In Business Continuity Planning organisations plan for worst case scenarios. The worst case scenario for this is worst than you think. It is a scenario which monetary historians and macro investors have been planning for for years.
Here is the worst case scenaro:
- China debt to GDP ratio is 300%
- Japan debt to GDP ratio is 238%
- US debt to GDP ratio is 107%
BASICALLY THERE IS SO MUCH DEBT IN THE WORLD TODAY THAT THE PRINCIPAL WILL NEVER BE REPAID
Sovereign states are borrowing more and more and only surviving by servicing the interest
- Now Covid-19 threatens to shutdown cities and nations
- No money spending means no cash flow
- No cash flow means debts don’t get paid
- Debts don’t get paid means people go bust, banks go bust, countries go bust
- Sovereign bonds will be worthless. Currencies will be worthless. What is a currency? Currency is an IOU where a government promises to pay you back
- Currencies will be worthless. There will be a currency reset
- All the people who lent the money are going to ask for their money back
Guess what will be the only asset that has value?
Because Gold is the only asset class that is not someone else’s liability and does not rely on any counterparty to perform.
My viewpoint may not be enough for you. How about an expert viewpoint?
Here is a viewpoint from Egon Von Greyerz the Founder of Matterhorn Asset Management.
Click on pic for to his article.
Click on video for an interview with him conducted by Grant Williams / Realvision.