Blog

by Egon von Greyerz – Matterho Asset Management

This month we will discuss what is likely to be a major change both in sentiment and in the economy in the next few months. The autumn of 2009 will be full of shocking surprises in the banking sector, in financial markets and in the world economy.  The events that we outlined in our previous newsletter, “The Dark Years Are Here” are going to start unfolding. There will also be shocking falls in stockmarkets, in the dollar and in bond markets. But these falls will create major opportunities for investors which we will also discuss.

The syndrome of hope and false expectations

Some readers might feel that we are prophets of doom and that there is only gloomy news coming out of Matterho Asset Management. For people who want only good news we suggest that you listen to politicians or read the newspapers or your average stockbroker’s forecast. This is where you find the good news. But if you do listen to these people, remember that virtually nobody waed you about the events in the last couple of years, and that today most of these people are saying that the worst is over. And this is also what stockmarkets are telling us, isn’t it? These “optimists” whether they are politicians, bankers or from the media all make their living based on good news and this is why they will continually tell you lies and never wa you about the risks.

By Gabrielle Parussini
Dow Jones Newswires
via Nasdaq.com
Wednesday, August 26, 2009

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=20090826…

PARIS — French President Nicolas Sarkozy said Wednesday that the dollar can’t remain the world’s only reserve currency, as the rise of emerging powers such as China and Russia challenge the U.S.’s prominence.

“The political and economic reality of a multipolar world will have to find sooner or later a translation on the monetary level,” Sarkozy told foreign ambassadors, gathered for a yearly reception at the Elysee Palace. “A multipolar world can’t count upon one currency only.”

Sarkozy also said that he won’t allow the euro to be the only currency to bear the weight of foreign exchange market adjustments as has happened in the past.

I’ve been spending a lot of time this week talking to my sources in China, one of whom is inside one of the country’s sovereign wealth funds (SWF).

He could not discuss the details of the Rio Tinto bribery scandal, but indicated that it was far more about saving face and establishing position than anything else.

He also indicated that the SWF analysts were working around the clock trying to put deals together… for China it’s a race against the clock for how fast they can convert their $2 trillion in US dollar holdings into strategic assets– namely oil and gold.

At today’s deflated prices, putting together a really good billion dollar deal is a difficult thing to do. Putting together 2,000 of them is impossible.  Doing it before the dollar collapses? No chance. And they know it.

So as a hedge, the govement appears to be pumping up demand for gold and silver among the public, possibly preparing them for an imminent dollar decline.

By ANTHONY ROWLEY
TOKYO CORRESPONDENT

IT’S party time again, it seems, in world stock markets and revellers are beginning to sound as though the financial crash and the global recession were nothing more than a pause for breath.

Yet the ‘ghost at the banquet’ is the gold price which, at near US$1,000 an ounce, is an unwelcome guest to have around just when it seems the good times are ready to roll again.

Even as advanced and emerging equity markets hit their highest level for the year on Monday of this week, the gold price continued its upward climb and reached US$955 an ounce. What’s more, even those investment managers who do not normally display a tendency toward hyperbole said it would hit US$2,000 an ounce soon and could go on to reach US$3,000.