3 Min. Gold News – Jim Rickards – CNBC World – June 11, 2015

3 Minute Gold News

A Quick Read for Busy People

A 3 minute synopsis of an interview with Jim Rickards, Chief Global Strategist at West Shore Funds, and New York Times bestselling author of The Death of Money and Currency Wars, by Adam Bakhtiar from CNBC World.

Topics:


China
Chinese A-Shares and H-Shares
Chinese Government Bonds
Japan

 

 Rickards - Brisbane

Jim Rickards

Interview link

CHINA

The Chinese stock market has all the dynamics of a bubble.

Central bankers like to say they can’t spot bubbles but Jim disagrees. They’re easy to spot. Just look at a chart and when you see hyper-volatility and exponential growth without any major fundamentals then it’s a bubble.

The Shanghai Stock Index looks like a bubble — but it could go higher.

The thing about bubbles is that they go on longer than you think.

Chinese stocks could go higher but not for any good reason. Personally, Jim would keep away from it.

A AND H SHARES

The rally in A-shares could be because of arbitrage between the H-shares and the A-shares, and the expectation that you could sell one and buy the other. The Chinese have been following the phrase “Buy the dips” — if you expect the market to go up and it pulls back the way it did with A-shares then it’s a good time to jump in.

CHINESE GOVERNMENT BONDS

There’s a move underway with an understanding between China, the United States and the IMF to include the yuan in the SDR (world money) basket that the IMF prints.

Right now there are four currencies in the basket and the yuan is not included.

There are a lot of institutional investors and sovereign wealth funds around the world. You can’t get SDR bonds, but you can get a synthetic SDR just by buying and diversifying among the currencies in approximately the weights that the IMF has.

If suddenly the yuan is added to the basket and you want to mimic the SDR basket then you’ll have to go out and buy some yuan bonds. There aren’t many of high quality so Jim is starting to accumulate those now in anticipation that the yuan will be included sometime in the 4th quarter of 2015.

Jim is talking about high quality government bonds. There are problems with the corporate, provincial and real estate debt. The “wealth management products” are where the problems are.

The Chinese government bonds will be fine.

JAPAN

The Japanese central bank has a policy objective and they are a little bit subordinate to Prime Minister Abe. They don’t have quite as much independence as some of the other central banks.

Maybe at the end of the day all central banks have to accommodate fiscal authority. This is what Fred Mishkin calls “fiscal dominance”.

Japan isn’t just cheapening the yen for the fun of it. They’re trying to get inflation in the form of higher import prices — specifically for energy.

That’s been a losing battle because no matter how much they cheapen the yen, until recently, the price of energy had gone down even more.

It looks like energy has stabilized in the $50-60 per barrel range, so now the cheaper yen should get them a little inflation.

But they’re not there yet.

The Bank of Japan governor Haruhiko Kuroda can say what he wants but they have an objective and they need a weaker yen.

 

 

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

 

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AlbumCover.PreparingfortheFall

 

Preparing for the Fall is a boutique live solo album available on iTunes — including 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 personal investment advice. We’re all watching how the wind is blowing.

 

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