3 Min. Gold News – Jim Rickards – October 10, 2015

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 Maria Bartiromo at Mornings with Maria on Fox Business, with Dagen McDowell and Jack Otter.

Jim is the Chief Global Strategist for West Shore Funds, former general counsel for Long Term Capital Management, and a consultant to the U.S. Intelligence community and the U.S. Department of Defense.

Topics:

Bubbles
Stock Market
Global Markets
Fed’s Next Move
US Dollar
Interest Rates

Rickards - Brisbane

Jim Rickards

Interview Link

 

BUBBLES

Ben Bernanke (former U.S. Fed Chairman) is probably right when he says there isn’t a bubble in the housing market but there are bubbles in emerging markets and in U.S. dollar denominated corporate debt.

Commercial real estate, which Bernanke hasn’t talked out, also looks like it’s in a bubble. There are bubbles all over the world.

The Fed is lousy at seeing bubbles. They didn’t see the tech bubble, the 2007 bubble, the emerging markets bubble in 1997, or the Mexico bubble in 1994.

They missed them all.

STOCK MARKET

Jim spoke with Bernanke in Korea recently, and the former Fed Chairman said that the Fed doesn’t care if the stock market goes down 15%. He said it’s not the Fed’s job to prop up the stock market.

GLOBAL MARKETS

The problem with global markets is that China’s slowdown is affecting the U.S., but the reason China is slowing down is because the Fed has been tightening for two years and China pegged its currency to the U.S. dollar.

The U.S. has been tightening for two years using “taper talk”, tapering QE, removing forward guidance and then tough talk on raising interest rates. They haven’t actually done anything to raise rates but they’ve talked about it.

THE FED’S NEXT MOVE

The Fed’s next move will probably be towards easing. They’ll likely restore forward guidance by throwing in some words like “patience” and “forbearance”. You can talk your way through tightening and easing.

Or else they’ll use the currency wars and just cheapen the dollar. They’ll call Draghi (Mario Draghi, President of the European Central Bank) and say it’s the U.S.’s turn so hand back the canteen because the U.S. needs a sip of water.

OIL

Oil is going to trade in the range of $50 – $60 per barrel. That’s really being driven by Saudi Arabia.

It may overshoot a bit on either side but that’s the range. That’s the price to put the frackers out of business.

Saudi Arabia found that $60 was the magic number — it destroys the frackers but doesn’t hurt the Saudi financial situation more than necessary.

Russia has been pumping oil, but the Saudis have the lowest costs and the highest reserves so they’re the price setters.

Oil is an easy trade. If it’s in the low $40s you buy it and if it’s close to $60 you sell it. It’s going to be in that range so just trade the range.

There are smart people out there calling for $15 oil, but Jim has talked to the heads of Goldman Sachs commodities trading and they don’t listen to their own research department. They say the researchers are all ex-Fed men and women using Fed models, and they don’t listen because the traders know better.

U.S. DOLLAR

Historically, the dollar was the Treasury’s job and the Fed didn’t worry about the exchange value. That’s changed.

Bernanke gave a speech in October 2012 in Tokyo, where he said to the world, “We’re the biggest economy and if we go down we take you with us. We need a cheap dollar to help the U.S.”

The reason the U.S. dollar got stronger later on was the tough talk from the Fed saying they were going to raise rates. That was a blunder. The Fed thought the economy was strong enough to bear a stronger dollar but it wasn’t.

So the U.S. will go back to a cheap dollar.

INTEREST RATES

People want lower rates. As soon as the Fed backs away from the tough talk about raising rates the stock market goes up. When they say they’re going to raise rates before the end of whatever, pick a year by this point, then it goes down.

Actually if they can’t raise interest rates by March 2016 then it won’t happen until 2017.

Jim thinks the Fed’s next move is to ease, but if he’s wrong and the data is stronger then maybe they’ll raise rates in March 2016.

But if they don’t raise in March then they’re in election season and it’ll anger either the Republican or the Democrats no matter what they do, so they’ll just stay out of it.

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

 

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From the Cariboo Gold Rush Trail

 

 

Gold is $1,156 US per ounce.

Screen Shot 2015-10-10 at 12.17.42 AM

 

 

 

 

 

 

Thank you for the tweets, comments, emails, DMs, facebook posts and phone calls about my dad. He passed away suddenly last weekend and the photo of us in the flowers is from just a couple of weeks ago. I appreciate the support. The kind words from readers and friends means so much.

My time in the Cariboo wilderness is coming to an end. I met gold miners, found a source or more for gold, went panning, designed art, and spent endless hours alone in the woods writing and studying the history of gold.

Now it’s pouring rain.

I’ll always remember sitting alone at the lake face-to-face with the baby black bear. The bright summer sun and intense heat. Deer and birds and butterflies on the daily stroll down the quiet village roadway back to the tiny house. The abandoned apple orchard I discovered in the woods, the private waterfall, and the eagles and hawks swooping down to keep me company.

But I want to go home now for a while and be close to family.

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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

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 opinions to have. China building islands in the South China Sea and claiming all the international waves. More dealing to come. More standing in line for those who owe. Who owes? There’s a long line of nations in debt and this is far from done.

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AlbumCover.PreparingfortheFall

 

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 the gold standard and sound money, and borrows to go to war, then 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 wisdom we need. The sayings that were copied are the truths, the gods, of our world. All the empires who followed the gods of the marketplace instead have fallen, and there’s terror and slaughter when the gods of the copybook headings return. The lyrics are by Rudyard Kipling. 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 piles of paper green. Naked short selling is like betting that your neighbour’s house will burn down. But in this scenario it happens to burn down. If the bankers win then 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 and we’ll see, when the tide goes out who’s naked on the beach“, and it’s coming on now. The world is changing as we know it.

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.

 

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