QE, Hyperinflation & Gold

By Egon von Greyerz

Founder and Chairman

December 16, 2011

• The current correction in gold is technical. There is very little physical selling, and refiners have their order books full well into the second half of 2012.
• Technically, this correction could last until the end of the year, but it could end already at the end of next week. Support is at $1,530-50 and $1,410-20. Thus, we could go that far down, but this would be a golden opportunity to add to positions.
• Governments are petrified of deflation. They know the consequences, which are unacceptable to them.
• The market is smelling deflation. With no QE, we would have a deflationary collapse. No bank would survive a deflationary collapse. Nor would any government. There would be total chaos and no functioning financial system.
• Therefore, whatever governments say, there will be unlimited money printing led by the Fed, the IMF and the ECB, plus other central banks.
• QE will not solve the problem, only kick the can down the road. There is no solution, as I wrote in my latest piece “Deus ex Machina”.
• Worldwide QE will lead to currencies collapsing, a hyperinflationary depression and surging precious metals. Physical gold and silver (stored outside the banking system) are the ultimate method for preserving wealth.