BONFIRE OF THE PAPER ASSET VANITIES & THE REBIRTH OF GOLD

By Egon von Greyerz

Founder and Chairman

March 27, 2025

The picture above shows the Bonfire of the Vanities (Falò delle Vanità)in 1497 in Florence. Objects of sin like art, books, cosmetics etc were burnt. Tom Wolfe wrote an excellent book with the same title in 1987.

THE WISE, THE UNLUCKY AND THE GREEDY

Some time ago, I wrote an article with the title: THE MOST IMPORTANT ARTICLE I HAVE PENNED.

It is a story about three investors, two real and one fictional (The Wise, the Unlucky and the Greedy). Their destinies are very different…

The article starts with Brutus’ speech in Julius Caesar about choosing the right current:

“…..AND WE MUST TAKE THE CURRENT WHEN IT SERVES, OR LOSE OUR VENTURES”.

WE HAVE FINALLY ARRIVED 

So, what do I mean by that?

Simply, we are now at the point when investors must take The Current or lose it all.

Let me just repeat what I have said many times:

Forecasting time and price is a mug’s game. But we all do it sometimes.

This is a lesson I have learnt after about 65 years of market experience. 

Instead of time and price, it is much more important to understand TRENDS and RISKS. 

This is what led me (in 2002 at $300) to purchase larger amounts of physical gold for ourselves and the investors we advised, based on our wealth preservation principles. 

Gold had then corrected for over 20 years, and a credit explosion was in the making. 

At the time, I told major clients to put more than 50% of their liquid assets in physical gold. They haven’t regretted it.

And today, for the first time in the last 25 years, main stream media and investors are starting to talk about gold. 

So, it has taken a quarter of a century and a 10-fold increase in the gold price for the public to wake up!

GOLD $3,000 

For some time, $3,000 has been an obvious magnet for gold, as I have written about many times. But $3,000 is certainly not a target – it is not even a price where gold will consolidate.

It is just a round figure where gold will not stop for long. As I wrote in a recent article: NEXT GOLD MOVE WILL SURPRISE THE WORLD.

Many investors have not bought gold recently as they have been waiting for a correction. But we have told investors that gold is very unlikely to pause at this level. Instead, once properly past $3,000, we are likely to see an acceleration.

Massively overbought stocks

Where I was wrong on the trend was in stock markets. I definitely thought that 2008 would be the start of a secular bear market, but massive money printing created miracles and fuelled markets for another 17 years. 

We were out of stocks since the beginning of this century which has been beneficial since gold has outperformed stocks even with dividends reinvested. 

So, instead of a market collapse in 2008, massive money printing and credit expansion have created the biggest stock market bubble in history. 

See the graph below of US Stocks to GDP. In the 2000 bubble top, Buffett’s indicator was “only”145%. That was when the Nasdaq fell 80%. Today, the US Stock-to-GDP is over 200%.

Another reliable indicator is bullish/bearish divergence. The S&P chart below shows a bearish divergence since 2018. This means that the Momentum indicator (RSI) has been showing lower tops since 2018 in spite of a much higher price. This is a very bearish long-term signal. 

But back to “WHY WE HAVE FINALLY ARRIVED”.

So, I have just explained that gold (and silver) is about to accelerate.

So, if we look at the Dow Gold Ratio (the Dow divided by Gold), back in the year 2000, the ratio was 45. It is now 14. The ratio has just broken a 12-month trend line and is now about to accelerate down. 

This means the Dow has fallen 69% against gold in the last 25 years. 

More importantly, if the ratio reaches long-term support at 0.5, it would mean a 97% fall from here.  But I doubt it will stop there.

That could mean Gold $20,000 and Dow 10,000.

Since the 1990s, I have privately talked about the inevitability of a collapse of the current monetary system, just like every monetary system in history has collapsed, without exception. The simple reason is, of course, the exponential growth of credit.

As the graph shows, Global Debt grew 75 X from 1971 to 2021. Today, it is around $360T. But if we add unfunded liabilities and derivatives which is a form of debt (when the derivative market implodes), then total debt and liabilities are around $3 quadrillion.

BONFIRE OF THE PAPER ASSET VANITIES & THE REBIRTH OF GOLD

So we are likely to see a debt collapse with bonds crashing (rates up), banks “borrowing” or blocking client funds or governments forcing bank accounts to buy 100-year bonds at ZERO interest. And obviously, the dollar will fall precipitously. 

At best, we will see a restructuring and, at worst, a collapse of the banking system. 

PRESERVE YOUR WEALTH WITH GOLD

If any of the above risks happen, investors in cash or securities will experience the biggest wealth destruction in history. 

So, to protect yourself against these risks, it is essential to take the following precautions. 

1. Don’t hold stocks, except for resource stocks. Remember that stocks held within the financial system are vulnerable to system failure.
2. Don’t touch any Bonds with a barge pool, including government bonds. Governments can NEVER pay the capital or interest with regular money. Only with massively depreciated fiat money. 
3. Don’t hold bigger amounts of Dollars, Euros, Yen or any currency in a bank. Cash deposits are at risk. In addition, the currencies will all fall rapidly. The Swiss Franc might be slightly better, at least early on. 
4. Only hold personal property and not investment property. 
5. Get out of debt if you can. 

We will likely see Capital Controls in many countries, including the US and EU. 

The main restriction will be that you can’t transfer funds out to, for example, buy a property or live abroad. 

BUY PHYSICAL GOLD AND SILVER

Hold your gold and silver in the safest jurisdictions and countries where there is a Rule of Law. Switzerland and Singapore are the most obvious. 

Also, you must have direct personal access to your gold and silver. 

Since we first invested heavily in physical gold in 2002 at $300 for ourselves and the investors we advised at the time, we have developed a state-of-the-art system also to help other investors. We now have HNW clients in 90 countries. 

For bigger investors in gold over $5 million, we have the biggest and safest private gold vault in the world in the Swiss Alps. This vault is nuclear bomb and gas attack-proof. It also houses servers for data protection. In our vaults in Zurich and Singapore, the minimum is $400,000. 

PROTECT YOURSELF NOW

DO NOT WAIT to buy your insurance in the form of physical gold and silver. Buy it now.

Insurance can never be bought after the event. 

In future articles, I will talk about:

GOLD vs Bitcoin, 

why gold is undervalued, 

why you shouldn’t store gold in Dubai, 

Silver, 

Swiss bank accounts, 

Trump and Wars, 

that European leaders hope the war will save them

and much more.

Finally, remember that family and friends are what life is about. So, helping others, especially in the difficult times ahead, is critical. 

Since the early 2000s, I have been standing on a soap box to urge investors to buy physical gold for wealth preservation purposes. Few have listened, as gold today is only a mere 0.5% of global financial assets. 

So anyone waiting to buy gold cheaper will either be left behind the goldwagon OR buy at a much higher price.