Economic Commentaries

Stephan Ernharth, our lead strategist, shares his views in our Economic Commentary series.

Gold-Backed Chinese Yuan "Would be a Game-Changer”

M2 Money Stock/Money Supply in the US equals $11.8 trillion. The United states official gold reserves stand at 8,133.5 tons. Those 8,133.5 tons equal 261,498,092.6 ounces. 

To back every one of those Dollars of M2 Money supply with gold (dividing the $11.8 trillion of M2 Money Supply by the 261,498,092.6 ounces of official US gold reserves) would require a gold price of $45,160.94 an ounce.

Yes, the Dollar can be fully backed by gold - simply at a higher gold price.

Much higher.”


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Why a Greek Default is a Very Big Deal

“After years of kicking the can down the road, the Greek Debt Crisis has reached its moment of truth, just as I believe the 2008 financial crisis will also arrive at its inevitable moment of truth. The rapidly unfolding Greek Debt Crisis has dragged Europe by its ear smack-dab into the middle of its fiscal crossroads. And in my opinion, all wiggle room has evaporated.

Considering the far-reaching geopolitical, economic, and financial ramifications (that appear to have slipped right by the mainstream financial media), it's my opinion a Greek default would be quite a very big deal.”


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Countering the Counterintuitive Regarding Gold

“I’ll reiterate my very long-held belief that there has been permitted to exist a significant disconnection between the physical price of gold and the futures-based price of gold - in other words a bifurcated gold price...

...It’s also my opinion that the price bifurcation between the physical price of gold and the futures-based price of gold will be reconciled by the non-futures-based market – resulting in the physical price becoming the determining price. I believe that will be an interesting time indeed from an international monetary perspective, and for the entire precious metals sector. I firmly believe that day draws continually closer.”


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Illiquidity, Narrow Exit Doors, and Air Pockets

“The liquidity in highly priced stock and bond markets has grown increasingly thin, making both more vulnerable to exogenic and endogenic shocks, as well as to escalating risk aversion. Increasingly illiquid government bond markets recently and suddenly grew volatile as prices dropped and yields spiked over short, condensed periods of time. The recent volatility in bond markets (which we will examine in further detail) also spilled-over into stock markets.”

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Facts Are Stubborn Things

"I believe now more than ever it's time to be as discerning as possible, to question things, and to not simply accept information fed by the mainstream financial media.

A time to seek facts, whether we like what we find out or not. And to use positively the information we discover.”


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