Global Currencies Are A Sinking Ship, But Gold Will Save You - Sprott CEO
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(Kitco News) - Currencies around the world are all in the same boat: a sinking ship, overloaded by government debt, and investors should look at gold as a “life preserver,” according to Peter Grosskopf, CEO of Sprott Inc.
Peter Grosskopf, CEO of Sprott Inc.
In a market note published Wednesday, Grosskopf laid out his opinion on why investors need gold as part of a balanced portfolio. Although investors have shunned the yellow metal, choosing instead to ride a 10-year historic bull market in equities, Grosskopf warned that the current market environment is not sustainable.
“There are ominous signs that dangers lie ahead for this Cinderella story, which has worked for investors lately but will not last forever,” he said.
The gold market fund manager said that an impending global debt crisis current poses the biggest risk to the global economy and the fiat currencies that back them. A report published by International Monetary Fund earlier this year positions global debt at an all-time high of $184 trillion in nominal terms.
“Global debt levels are at record levels and can no longer be serviced by the productive engines of the economy and normal tax levels,” he said. “Many pensions and entitlement programs are past the point of broken and government deficits are out of control.”
Even though global debt levels are at record highs, Grosskopf said that he sees this issue only growing as governments implement populist policies in a growing polarizing geopolitical environment. He noted that one policy gaining traction among voters is “Modern Monetary Theory (MMT),” which promotes the idea of using fiscal policies to boost economic growth.
Grosskopf described the current financial market environment as “a tightly coiled spring which is becoming more loaded every year.” The only way to protect yourself from the approaching crash, he said, is to put your money in gold.
“Most investors do not realize that gold is one of the world’s most liquid currencies and assets,” he said. “Although similar in philosophy, gold blows Bitcoin away on any measure by which the two can be compared.”
However, the issue with gold is its “insufficiency as an everyday payment metric,” Grosskopf said in an interview with Kitco News on the sidelines of the Mines and Money conference in New York last week. But digital gold would solve that problem, he noted.
“[It’s] more secure because it is backed by the physical metal and it has a ledger that is being tracked, so gold can’t be hacked,” Grosskopf said. Sprott has recently undertaken several new ventures that deal with gold bullion on the blockchain.