In this brief interview with Investor Talk’s Jan Kneist, Matterhorn Asset Management principal, Matthew Piepenburg, addresses tensions in Ukraine, central bank-driven bubble sustainability, the critical role of interest rate movements, market mean reversions, historical debt levels, cornered central banks and finally the unique advantages of storing gold in Switzerland.
Although originally recorded just prior to the Russian invasion into Ukraine, Matthew addresses the dangers of brinkmanship in a nuclear era and warns that military conflicts are nevertheless all-too common consequences of debt-cornered sovereigns. Jan and Matt then discuss the artificial and Fed-driven stock bubble in the U.S. which has defied years of war, pandemic lock-downs, historical wealth disparity and rising social and political fracturing on the backs of unlimited money printing and artificially repressed interest rates. As Matthew describes, this debt party and asset bubble was born from low rates and will die from rising rates, a fact which central bankers are desperately trying to postpone but by no means avoid.
Jan and Matt then look at the ignored market force of mean-reversion to track future losses in equity markets once this extended/pretended stock bubble eventually “pops.” In the interim, Matthew addresses how convenient crises like Covid and even war in the Ukraine can be promoted as scape goats by policy makers who created the current debt and equity bubble long before either crisis made the headlines. Also discussed is the nightmarish corner in which central banks have placed themselves in choosing between combating inflation with rising rates or saving asset bubbles via low rates. Ultimately, Matthew argues that central banks will pretend to fight inflation but will have no choice but to allow inflation and negative real rates for the long term to address rising debt levels, all of which will be long-term tailwinds for gold.
As to gold, Matthew addresses recent concerns out of Canada as to locally stored gold as well as the inherent but often unknown risks of owning ETF /paper gold rather than vaulted physical gold. He concludes by underscoring the key advantages of storing gold in Switzerland rather than other common jurisdictions.