May 3, 2018

by Egon von Greyerz

Strategic investments are made for the long run and with no intent of short term gains or concern of short term fluctuations. This kind of investing is based on buying undervalued and unloved assets and holding them for a very long term. This is what we did with gold in early 2002 for our investors and ourselves.

Having come down from $850 in 1980, not only did gold represent incredible value at $300 in 2002, but it was also the best insurance possible against a financial system which was turning increasingly unsound. Sixteen years later we are still sitting on our gold. We have seen a high of $1,920 in 2011 and a low of $1,050 in 2015. Have we ever been tempted to sell the gold? No, not for one second. We would rather buy more than sell an ounce.

We will patiently hold the gold until one or more of the following events have happened:

  • The financial system has been miraculously restructured and debt has vanished – IMPOSSIBLE
  • Major sovereign nations are running surpluses and have reduced debt substantially – NEVER
  • The financial system is backed by gold, guaranteeing the value of money – UNLIKELY
  • We can swap some of the gold for real assets at values 90-99% below today – LIKELY

We would never sell gold just because it reaches a certain price. Nobody knows today the level gold will reach. Will it be $10,000, $100,000 or $100 trillion. That depends on the amount of money that will be printed in the next few years. The nominal value of gold at that point is irrelevant. It is only the purchasing power that counts. When the crisis peaks, so will the gold price, although there will be some time lag. At that point it serves no point of course to sell the gold since the financial system will be on its knees. But it could make sense to swap some gold against safe high yielding assets at a bargain price or even against sound businesses that have survived the crisis and can be picked up for a song. There will be plenty of bargains around at that time.


It is these opportunities that investors should now prepare for. Sell your Tesla shares, Amazons , Facebooks and your government bonds and buy gold and then wait. The next 5-10 years will give us opportunities that only happen once every few hundred years. And due to the massive debt and asset bubbles we are in today, this time the bargains are likely to be greater than any time in history.

Sadly, only a fraction of 1% of the investment population can see this opportunity. But Remember the Golden Rule: “Whoever holds the gold makes the rules.”




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