A Cyclical Choice: Nature’s Money vs. Man-Made Disasters

By Egon von Greyerz

Founder and Chairman

July 28, 2024

In this latest Gold Matters discussion, VON GREYERZ principals Egon von Greyerz and Matthew Piepenburg squarely address the rising symptoms of a financially and politically unstable financial system reaching the end of an openly embarrassing cycle reminiscent of prior cycles, from Ancient Rome to today.

Piepenburg gives an American perspective on the dispositive evidence of an American crisis, citing the toxic levels of both governmental and consumer debt data. In addition, signals of a looming banking crisis (underwater UST collateral combined with massive credit risks and non-performing loans) and dangerously narrow equity markets suggest far more pain than pleasure ahead for families, citizens and investors.

As von Greyerz reminds, however, the stressors and failures facing the US extend well beyond its borders into Europe and beyond. The EU merely (and wrongly) follows US policies to their own detriment, whether in terms of monetary reactions to Fed policies or foreign policy fiascos, including the backfiring sanctions against Russia. Meanwhile, signs of open political fractures in the UK, France, Germany etc. increasingly suggest that majority rule (i.e. democracy) in Europe has been eclipsed by a patchwork of coalition governments (from London to Paris) which make less and less sense. Instead, this open and sustained level of political mediocrity (from DC to Brussels) is just more evidence of a political and financial system in open decline and at the end of a cycle.

Piepenburg shares similar concerns, and underscores the fact that financial and political disaster is not a looming or pending event, but one taking place in real time—i.e.: Right now.  It is often hard, he says, to see history playing out when one is right in the middle of it, but the changes we are seeing in markets, banking, inflation and, of course, currencies are “frog boiling” us toward clear financial decline.

This currency “frog boil”, of course, has massive implications (from both math and history) for owning physical gold outside a precarious banking system and held privately in one’s own name. Given that gold is not only real money, but “nature’s money,” the case for something natural rather than man-made makes historical and common sense, as it is the one asset that man can not create (or distort) at will.