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Gold as a Crisis Hedge

Written by Gary North on January 20, 2012

There are millions of investors who still sit on the sidelines, wondering if they should buy gold. I have said yes, beginning in October of 2001.

This man agrees.

With gold closing above the critical $1,650 level and silver above $30, today King World News interviewed the man who told clients in 2002, when gold was $300, to put up to 50% of their assets into physical gold. Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. When asked about the recent action in gold, von Greyerz said, “We like the action and it’s exactly what we’ve been predicting. My view is that we have bottomed and we are on the way to much higher levels. We are seeing a bit of sideways action here, but it’s sideways to upward and I think that will continue. I like the pace, the fact that it’s not going up too fast, but I think we will see an acceleration to the upside in short order.”

Day-to-day moves are for commodity futures speculators to worry about. What about for the est of us?

“I look at the banks here in Europe and they are an absolute mess, even before the French downgrade. We deal with French banks and they’ve had their lines cut by billions and billions. They couldn’t trade, and that was before the downgrade. It must be even worse for them now. This is what you are seeing in a lot of banks around Europe.

This just confirms we are very near a massive package of QE here because if they don’t do it there won’t be any banking system left here in Europe. Because of that I’m seeing big buyers coming into gold and even bigger buyers becoming very interested. So there is definitely a shift.

We are seeing steady demand, even as gold was turning down at the end of the year. Now, in January, we are seeing demand keeping up, extremely strong. So, there seems to be a totally different attitude to gold now and I expect for there to be incredible demand for 2012. We are just seeing the very beginning of it.

He thinks hyperinflation is coming. I don’t.

Gold will play a role in the future when they realize the paper money is worthless, but, at that point, we will not see these present governments in power. The East understands gold, China understands gold, India understands gold, but the West doesn’t and sadly that trend will continue.

He thinks gold will save people. I don’t. If fiat money falls to zero value, guns and ammo and gardens in rural areas will be what you will want. Gold will help, but it will not save you. So, I don’t buy this scenario,

Individuals will become more and more aware of the fact that gold is the only way to protect them from what is going to happen. But at this point, of course, it’s only a very, very small minority that understands that. That will change as we go further along in this cycle.

The bottom line is you cannot expect to have anything deposited or held within the financial system that is going to be yours when the day of reckoning comes. Therefore, people must move their money out of the system and have it under their direct control, preferably in precious metals.

Some money in gold, yes. All your money? No. There are other assets you will need in that day of reckoning.

Warning: There will be more than one day of reckoning. There are many ways the Federal Reserve can ruin the economy.

Continue Reading on kingworldnews.com

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2 thoughts on “Gold as a Crisis Hedge

  1. What other asset will we need in the day of reckoning? When do you think reckoning day will occurr? It looks like the world financial system has so many weak spots that just one failure will trigger a domino effect. I would llike someone to give an educated guess when the day of reckoning will occur? How many will occur? When will these reckoning days occur? What impact will it have on the USA?

  2. Brando: It's already happened, The Feds/Gov. Are pumping newly printed monopoly money into the system, and now are getting another 1.2 trillion or so hike? They just got a hike. Fact is there is no chance for the middleclass to survive it without smart thinking and tough times. Chances are you are better off than most, I knew you can't keep borrowing from peter to pay paul, and keep the rest for your self. The Gov. hasn't failed, They knew it was unsustainable, They are buying time to get thier stuff in order, leaving the rest of us in the dark. So To answer your Question Think as if it was going to crash in about an hour. It should have happened already so sorry to say time is up. So do what you need to and do it now. It will look like Katrina for a while and never be the same again. Martial law will try to be inforced. But when people go without food for a few days they want yours at any cost, They need to eat and feed themselves, stores only have three days of food, and most of that will be gone in one day if not bought than stolen, currency will be worth nothing. Get ready to protect youself from the gov. and the people. Good luck..