by Egon Von Greyerz, Gold Switzerland:

There are no safe assets. In 2002 we recommended our investors to hold up to 50% of their financial assets in physical gold. Today in 2020, I consider that up to 100% is the right figure since there are no safe assets except for physical precious metals.

We are now at the end of the only truly global asset bubble in history, fuelled by a debt explosion of epic proportions. Never before have all major economies peaked together, powered by quadrillions of credit creation, money printing and derivatives.


Although the magnitude of this bull market is greater than anything seen before, the psychology of the current market is similar to previous speculative bubbles whether we take 1929, 1973, 1987, 1999 or 2007. At the stock market peak of these periods, psychology reached uber-optimism. In 1929 for example, the Yale economist Irving Fisher stated in the New York Times: “Stock prices have reached what looks like a permanently high plateau”. Three years later the Dow had lost 90%.

Whether markets peak now or climb slightly higher is irrelevant. Euphoric investors and computers might push the Dow to the psychological level of 30,000 or it might peak here. What is clear is that the turn is imminent whether it happens today or in a few weeks’ time. And once the turn is in, we are likely to see a 90% decline in real terms.


The catalyst for the coming market and debt collapse could be a number events. If the Coronavirus doesn’t miraculously stop spreading soon, it could very likely be the trigger for the world economy coming to a halt.

A Lancet study by the University of Hong Kong has estimated that the Chinese authorities have understated the Coronavirus epidemic tenfold. The study calculates a spread rate of 2.68 per case and a doubling in total numbers every 6.4 days.

Instead of the official figures of around 1,100 fatalities, there are other numbers stating 25,000 dead in total or even as high as 10,000 per day. During the 1918 Spanish Flu, 2.5% of the victims died or an estimated 50 million. The Wuhan figures indicate a death rate of 5% which would be extremely serious if correct. But that is very low compared to the Black Death which killed half of Europe’s population in the mid 14th century.

If the number of cases increases as fast as the Lancet estimates, the virus will quickly spread around the world. There are already cases on all continents and so far there are officially 49,000 cases in at least 25 countries. For example, five Britons in a French ski resort were infected by a Brit who had been to a conference in Singapore.


Currently 400 million Chinese are on lockdown. Based on the Lancet figures, all of China could be quarantined in a few weeks’ time.

But just as serious is that the Chinese economy is also on lockdown. Over 65% of the Chinese economy is shut down. More than 80% of the manufacturing industry is closed and 90% of the export industry.

We must remind ourselves that the Chinese economy is 17% of the world economy and any shutdown of the manufacturing engine of the world will have serious repercussions for the rest of the world. Also, Chinese debt has exploded. It was $2 trillion at the beginning of this century and is now $42 trillion. As the Coronavirus crisis spreads, a major part of this debt is likely to turn into junk.

Since the Chinese authorities are suppressing most data when it comes to the Coronavirus as well as its effect on the economy, it is extremely difficult to ascertain what the real figures are. Based on the various reports we receive, it is quite certain that the real figures are considerably worse than the official ones.


With severe pressures in the US and European financial systems, both the Fed and the ECB have started aggressive QE programmes. China will now have to start a substantial programme of liquidity injections to prevent a collapse of its financial system.

As the world’s manufacturer is on lockdown and a serious pandemic spreading around the globe, the rest of the world seems to live in cloud cuckoo land. It is quite unreal that the Dow just reached a new high and the Dax in Germany was not far from the high.

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