I believe the world economy should have collapsed in 2008 were it not for a massive Hocus Pocus exercise by Western central banks. At that time, global debt was $125 trillion plus derivatives. Today debt is $325 trillion plus quasi-debt or derivatives of probably $2+ quadrillion.
Bottom line: We now have today a perfect setup for the coming wealth destruction scenario:
1. Global debt has gone up 80X between $4T in 1971 to $325 trillion in 2023
2. Bursting of the derivatives bubble could push debt to $3+ quadrillion
3. High interest rates and high inflation lead to sovereign and private defaults
4. Bubble assets like stocks, bonds and property will fall dramatically in real terms
5. Major debasement of USD and most currencies
6. Real assets – commodities, metals, oil, gas, uranium etc will rise strongly
7. Higher taxes, bail-ins, failure of pension and social security system
8. Central banks will fail to save the system leading to debt implosion and defaults
9. A deflationary depression will hit the West worst in a long term decline
10.The East and South (BRICS, SCO etc) will also suffer but emerge much stronger
This is the inescapable outcome for the Western world.
I am asked many times what do you do under such “wealth destruction” scenario in the making
Since I cannot forecast when the greatest wealth destruction in history will start, we need to prepare today. As I often repeat, you can’t buy fire insurance after the fire has started.
So now is the time to put your house in order.
Forget about gluttony or greed.
Forget about trying to get out of stocks at the top.
Forget about the old axioms that stocks and property always go up.
Forget about the notion that sovereign debt is always safe.
Just remember one thing the next however many years is all about “economic survival”.
If you haven’t made your money from ordinary investments in the last 20+ years, you are very unlikely to make it now.
And if you hang on to your portfolio of conventional investments like stocks, bonds and investment properties, you are standing the risk of a severe decline of 50-90% of your portfolio for a very, very long period.
More safe investments in the current climate are commodities.
Look at the chart below showing Commodities versus Stocks (S&P) years. We are looking at a 50+ year low.
Best stocks to hold would be in precious metals, oil, and uranium.
The king of wealth preservation is gold. Silver is very undervalued and thus has more upside potential than gold but is much more volatile.
For the best protection, gold and silver should be held in physical form directly and stored in the safest private vaults in the safest jurisdictions.
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