GOLDEN TIMES AHEAD
BUT ONLY FOR OWNERS OF PHYSICAL GOLD
by Egon von Greyerz
In this month’s newsletter we will discuss why physical gold is the most important and probably the only asset to protect investors’ wealth from total destruction in the next few years. Gold will not only preserve investors’ wealth, it will also continue to greatly enhance their wealth just as it has done for the last ten years. In 2002 Matterhorn advised investors to put up to 50% of their liquid assets in physical gold. Since then gold has appreciated over 200% against most currencies. But we believe that the big move in gold is still to come as we
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The bankrupt saving the bankrupt
by Egon von Greyerz
Who will save the UK?

Last month we said that the UK will follow Iceland in a hyper inflationary financial depression. Just one month later our predictions are being confirmed both by events in the UK economy as well as by forecasts from the IMF several economists and money managers.
If we look at the chain of UK debtors, every link is on the verge of bankruptcy.

The UK consumer debt is higher than GDP and unsecured personal debt is twice the level of the rest of Europe. The UK consumer debt has been built up during good times and there is no possibility that this
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2009 – A YEAR OF MONEY PRINTING,
INFLATION AND FINANCIAL TURMOIL
by Egon von Greyerz
In our December 2007 report we forecast “a major recession or depression for the world economy in the coming years” as well as “serious problems in the world’s financial markets with the banking system fighting for survival.”
Sadly this has all come to pass but the trends that started in 2008 are only the very beginning of a major change of trend that will dominate the world economy for many years. It will be devastating and life changing for most of us but there are ways of easing the pain by taking the right decisions which we will discuss
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GOLD MARKET UPDATE
Gold had a significant break on Friday 21 November. It broke out of a trading range to a closing high of $ 800.
But more importantly Gold made new weekly closing highs in many currencies including the Pound and the Swedish Kroner and the Euro. Whilst the world’s stock markets in 2008 have lost between 40% and 70%, gold has gained against all major currencies except against the dollar. The table below summarises Gold’s performance in four currencies. Since the lows in the second half of 1999 Gold has gained between 169% and 242% in these five currencies or 18% to 26% annualised.
Gold has also outperformed all major stock
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“There is a tide in the affairs of men Which taken at the flood, leads on to fortune. Omitted, all the voyage of their life Is bound in shallows and in miseries. On such full sea are we now afloat. And we must take the current when it serves, or lose our ventures”
W. Shakespeare, Julius Caesar, Act 4

FORTUNE OR MISERIES

The current financial crisis will have a major impact on virtually every person in the developed world as well as in the developing world. We are today standing at crossroads in our personal lives and affairs. The decisions we take today will either lead us to “fortune” or “miseries”.
Do not for
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MELTDOWN
by Egon von Greyerz
RESCUES

Central banks and governments are now in a frantic state to save banks and financial entities that are falling like dominos on an hourly basis. It is almost impossible to keep up with all the businesses that have collapsed worldwide only in the last week. The authorities around the world have no choice. They will print any amount of money to save whoever needs to be saved. Also the whole world is waiting for the US rescue package of $ 700 billion to be passed. This might help for a few days or weeks but not much longer

Let us be very clear; no rescue package or action
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NO, THE EMPEROR HAS NO CLOTHES
by Egon von Greyerz
MELTDOWN
For anyone who has been reading our reports in the last few years it comes as no surprise that the banking system is crumbling. In the last week we have seen AIG being nationalised, Lehman go bankrupt, Merrill Lynch swallowed up by Bank of America and HBOS bought by Lloyds TSB. The week before Fannie and Freddie were nationalised.

We have been warning investors that the banking system is bankrupt and have named all the above names and some others as being vulnerable. So finally the world has realised that the Emperor Has No Clothes. What is happening now is not surprising. What
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MARKET UPDATE
We are currently going through a correction in all markets. Dollar up, precious metals down and stockmarkets up. This is a typical thin summer market shake up with exaggerated moves due to the fact that most of the heavy investors and traders are on holiday. Therefore central bank intervention to boost the dollar and computerised, black box trading are currently managing to push the markets further than normal. But remember that central banks run out of ammunition very quickly and the black boxes are lemmings just following any short term trend.

The corrections in the precious metals, albeit always unpleasant to experience, are totally normal. We have seen it many
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GLOBAL WARNING
by Egon von Greyerz

In the last few days various reports have been published from organisations such as the BIS (Bank for International settlement in Basel), Barclays Bank, Royal Bank of Scotland (RBS). They are basically all saying the same thing namely that the world financial situation is extremely precarious.

BIS says: “The current market turmoil is without precedent in the postwar period. With a significant risk of recession in the US, compounded by sharply rising inflation in many countries, fears are building that the global economy might be at some kind of tipping point.” BIS goes on to say: ”The magnitude of the problems yet to be faced could be
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HOW TO SURVIVE AND PROSPER IN A STAGFLATIONARY ENVIRONMENT
by Egon von Greyerz
Today’s financial world is a minefield. There is massive divergence in performance in different markets and sectors; European stockmarkets are down around 15-20% this year, US slightly less whilst some Asian markets are down in excess of 30%. Certain sectors such as Banks and Property are down 50-80%. On the other hand we have seen substantial gains in commodities, especially food and energy (crude up 42%, corn up 59%) and also in precious metals. These trend are likely to continue for at least 2-3 years and probably a lot longer during which time commodities (especially precious metals) will outperform
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