Greyerz - Despite Manipulation, Swiss Gold To Become Money

Today Egon von Greyerz spoke with King World News about the, “... incredible amount of intervention and manipulation (in the gold and silver markets).” Greyerz, who is founder and managing partner at Matterhorn Asset Management, also spoke with KWN about an initiative to make gold money in Switzerland, “It is an initiative that will introduce a Swiss gold coin as a parallel currency.”

Here is what Greyerz had to say: “It’s ridiculous, Eric, what is happening now. There is an incredible amount of intervention and manipulation (in the gold and silver markets). I know you’ve had these superb interviews with the ‘London Trader,’ but just looking at the screen, at every important level, the gold and silver prices are being attacked and there is selling taking place.”

“Every time COMEX opens, it’s the same thing -- you see selling. So there is clearly short-term manipulation, but it makes no difference whatsoever. If you look at the gold price, in combination with world liquidity, you see that gold is going up hand-in-hand with increased liquidity.

That will continue, Eric, and since the money printing will accelerate, it’s very clear the gold price will also accelerate....

“We have another eurozone meeting starting today, and as usual, Eric, they won’t agree on anything. They can’t. They are incapable, politically, to agree on anything. As I’ve said, money printing will only start in earnest, in Europe, out of a panic situation.

In Spain today, bad debts are worse than ever. Bad debt represents 10.5% of loans outstanding. That’s 178 billion euros. That is just beginning in my view. It’s going to get a lot worse. Of course that money will never be repaid. In Greece we have another strike, this is protesting against austerity. Sadly, the problems will continue in Europe.

There are real problems in the US, Eric. We have a debt that can only continue to grow. Neither presidential candidate has the political will or the ability to reduce the debt. It would be political suicide for either of them to do it. So austerity is not an option in the US.

Look at what’s happened in the last few years. Since Bernanke became chairman of the Fed in 2006, during those six years the debt has gone from $8 trillion to $16 trillion, while GDP has gone from $12 trillion to $16 trillion. So debt has increased by $8 trillion, while GDP has only increased $4 trillion.

So it takes more and more debt to produce less and less return. Without money printing taking place in the US, GDP would go backwards. And since the deficits are increasing, so will the money printing. We will see even more debt created in the next few years. I’ve been talking about tens of trillions of dollars (of additional money creation), and I think that is the reality.”

Greyerz added this regarding Switzerland and their gold activities: “Eric, Switzerland has had a tradition of refining gold for a long time. Out of the top six refiners in the world, the top 6 refiners produce 90% of all refined gold, and four of those six refiners are in Switzerland.

So there is a longstanding tradition for Switzerland to produce gold. This is why Switzerland must be looked upon as a country which will not confiscate gold, and not tax gold in a way that other countries do. On top of that there are actually two initiatives taking place (in Switzerland). Both of them are initiatives to introduce gold as a form of currency. One initiative would make the Swiss currency backed by the government gold up to 20%.

But there is another one which in my view is very interesting. We are actually supporting that one. It is an initiative that will introduce a Swiss gold coin as a parallel currency. This would be approved by government. There have already been discussions with various people in Parliament who are looking upon this very positively.

People could use it (gold coins) as money. And because of the tradition of saving and investing in gold in Switzerland, I think it has a very good chance (of passing). Of course that would mean Switzerland would be very unlikely to ever confiscate gold if this initiative passes.”