by Egon von Greyerz, Gold Switzerland:

There are probabilities in markets and there are certainties. It is very probable that investors will lose a major part of their assets held in stocks, bonds and property over the next 5-7 years. It is also probable that they will lose most of their money held in banks, either by bank failure or currency debasement.


What is not probable, but absolutely certain, is that investors who buy the new Austrian 100-year bond yielding 2.1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} are going to lose all their money. Firstly, you wonder who actually buys these bonds. No individual investing his own money would ever buy a 100-year paper yielding 2{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} at a historical top of bond markets and bottom of rates.

The buyers are of course institutions who manage other people’s money. These will be the likes of pension fund managers who will be elated to achieve a 2{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} yield against negative short yields and not much above zero for anything else. These managers will hope to be long gone before anyone finds out the disastrous decision they have taken with pensioners’ money.

But the danger for them is that the bond will be worthless long before the 100 years are up. It could happen within five years.

There are a number of factors that will guarantee the demise of these bonds:

  • Interest rates are at a 5,000-year low and can only go up
  • Inflation will surge leading to hyperinflation
  • Sovereign states are bankrupt and will default
  • The Euro will go to zero not over 100 years but in the next 5-7

But pension fund managers will not be blamed for their catastrophic performance. No conventional investment manager could ever have forecast the events I am predicting above. (They are not that smart). Thus, they are totally protected, in spite of poor performance, since they have done what every other manager does which is to make the pensioners destitute. The average institutional fund is managed based on mediocracy. It is never worth taking a risk and do something different to your peer group. But if you do the same as everybody else you will be handsomely rewarded even if you lose most of the money.


Most people in the world don’t have a pension so they won’t be concerned. But for the ones who are covered by pensions, they won’t be much better off. Most pension funds are massively underfunded and the amount they are underfunded by is absolutely astounding. We are looking at a staggering $400 trillion gap by 2050 according to the World Economic Forum. The biggest gap is of course the US with $137 trillion. The 2015 US deficit was “only” $28 trillion which is 150{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of GDP.

PENSION DEFICITS – There will be no pensions for anyone

The reasons are quite straightforward; an ageing population, inadequate savings and low expected returns. These calculations don’t take into account the coming collapse of all the assets that pension funds invest in such as stock, bonds and property. It is a virtually certain prediction that there will be no conventional pensions paid out in any country over in 5 to 10 years and longer. The consequences are clearly catastrophic. The only country with a well-funded private pension system is India. Most families in India hold gold and as gold appreciates, this will protect an important part of the Indian population.


Global debt and unfunded liabilities are continuing to run out of control. With total debt at $240 trillion, pension liabilities at $400 trillion (by 2050), other liabilities such as medical care at say $250 trillion and derivatives at $1.5 quadrillion, we are looking at a total global debt including liabilities of around $2.5 quadrillion.

Read More @