3 Min. Gold News – Jim Rickards – Fox Business – January 9, 2016

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 Deirdre Bolton at Fox Business Risk & Reward.

Jim is the editor of Strategic Intelligence, 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 U.S. Department of Defense.

Topics:

 

China’s Yuan
Next for China

 

 

Rickards - Brisbane

Jim Rickards

Interview Link

 

CHINA’S YUAN

The Chinese need the yuan to come down even more, but what they didn’t want is all the collateral damage that’s happening.

It’s a good reminder that they’re communists. Putting communists in charge of a capital system is like giving a loaded gun to a three year old — someone’s going to get hurt.

That’s exactly what’s happened in global markets.

China is trying what’s called The Impossible Trinity.

Screen Shot 2016-01-09 at 11.27.23 AM

The Impossible Trinity is three things that you cannot have at the same time: an open capital account, a pegged exchange rate and an independent monetary policy.

China was pegging at 6.2 to the U.S. dollar, they wanted an open capital account to keep the IMF happy, and they wanted an independent monetary policy to cut rates and stimulate the economy. But the theory is that you cannot have all three. But you can try, which means you’re bound to fail.

What happened to China when they tried The Impossible Trinity is they got capital outflows — massive capital outflows.

$4 trillion sounds like a lot of reserves, until they start to walk out the door. Once they do then it’s never enough.

You’re going to see China’s reserves go to zero by the end of 2017 if they don’t do something.

They’re not going to close the capital account because they have to keep the IMF happy. They want to be able to cut interest rates which means they want to keep an independent monetary policy, so the thing that’s going to go is the peg — and that’s long gone.

You’re going to see the yuan get a lot weaker.

They don’t care what the United States thinks.

NEXT FOR CHINA

If they don’t cut the yuan they’ll either have to close the capital account or devalue the currency. If they don’t then their reserves are going to walk out the door.

It’ll be $100 billion a month.

You do that for ten months and that’s a trillion dollars out the door.

You do that long enough and it has to break.

They’re smart enough to see that and they don’t want to lose another trillion. They’re down almost a trillion already so they’re going to have to keep devaluing the yuan.

Another solution is that they can raise rates to 15% to try to keep the capital at home, but that will kill the economy. So they don’t want to have to raise rates.

The other solution is that they could close the capital account, but that would anger the IMF. They just played nice with the IMF and now they’re joining the other currencies in the basket of the SDR world money.  Closing their capital account would be like joining a fancy club and showing up the next day in cut offs and flip flops — you can’t do that.

So the only tool left to China is devaluing the currency, and they’re going to do it more.

The U.S. should get ready for that.

The U.S. has accused China of manipulating their currency and of course they are, but it’s the kettle calling the pot black. No one manipulates more than the Fed.

 

 

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

 

……………………………………….

 

Gold is $1,104.60 U.S. per ounce.

Screen Shot 2016-01-09 at 12.13.43 PM

 

……………………………………….

New livingroom demo:

Hawk and a Dove

 

Hawk and a Dove

There’s a girl in love with a hawk and a dove
and she keeps them both I know
Off to the market in the dark
she takes them both in tow
Takes them both in tow boys
Takes them both in tow
And you’ll never see ’til she sets them free
where they want to go

There’s a boy who cares for a bull and a bear
and he keeps them both I know
Off to the market in the dark
he takes them both in tow
Takes them both in tow boys
Takes them both in tow
And you’ll never see ’til he sets them free
where they want to go

There’s a wizard fond of gold and a wand
and he he keeps them both I know
Off to the market in the dark
He takes them both in tow
Takes them both in tow boys
Takes them both in tow
And you’re going to see when it all breaks free
where it’s going to go

words and music: Elaine Diane Taylor
© 2016 Intelligentsia Media

……………………………………….

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.

……………………………………….

AlbumCover.PreparingfortheFall

 

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

 

……………………………………….

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.

……………………………………….

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

 

 

 

 

Please feel free to leave a comment. Email addresses are not publicly shown.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s