3 Minute Gold News
A Quick Read for Busy People
A synopsis of an interview with Jim Rickards, New York Times bestselling author of The Death of Money and Currency Wars, by Mark Crumpton and Matt Miller at Bloomberg Business.
Jim is the Chief Global Strategist for West Shore Funds, former general counsel for Long Term Capital Management, and a consultant to the US Intelligence community and the US Department of Defense.
Topics:
Fed Interest Rate Hike Off the Table
Weak Data
Targets for a Rate Increase
Currency Wars – Systemic Reform or Collapse
Jim Rickards
RATE HIKE OFF THE TABLE
St. Louis Fed President James Bullard said the Fed should not be overly-influenced by the volatility in the stock market. That’s right, but they should be influenced by the data, which is what Janet Yellen has been saying all along.
And the data is coming in weak.
Jim’s call that an interest rate increase is off the table is because the economic data is very weak right now, not because the stock market was choppy this week.
WEAK DATA
The first quarter GDP was 0.6%, second quarter 3.7%, and Atlanta GDP Tracker shows third quarter 1.4% (updated after this interview to 1.2% as of Aug. 28th). Put those together and you get the September 30th’s at 1.9% — well below Janet Yellen’s 2.5% target.
As far as unemployment goes, it looks like job creation peaked last November at 350. It came down to 260, 225, 215 — that’s trending down, so that looks weaker. Unemployment was 5.3 in July but it was also 5.3 in June. That’s not that strong with labour force participation at an all time low.
If it was strong then it would show up in real wages. There’s a bunch of stuff on Janet Yellen’s dashboard, but number one is real wages, because that’s where the two parts of the dual mandate (maximum sustainable employment and price stability usually via interest rates) come together.
If labour can get a raise that means conditions are tight and inflation is on the way.
We’re not seeing that. Real wages are flat.
TARGETS FOR A RATE INCREASE
So we’re not seeing strong data in real wages, unemployment stopped coming down in July and flatlined, job creation peaked last November, and it looks like for the third quarter of 2015 we’ll have 1.9% GDP growth (GDP Tracker lowered it further on Aug. 28 after this interview to 1.2%) .
Yellen told us what her targets are:
— 2.5% GDP growth
— 4% unemployment
— 2% inflation
We’re not near any of those, and more importantly they’re all moving in the wrong direction.
CURRENCY WARS – SYSTEMIC REFORM OR COLLAPSE
We’re not always in a currency war but when we are they can last 15 or 20 years.
It’s not at all surprising that we’re talking about it in 2015, and in a year from now we could come back and still be talking about the currency wars.
China, Vietnam and Kazakhstan were the most recent, but 28 countries have done interest rate cuts and devaluations this year.
There is no logical conclusion to a currency war except systemic reform or systemic collapse, and sometimes you can have both.
But until we get to reform or collapse the currency wars are going to go back and forth.
Jim Rickards can be found on Twitter and at James Rickards Project.
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From the Cariboo Gold Rush Trail
Gold is $1,133 US per ounce today.
It’s pouring rain off and on. Love it. It makes my rock garden happy and helps the west coast wildfires. The sound on the roof says all is well.
Yesterday was panning. Today is guitar, research, writing, Photoshop’s Lightroom tutorials, weights and reading Gold and the Gold Standard by Edwin Walter Kemmerer. Plus a bit of this:
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Not Much of a Holiday
words and music Elaine Diane Taylor
© 2015 Intelligentsia Media, Inc. All rights reserved.
SOCAN/ASCAP
Single available on iTunes
About the Greek bank holiday and long lines to get a few euros for the day. Debt deals behind closed doors. The media telling us what opinion to have. China building islands in the South China Sea. More dealing to come. Standing in line for those who owe. Who’s next? There’s a long line of nations in debt and this is far from done.
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Preparing for the Fall album is available on iTunes — featuring Wag the Dog, Black Swan Dive, American Pie and Gods of the Copybook Headings.
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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.
When a nation leaves a gold standard or sound money and borrows to go to war, then jobs go down, hunger goes up, hope goes down, anger goes up, then it all goes down.
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
The copybooks of the early 1900s gave us all the words of wisdom we need. All the empires who followed the gods of the marketplace instead have fallen. There’s terror and slaughter when the gods of the copybook headings return. The words are Rudyard Kipling’s. One of my gurus.
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 available on iTunes
See the bankers wave their Wall Street wands and conjure up piles of paper green. They’re making bets that the market will lose. Naked short selling. If they win we lose the whole world as we know it. I wrote this in 2009, with a lyric “A little grease (Greece) is floating out to sea and little pigs (Portugal, Italy, Greece and Spain) are bobbing up and down, they’ll send a storm then we’ll see, when the tide goes out who’s naked on the beach“, and it’s coming on now.
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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.
