In this opening MAMChat for 2024, Matterhorn Asset Management principles, Egon von Greyerz and Matthew Piepenburg, take a sober look ahead at a macro environment riddled with undeniable event-risk—from geopolitics and asset bubbles to debased currencies and distrusted global leadership. None of these facts are pretty, yet they point the way to protective thinking as well as open appreciation in precious metal markets for the coming year.
Egon opens with a sober analysis of geopolitical risks emanating from the Ukraine and Middle East to inflamed election cycles in socially fractured nations like the UK and U.S. An obvious pell-mell of both predictable and unpredictable events in any of these areas can and will have headline-making impact on our personal and financial security. In addition to such geopolitical vulnerabilities, investors are crawling toward open market, currency and rate market risks. As Egon reminds, the temporary and rate-cut-driven euphoria in bloated stock markets can easily and inevitably lead to disaster in a setting of undeniable risk asset bubbles and increasingly distrusted sovereign bonds like the UST.
Matthew sees similar ripple effects in global markets, all of which emanate from absurd debt levels across the globe in general and from within the US in particular. The increasingly obvious gap between fantasy (“resilient markets” or “transitory/defeated inflation”) and cold reality is getting harder to ignore or politically white-wash. Gold, despite the traditional headwinds of positive real rates, rising yields or a relatively strong USD, has been making record highs because the world is openly distrustful of US Dollars, IOUs and failed foreign policy.
Matthew highlights the record-breaking levels of central bank gold purchasing and UST dumping as clear signals of this distrust. In addition, the obvious weaponization of the mainstream media to hide open lies from within the CDC, the DOJ and other US agencies have truncated American credibility. Even recent attempts to weaponize the 14th Amendment to manipulate the democratic process (however messy) have tarnished US credibility in the wake of disastrous foreign policy failures from Afghanistan to Kiev, and all in the backdrop of an historically embarrassing leadership vacuum at the White House.
Turning specifically to the subject of physical gold, Egon and Matthew trace gold’s cyclical price moves and place the same into the current context of the foregoing (and enhanced) event risks. Despite rising by 8X against the major currencies since Matterhorn was founded, gold, as well as its use and power in a backdrop of monetary policy failures, remains misunderstood by the majority of investors.
As the same central banks which destroyed fiat money are now stacking physical gold, precious metals are currently and uniquely poised for significant moves north to not only serve as wealth preservation assets, but also as wealth enhancement assets. In this backdrop, Egon and Matthew further remind that the despite the critical importance of understanding WHY investors should own gold, it is equally important to understand WHERE and HOW gold should be held (and not held) in a setting of objective banking, currency, market and political risk.
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