May 14, 2014
Zulauf, founder of Zulauf Asset Management and 20+ year Barron’s Roundtable panelist, also discussed how all of this will impact major markets, including gold.
Below is what Zulauf had to say in the first of a series of powerful written interviews that will be released on King World News.
Eric King: Will the key (to surviving) this (end game), as you warned many, many years ago, be to be outside the banking system?”
Zulauf: “Absolutely. The banks are the worst money managers of this world. I don’t blame them because they are the receivers and transmission mechanism for all the money being printed by the central banks. They are flooded with cheap or gratis money. They have to do something with that money, so they go into carry trades. You can look back in history. It started with Citicorp being trapped in Mexico. It goes on and on and on, and they are in carry trades again. And when you look at the quality spreads between junk bonds and Treasuries, we are back to the extremes of 2007, at the last cycle peak.
“We have many other extremes that suggest we have tremendous speculation in the system, all thanks to printing money and creating a sea of liquidity that is being used for carry trades much more than being activated and creating demand in the real economy. And Janet Yellen doesn’t understand that. She thinks she can improve the employment situation by printing money like mad. That’s nonsense. She is worse than Greenspan and Bernanke together. So eventually this will turn out to be very good for gold, very bad for paper currencies, very bad for bonds. ... And in the long run, I think stocks are also a means where you can store some value, but you have to prepare for losing losing 50 percent for a while before they go up again.”
Eric King: “Any major surprise in 2014 that is still in front of us?” Zuluaf: “I think the world will be surprised that the Chinese currency will devalue by much more than the world was expecting, and that eventually the world could wake up understanding that this is no good for the world.” Zulauf added: “Gold is money and it’s true money. It’s money that is not part of a balance sheet of a central bank, and it doesn’t have any debt. It is a real asset and it has been money for thousands of years and will remain so. Paper money is different. Gold has survived all paper currencies. And all fiat currency systems, as we are in since 1971, have eventually collapsed. That’s the long term. I do not know when our paper currency system will collapse but eventually it will. And that’s where the true value of gold will be because in gold you can store your savings and your assets in a better way than in paper currencies. ... In the end of a fiat currency system you either have a deflationary collapse and a currency reform, or you have an inflationary collapse and a currency reform, and you cut out a lot of debt. Obviously you also cut out a lot of assets and wealth. That will be the ultimate point where gold really is the most important asset to hold.”
Part II of Zulauf’s interview will be released within hours. In his audio interview, Felix Zulauf discusses what investors should expect as the system implodes and, more importantly, how they can protect themselves. The legendary money manager and two decade Barron’s Roundtable panelist also discusses central planners, systemic collapse, China, what investors should be doing with their money right now, gold, and much more. The extraordinary KWN audio interview with Felix Zulauf is available now and you can listen to it by CLICKING HERE.
Click here to listen to the Interview:
Felix Zulauf was born 1950, and is the owner and president of Zulauf Asset Management, a Zug, Switzerland-based hedge fund. Felix has worked in the financial markets and asset management for almost 40 years. Mr. Zulauf has been a regular member of the Barron's Roundtable for more than 20 years.