3 Min. Gold News – Jim Rickards – Kitco News Interview – Sept. 24, 2013

3 Minute Gold News

A Quick Read for Busy People

3 minute synopsis of a recent video interview with Jim Rickards, author of Currency Wars, senior managing director at Omnis, by Daniela Cambone of Kitco News.

Topics:

THE FED

NEXT FED CHAIRMAN

GOLD

——————–

Jim Rickards

Kitco News
Daniela Cambone
Interview with Jim Rickards
September 21, 2013

THE FED

Jim thinks the markets fooled themselves instead of being fooled by Ben Bernanke.

In May, Bernanke said they were going to reduce asset prices, in other words tapering,  before the end of the year, if the economy behaves the way they had forecast. Everyone concentrated on the the first half, but not on how the economy was performing against the forecast.

The Fed has the worst forecasting history in economics. Every year they give a one year forecast. For the last four years they’ve been wrong in the extreme.

They predicted the economy would grow, so Jim figured they’re always wrong and we’d hit a rough patch so they wouldn’t taper.

Throughout the summer, in numerous speeches, the FED said that they would taper if the data was good.

The data was awful. The August employment data was awful. Consumer confidence collapsed, mortgage applications collapsed, so Jim just took the FED at their word.

So the markets fooled themselves with wishful thinking.

The FED would like to taper, but the question is can they taper.  Let’s see what the data looks like in October and November.

If they taper now, they’ll be tapering into weakness. We might even have a recession next year.

NEXT FED CHAIRMAN

Things won’t change with the next FED head. They all think alike, so it won’t change. Janet Yellen is more of a dove than anything. She gave a speech in 2012 saying there is no example in history of inflation breaking out when you have this much slack, industrial capacity in the labour market. She said there is no chance of inflation. So she is fearless and will keep printing money.

She is wrong. Historically there are examples. Germany in 1921, had a lot of excess capacity, a lot of excess labour, and hyperinflation broke out anyways. So she doesn’t understand the dynamics of inflation.

GOLD

Gold is a little bit ahead of itself. The market had priced in some tapering, but not full tapering. If the FED had really tapered then gold would have traded down. The fact they didn’t taper meant the market had to reprice. So gold went up, stocks went up, interest rates came down, bonds went up.

But no sooner is that over and people are guessing that they’ll taper in October. This is putting downward pressure on gold again because there’s more “taper talk”.

Jim thinks it’s nonsense. Let’s see what the data says.

If the report is weak then tapering will be off the table and gold will rally again.

Gold isn’t on a path where it’s going to go back up to its old highs on its own. There are catalysts that will take it there. One would be inflation. The other one is continued China buying; they are secretive and buy the dips.

Jim recommends people buy gold on the dips. Gold is volatile. Make the volatility work for you. When it goes down buy it and hold onto it.

Anything in the low $1,300s or below $1,300 per ounce is a great buy.

The Chinese buying has created a floor. The only way it will go below that floor is if deflation get a hold.

There’s a battle between deflation and inflation. If you see deflation and nominal GDP start to decline then that could take gold down, but everything else will go down with it. But even if gold goes down, it will outperform stocks and other assets.

The FED knows that gold has to go higher. The FED wants inflation, because they can’t pay off the debt without it. So they’re trying to engineer inflation by stealth. 2% or 3%, and people won’t notice. Jim fears if it gets there then it will shoot up to 6% inflation and get out of control.

The FED know gold will go higher, they want gold to go up in an orderly way.

In July 2011 the dollar was collapsing to an all time low and gold reached an all time high. The dollar and gold are just inverse to each other.

The FED didn’t like that because it was disorderly. So they came in and squashed it down, and did it again in April.

Jim’s new book is called, “The Death of Money: The Coming Collapse of the Monetary System” out next April. It is a non-fiction economic book that picks up where Currency Wars left off, but is a little more forward leaning. Currency Wars had a lot of history, and this new book will have a lot more forward looking analysis. It will look at the future of gold and the IMF, the future of the international monetary system.

Jim expects a collapse and the book talks about the forces leading to a collapse, when it will happen, how it will happen, and what comes next.

————————————————————————————

Coins and Crowns

words and music Elaine Diane Taylor
© 2011 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
available oniTunes

It’s all going down, down, down
The peasants reeling
From a game of coins and crowns
We’re all feeling
When they borrow for war
With no gold in store
They just print more

Then our costs go up and our jobs go down
Hunger goes up and hope goes down
Then anger goes up and it all goes down, down, down

Gold and silver from the ground
Five thousand years of money found
Mine it up, melt it down
A fair exchange to keep us sound
Print it up and it all goes down

Kings and queens with golden crowns
Five thousand years of empires founded
Make some war, win some ground
Just give us bread and circus clowns
To keep us down

……………………………………

Another Week on Wall Street
words and music Elaine Diane Taylor
© 2013 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Coins and Crowns

Another Week on Wall Street

See the bankers wave the Wall Street wands
See the conjured piles of paper green
Now they’re betting all their tricks go wrong
They’re betting the world as you know it
If they win
You lose the whole world as you know it

Ever seen a long con?
Ever seen a tampered wand?
Ever seen the betters sipping tea?
Making bets just sipping tea
Well don’t talk back
Your betters
Your bankers are having a tee, hee, hee

Heyo heyo, just another week on Wall Street
Heyo heyo  just another week on Wall Street

A little grease (Greece) is floating out to sea
Little PIGS (Portugal, Italy, Greece, Spain) are bobbing up and down
So send a storm and we’ll see
when the tide goes out who’s naked on the beach

Ever seen a long con?
Ever seen a tampered wand?
Ever seen the betters sipping tea?
Making bets just sipping tea
Well don’t talk back
Your betters
Your bankers are having a tea, hee, hee

Heyo heyo, just another week on Wall Street
Heyo heyo  just another week on Wall Street

Who’s that wizard hiding behind that hedge?
Who’s that wizard hiding behind that hedge (fund)?

See the bankers wave the Wall Street wands
See the conjured piles of paper green
Now they’re betting all their tricks go wrong
They’re betting the world as you know it
If they win
You lose the whole damn world as you know it

Ever seen a long con?
Ever seen a tampered wand?
Ever seen the betters sipping tea?
Making bets just sipping tea
Well don’t talk back
Your betters
Your bankers are having a tea, hee, hee

Heyo heyo, just another week on Wall Street
Heyo heyo  just another week on Wall Street

6 thoughts on “3 Min. Gold News – Jim Rickards – Kitco News Interview – Sept. 24, 2013

  1. I have no idea how it will eventually play out. It may be a long process or it could be event driven. If it is a process then the price of Gold will give us an indication of where we are in the process as we move toward chaos, as Jim says. The bond market is probably another key. Are you familiar with Neil Howe’s work ? He did an interview with Chris Martensen(sp) that was interesting. If we are in “winter” then it may take a while for confidence in this system to fail.

    • I personally think we are in an artificially prolonged autumn at the moment. A winter will be good in the long run, and it’s our reset for a new spring. I researched and wrote “Rise and Fall of Empires” for two years before writing it, just as the real estate bubble burst. I sold at the peak and am out for now. Went into PM and mining stock and sold just before that fell. I’ve been fortunate in my guesses as none of us has a crystal ball. It’s cycles and research into past events that helps, but no one knows the future. I’m not about “success” or getting rich really, I’m more about preparing for eventualities and enjoying family and friends in whatever cycles we’re in. Thank you for the words and for having a look around. I’ll take a look at the interview you suggested.

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