Debt, Currency Debasement, Inflation & War—History Repeating Itself

By Egon von Greyerz

Founder and Chairman

October 12, 2023

In this brief yet substantive MAMChat, Matterhorn Asset Management principals, Egon von Greyerz and Matthew Piepenburg, address the overlay of escalating geopolitical tensions, oil markets, currency direction and, of course, gold’s critical and increasingly obvious role in preparing for the same.

Egon opens by asking a repeated question: “Is this fall the fall of falls?” Specifically, he addresses rising risk levels from inflation forces, unsustainable debt levels and toping markets to banging war drums, which sadly, are a fundamental symptom and aspect of debt cycles and debt crises. Naturally, tensions in the middle east will have ripple effects in oil markets which in turn impact the USD and hence gold, a theme which Matthew addresses in greater detail.

Specifically, Matthew discusses the double-barreled stresses on US oil production as a result of increased CAPEX costs on the back of Powell’s rising rate policies and the negative impact Biden’s pro-Green, anti-oil policies have had on US oil production. Strategic Petroleum Reserves, last year at over 650 million barrels, are now clocking in at 350 million barrels, and thus getting dangerously closer to supply-driven price hikes. Adding insult to injury, we are also seeing sanctioned nations like Iran, Venezuela and Russia selling oil outside of the USD to oil-thirsty nations like China, all of which point toward a slow drip away from the Petrodollar, which will impact Dollar-demand. Longer term, this will mean more artificial USD production and hence currency debasement in favor of precious metals.

This all-too-familiar (as well as historically-confirmed) interplay of debt, currency debasement, inflation and war is theme to which Egon returns in the concluding remarks. Gold, of course, can not and will not solve all of the myriad problems—political, military and social—making headlines at increasing speed today. Nevertheless, gold’s role as a preservation asset against undeniably weakening fiat money around the world is now undeniable. As Matthew then adds, once the role of gold is fully understood, it is equally critical for investors to understand the best jurisdictions to store this asset as well as the need to avoid paper gold in ETFs and gold “storage” in fractured and levered commercial banks.