By Egon von Greyerz, founder of Goldswitzerland.com (Matterhorn Asset Management AG) and member of the board of directors of Gold broker.com.
On Sunday it was incorrectly reported that the JP Morgan Chase & Co. (NYSE:JPM) Gold vault on Broad Street had caught fire. Let me categorically state that even the world’s best pyromaniac would most likely fail burning down its vault. And let me explain why it is virtually impossible….
Gold vaults are constructed not to burn. Virtually all Gold vaults are made of reinforced concrete and other materials that are non-combustible. And the content of the Vault – Gold and other precious metals – are obviously not combustible.
All well-built Gold vaults are ground supported and built both on and of material that does not burn. All high-end Gold vaults also have fire extinguishers. But these are really superfluous since there is not enough perishable material in a Gold vault for a fire to spread.
Matterhorn Asset Management / GoldSwitzerland currently uses only vaults which are located under ground or inside a mountain. These type of vaults are normally much safer than vaults above ground in warehouse buildings. Vaults deep in the mountain are the safest in the world.
GOLD ON FIRE!
Yesterday the Gold market was on fire. The metal did what it was supposed to do. Several technical indicators were forecasting that gold would start its resumption of the secular bull market yesterday. And this happened right on cue with a $40 + rise. But that is of course only the beginning and we will see gold on its way to new highs with a more rapid rise starting in the autumn. But new highs is just the beginning and my long standing target of $10,000+ is still as valid as ever. With real hyperinflation, we will probably need to add a few zeros.
Silver is likely to outperform Gold substantially. With Gold at $10,000+, silver should be $500+. But remember that silver is extremely volatile and not for the faint-hearted. Also, it is money but silver is an investment and an industrial metal. For the end game Gold will probably be safer than silver. But this is of course a few years away.
So now we have the perfect symbiosis of technical and fundamental factors for the precious metal. With Japan, the Eurozone, the UK, the US, probably China and a few others ready to print unlimited amounts of money in coming years, GOLD WILL BE ON FIRE! And that fire will not and cannot be extinguished for several years.