Greece and the Cemetery for Your Wealth

Larry Edelson

The Greek default is merely the opening act of the worst sovereign-debt crisis in history. By the time it comes to its conclusion, roughly five years from now, the crisis will have enveloped — and destroyed — the Western world governments of Europe, Japan and the United States.

Government (sovereign) bond markets will be destroyed. So much so that in the June issue of my Real Wealth Report, I told my subscribers that  …

Over the next few years I expect government bonds to easily lose as much as 50 percent of their value, and possibly much more. No amount of yield they could possibly offer will save you. Not even if you live to 200 years old.

Owning any sovereign debt of Europe, Japan, or the United States, I said, would be akin to creating a cemetery for your wealth.

From Greece, the crisis will spread to the other heavily indebted countries of Europe and the European Union.

Take Italy, for instance, which owes 32 percent more than its economy produces in a year. Portugal, 30 percent more. Cyprus, 8 percent more. France, indebted to the tune of 98 percent of its GDP. Ireland, 110 percent.

And those figures don’t even include “unofficial” debts and IOUs, which are multiples higher.

As Europe starts to go down the drain, the crisis will then spread to Japan, where government debt is a whopping 230 percent of the country’s GDP.

And once it becomes obvious that Japan too will eventually default, Washington will no longer be spared.

The most indebted government in the history of civilization, Washington, is in debt to the tune of more than $200 TRILLION — more than ELEVEN times the entire output of our economy.

Let me give you a little more insight on the sovereign debt crisis that’s now starting. Also from my June Real Wealth Report, the big question I pose — and answer — is this  …

Where Will the Massive Capital That Flees Government Bonds Go?

The frightened trillions that will stampede out of government bond markets has to go somewhere. So let’s trace it out logically. Will the capital that flees government bonds in Europe, Japan and the United States go to …

A. Cash under the mattress? Some of it, yes. But certainly not the bulk. Savvy investors always want to put their money to work somewhere for some yield and potential gains — even in the worst of times.

In the long run, conditions are bullish for U.S. stocks.

B. The stock market? Yes, a major portion of it will be invested in the U.S. stock market. We’ve already seen it impact the stock market. It’s the chief reason the major indices are so firm.

It does not preclude a selloff in stocks, which I still fully expect. Especially as jitters over a looming Fed rate hike continues.

But in the longer run, the implosion of government bond markets is going to be extremely bullish for the U.S. stock market.

The U.S. stock markets are the last bastion of capitalism, and the deepest liquid market on the planet.

C. Real estate? Absolutely. Don’t fall for any claims that rising interest rates — as a result of falling bond prices — will kill the real estate market again. It won’t. It will largely have the opposite impact, driving real estate prices higher!

How so? It’s simple: As the cost of mortgage money begins to rise, pent up demand for property will come pouring out of the woodwork. After all, if rates are going to rise, then you’re far better off buying now rather than later.

Naturally, different locations in the U.S. and around the world will fare differently. And you want to buy real estate based on location.

But to think that real estate will implode as interest rates start to rise and the sovereign bond markets implode is simply dead wrong. Real estate, as a tangible asset, is going to do just fine, opening up all kinds of new opportunities for you.

D. Foreign stock markets? Over the next few years you will see Asia’s markets double and even triple, offering incredible opportunities, largely due to a wholesale exodus of capital out of Western government bond markets.

E. Natural resources? Although deflation still has the upper hand on a macroeconomic basis, and will for some time, mark my words …

In the not-too-distant future, capital will become so frightened over the collapse of the Western world’s government bond markets — and the inevitable bankruptcy of Europe, Japan and the U.S. — that …

Natural resources, gold, silver, oil, coal, copper, nickel, food, timber, water, platinum, palladium, and more … will once again, explode higher.

Not because of inflation. But because the world’s largest governments will be going down the tubes.

It’s coming, and it’s not far off.

Best wishes, stay safe, and stay tuned …

Larry

Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader. Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.

Comments 49

Manny July 1, 2015

I can taste it. I really can...

$1,000 gold July 1, 2015

it's not a $200 trillion debt, larry it's $20 trillion: http://research.stlouisfed.org/fred2/series/FYGFD

craig lipinski July 1, 2015

The United States Government does not use GAAP (Generally Accepted Accounting Principles) accounting. The $200 Trillion Larry speaks of includes all the unfunded liabilities the USA has racked up. Primarily made up of paying for: Medicaid, Medicare, Social Security and a bunch more, see story below. http://www.npr.org/2011/08/06/139027615/a-national-debt-of-14-trillion-try-211-trillion

$1,000 gold July 1, 2015

the entire world's wealth combined would barely reach $200 trillion. it's not me that's delusional.

Mephisto July 1, 2015

don't bother. $1000 is a troll and just wants to cause trouble.

$1,000 gold July 1, 2015

i'm not a troll, and i'm not a troublemaker. you say you never listen to me anyway, so what difference does it make?

Ed July 4, 2015

It's actually more with unfunded liabilities & IOUs

$1,000 gold July 4, 2015

look at it like this, ed. houses in our country once sold for as little as $20 thousand that decades earlier were built for a little as $2 thousand. likewise, someday we'll look back on our country's $20 trillion debt like it was $2 trillion debt ... and so on. it's all relative.

$1,000 gold July 1, 2015

also, gdp is $16 trillion: http://research.stlouisfed.org/fred2/series/GDPC96/

George N July 4, 2015

fishing. Mr.$1000 gold, that would take 12.5 yrs.

$1,000 gold July 1, 2015

which means the deficit is rapidly coming under control and will soon be a surplus: http://research.stlouisfed.org/fred2/series/FYFSD

Mephisto July 1, 2015

We can always count on a laugh from you and your ludicrous delusions.

$1,000 gold July 1, 2015

the chart speaks for itself. no need to listen to my delusions.

Mephisto July 1, 2015

We don't listen to you anyways. No problem there.

$1,000 gold July 1, 2015

good idea, if you think i'm delusional.

Rod Smith July 1, 2015

I'm so glad we have such well informed guys on the street that can keep Larry corrected when he misquotes figure!!!!

$1,000 gold July 1, 2015

thanks, rod. i'm glad to see someone is listening to me.

Me July 9, 2015

I do not understand why you keep reading Larry's posts when you think he's wrong! Any fool soul just stop reading this, or is there something you find of value from Larry? Perhaps you have too much time to waste - go play some golf or learn how to. - Best

rob July 1, 2015

Greece won't be allowed to default,. far too important for Europe and NATO,,

$1,000 gold July 1, 2015

maybe it's greece that's getting kicked out, eh?

rob July 2, 2015

they wont be kicked out and they know it,.

rob July 2, 2015

they wont be kicked out and they know it,.

$1,000 gold July 2, 2015

maybe, maybe not. i don't know. we'll soon see. greece's situation is not their fault. had they not joined the euro greece would have the ability to deflate their currency. as it is now, greece is at the mercy of someone else's currency. no country should ever put themselves in a situation like this.

randy July 3, 2015

not their fault?? you mean they didn't have a choice of joining or not??

$1,000 gold July 3, 2015

joining the euro sounded good to all the members at the time, randy. but i imagine the euro is doomed as an experiment that won't work. every country needs it's own currency and own central bank to regulate its own economy. this is why a world currency will never happen. never, ever will their be a world currency. you can count on that.

craig lipinski July 1, 2015

The United States Government does not use GAAP (Generally Accepted Accounting Principles) accounting. The $200 Trillion Larry speaks of includes all the unfunded liabilities the USA has racked up. Primarily made up of paying for: Medicaid, Medicare, Social Security and a bunch more, see story below. http://www.npr.org/2011/08/06/139027615/a-national-debt-of-14-trillion-try-211-trillion

$1,000 gold July 1, 2015

my house will be worth ten times more by then too. so you can see how we can successfully inflate our way out of this debt.

Folly July 1, 2015

Larry's old tactics, of being a guru with all the answers in the middle of a fake financial crisis. I say "fake" because the default of Greece will have little effect on the world economy.

$1,000 gold July 1, 2015

i agree, folly. most states here are bigger than greece and i doubt one state could rock the world's economy.

K Duryea July 4, 2015

Folly, that is so fitting. Greece has and will have an impact. Simple dominoes effect. Next year at this time the financial landscape of America, and the rest of the world will look much different. 1000 I'm surprised you take the Fed's take on the economy as the Gospel truth. Our government would never ever lie to the American people.

$1,000 gold July 5, 2015

it's not the fed's take on the economy, it mine. i listen and learn from other people, but make my own decisions. it's not so much that i think a greece default will or won't cause contagion, it's i think the euro experiment of a single currency is bound to end. every country needs it's own currency, and that's what will eventually happen. it's important greece leave the euro for greece's sake. i just hope it's done in a timely manner.

$1,000 gold July 1, 2015

if greece defaults, i would think the ecb would be smart enough to immediately shore up banks in italy, spain and portugal to contain any chance of contagion. this could quickly become a non-event.

Tom July 2, 2015

Finally, I agree with Larry. Bull stock market, bull real estate market, terrible bond returns.

Heidi July 3, 2015

Report this asshole who wrote that above me .

rob July 3, 2015

Ah,. and now your writings are open to interpretation!,.

Gary July 4, 2015

Dude are you for real? I didn't think anyone could be that headscrewed and still operate a keyboard!

George July 3, 2015

Larry. I totally disagree with you on real estate For years you have had people on your program on cycle theory and have mirrored Martin armstrong. You have an intro to his trailer. He has a paper on real estate cycles That show a decline until 2032. Where are you going to pay the interest on a 20 yr mortgage at 20% interest. Banks have fed the up prices of housing by easy money policies. Follow the money. That's martin's premise. Please explain. Inquiring minds want to know!

randy July 3, 2015

number one, greece will NOT leave the european union nor will said union crumble for a long time. this is armstrong's folly and his lackey, edelson, is not an original thinker so he cannot do anything but parrot armstrong. what these guys don't understand is the powers that be are of the devil and will not allow what armstrong predicts until they are ready. they'll be ready when russia and china are ready to nuke ameriKa which the PTB who run ameriKa also want. this is why repubs and dems are doing what they are doing...installing a totalitarian police state (thanks to the unpatriot act) which the soft minded ignorant ameriKan masses will readily accept once that first nuke lands. it's all a shakedown and you people (97% of you) actually think all this spying and airport/sports venues/random shakedowns/etc. are about terrorism. you are delusional. papers please! WAKE UP!

Eli July 3, 2015

Just curious....I hear people say buy silver as a hedge against inflation, but which kind of silver? There's some that's just above spot price like Buffaloes, sunshine mint eagles, generic rounds. OR the pricey ones like Kookaburra and Pandas that are dollars above spot price........i hear arguments on both.........ideas?

Mephisto July 3, 2015

Lowes has a deal on silver paint this week . You could make a lot of things silver with that, right ?

Eli July 3, 2015

Wrong

Rizalito Jaway Jimena July 3, 2015

have a wonderful day to you all

Eli July 3, 2015

Great topics and sub-par language skills,,,I thought this was Market and Markets,

William Leavenworth July 4, 2015

Keep your antiSemitism to yourself, lest it cost you your useless life. There is no place in this world for religious prejudice.

William Leavenworth July 4, 2015

Without close governmental controls, "Free Market Capitalism" is civilization's Jonestown koolaid in an elaborately decorated chalice. Adam Smith had no idea of what the industrial revolution would create, or leave in its wake. There wasn't a MODERN capitalist corporation in the world when he wrote "The Wealth of Nations." Marx and Engels weren't revolutionaries; they were reactionaries, reacting to the destruction of the social fabric of Europe's artisan shops and family farms by burgeoning factories in the second phase of the industrial revolution.

Karl July 4, 2015

Larry; I would appreciate some form of monitoring of these (for the most part) lame comments. If I want filth, stupidity, and delusions I'll go to Facebook, Twitter, of the grade-school parking lot. Thank you William for one cogent and thought-provoking statement. "We have seen the enemy.....and he is 'us'".................

Arf July 4, 2015

Hard to believe Asia, esp China, is the place to be with the bubble possible from margin calls

hatred July 4, 2015

the only problem i see here is hatred

hatred July 5, 2015

hatred has never solved a perceived issue ever ....I dare say...... Taking advantage of people with unjust outcomes is madding Take a look inside yourself and see......has hatred helped you or made your world worse Turn that around and love yourself, and expand that to everything Your world will change as you align yourself with the design of your creator Positive creates a better world for you you will see for yourself a light that goes beyond your physical body