3 Min. Gold News – Jim Rickards – CNBCWorld – February 5, 2015

3 Minute Gold News

A Quick Read for Busy People

A 3 minute synopsis of an interview with Jim Rickards, New York Times bestselling author of The Death of Money and Currency Wars, by and Adam Bakhtiar from .

Topics:


Greek Exit aka ‘Grexit’
China RRR

 Rickards - Brisbane

Jim Rickards

Interview link

CNBC World

GREEK EXIT AKA ‘GREXIT’

This is a classic negotiation — there’s a lot of posturing going on.

It’s not unimportant and there’s an understandable volatile market reaction, but the euro zone does not want Greece to quit the euro.

That would be a disaster and you would see other dominos fall — Spain and Portugal and so forth. That would be a catastrophe.

Greece also does not want to quit the euro.

Polls in Greece say 70% of Greece supports the euro.

However, we’ve got a problem with the debt rescheduling so both sides are negotiating.

Greece is playing footsie with Russia and taking a hard line, and now Draghi is saying they’re not going to take Greek bonds as collateral.

They’re just positioning.

They’re going to work this out.

It might not be for another month or so, and there might be good days and bad days and more volatility ahead, but at the end of the day they’ll sort it out.

They won’t reduce the face value of the debt, they’ll reduce the present value in a market sense by cutting rates and extending maturities, but neither side wants a crack up so they’re going to find a way.

Christine Legarde has said the IMF won’t accept any haircuts, but she doesn’t have the last word — again it’s just a lot of posturing.

You see equally hard line statements coming out the Greek Finance Ministry.

Jim has over 35 years experience in capital markets, is an advisor on capital markets to the Office of the Director of National Intelligence, and obtained his L.L.M. (Taxation) from the New York University School of Law — he’s been in a lot of negotiations and done a lot of deals.

You don’t walk in with a weak hand. You at least try to posture with the strongest possible hand.

When push comes to shove they will find a middle way because it’s simple dynamics — the cost of not doing a deal are so much greater than the cost of doing a deal.

Each side is just trying to take a hard line.

It’s a classic negotiation — Negotiation 101 — you posture on the way in, and you compromise once you’re behind closed doors.

They’ll get something done and life will go on.  Again, Jim is not minimizing the impact in the meantime. Markets tend to overreact and read too much into it.

With this whole ‘Grexit’ thing — it was nonsense two years ago and it’s nonsense today, but that doesn’t mean markets won’t be volatile.

CHINA RRR CUT

What reducing the reserve requirement ratio of banks by 50 basis points will do is create asset bubbles.

China is trying to do the classic ‘soft landing’.

It never works.

For any central bank anywhere in the world — it never works.

The idea is that you’ve had too much ease and you get asset bubbles. China had them in real estate and real estate is now cooling off. Now they have asset bubbles in stocks and commodity prices — they can pop up in different places.

So the regulators, who are really just market manipulators, say, “We have to deflate the bubble, but we don’t want to do it too far, too fast because we don’t want a credit crisis or a liquidity crisis. We want to bring it in for a ‘soft landing’.”

That’s the goal.

They’ve got three tools they can use to do it. They’ve got interest rates, they’ve got the reserve requirement ratio, and they’ve got the exchange rate.

You can ease with any one of them or all three of them, or you can tighten with any one of them or all three.

So what they are trying to do is selectively and gradually ease when the economy is slowing down. But if it picks up too much and there’s too much inflation they may try to tighten it again.

The problem is that it just gets wobbly and one of two things is going to happen:

1. They’ll ease too much and have asset bubbles that collapse.

2. They’ll tighten too much and it will collapse for different reasons.

It will have a bad end — it always does.

They’re trying to finesse it because they’re between a rock and a hard place.

Jim Rickards can be found on Twitter and at James Rickards Project.

 

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Today’s Gold News:

Gold is $1,258.80 US per ounce via Kitco

Screen Shot 2015-02-05 at 7.04.41 AM

 

 

 

 

Belgium reportedly plans to retrieve 200 tonnes of gold from the UK via sputnik news

This hasn’t been reported in mainstream US news, but one website reports that Belgium is repatriating gold being held in UK vaults. This would add to the growing list of nations returning their physical gold to hold and control from home.

update: Belgium denies to repatriate gold from UK via Koos Jansen Bullion Star

The central banks aren’t being forthright with what they’re attempting or actually doing with the repatriation of their physical gold.

In the topsy-turvy world of negative interest rates even gold investment starts to make sense via Telegraph

Here’s a mainstream article that’s positive on gold, if only to insinuate that because everything has gone crazy why not invest in some crazy gold as well.

Gold and the dollar buck the trend to shine together via The Wall Street Journal

Some mainstream news is noting how odd it is that gold and the dollar, which usually go in opposite directions, are both up in price. More acknowledgement that the world is saying, “Run.”

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Davinci's Vitruvian Man is the Golden Ratio

Davinci’s Vitruvian Man is the Golden Ratio

 

 

Artists know patterns using visual and musical ratios and fractals, and see everything in a closed system goes through four seasons.

We’re coming into a global economic winter, to be followed by a glorious spring with new technologies and opportunities.

Hold a little silver or gold and a little currency  — in case of snow.

 

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AlbumCover.PreparingfortheFall

 

Preparing for the Fall is a boutique live solo album available on iTunes — includes the singles Wag the Dog, Black Swan Dive, Miss American Pie and Gods of the Copybook Headings.

 

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Wag the Dog (Drums of War and Backroom Banker Passes)
words and music Elaine Diane Taylor
© 2014 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Preparing for the Fall available on iTunes

 

Coins and Crowns
words and music Elaine Diane Taylor
© Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Coins and Crowns available on iTunes

Single featured in Episode 1 of Mike Maloney’s documentary series Hidden Secrets of Money.

 


The Gods of the Copybook Headings
words by Rudyard Kipling and music by Elaine Diane Taylor
©2014 Intelligentsia Media Inc.
SOCAN/ASCAP
from the album Preparing for the Fall available on iTunes

 

 

Another Week on Wall Street (Naked Short Selling and Fiat Currency)
words and music Elaine Diane Taylor
© 2013 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Coins and Crowns available on iTunes

 

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Nothing on this site is investment advice. We’re all responsible for our own research and our own decisions on how the wind is blowing.

 

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