1% Swiss Franc's  
+  55.9% 30yr Treasury Bond 

+  52.3% Nasdaq

US government suppress gold to hide world’s biggest Ponzi scheme

Governments are suppressing the gold price to conceal their fraudulent mismanagement of the economy. Chronic deficits like the US has been running for over 55 years combined with money printing to cover the debt, is totally scandalous and the most flagrant Ponzi scheme ever created in history. 

Dollar turning down – an ominous sign

Often when markets turn there is a catalyst. The interesting observation is that currency markets are much more intelligent than stock, bond or metals markets. The main reason is that currency markets because of their size are very difficult to manipulate except when all central banks coordinate intervention. But today there is very little willingness from China or Russia for example to cooperate with the US. And even the US wants a weaker dollar. Trump’s election was taken badly by currency markets since the dollar turned down soon after his victory whilst stocks continued to boom.

Major turns in markets later in 2017

So it is likely that we will see major turns in all markets either before the summer ends or possibly we get final moves ending in the early autumn. In either case, we will soon see in 2017 the beginning of collapsing stock markets around the world together with a strongly falling dollar. Bond markets will also come down in spite of central bank attempts to keep interest rates low.

The main beneficiaries of the coming crisis will be of course be physical gold and silver. Central banks will lose their ability to manipulate these markets and we will realise what the real price of gold and silver is. It is likely to be multiples of the current price. There is still time to protect assets against the coming shocks but that time is very, very short.

DYI