3 Minute Gold News – Jim Rickards – The New Case for Gold – Kitco Pt. 2 – April 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, Currency Wars, and the newly released The New Case for Gold by Daniela Cambone at Kitco News.

PART 2

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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:

Are We Already on a Gold Standard?
Results of a Gold Standard
China
Gold Shortages

 

 

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Jim Rickards

 

From the book The New Case for Gold:

“The confidence of the entire global system of finance rests on the U.S. dollar. Confidence in the dollar rests on the solvency of the Fed’s balance sheet. And that solvency rests on a thin sliver of… gold. This is not a fact anyone at the Fed wants to acknowledge or discuss.”

 

ARE WE ALREADY ON A GOLD STANDARD?

The world has never left the gold standard.

We denied it and we stopped talking about it, but the world is on a shadow gold standard.

Why does the U.S. still have 8,000 tonnes?

They needed to support what they promised to the Fed.

Why does the European Central Bank have 10,000 tonnes?

Why does the IMF have 2,000 tonnes?

Why is China buying thousands of tonnes?

Why has Russia more than doubled its gold reserves in the past seven years?

We clearly are on a gold standard but no one wants to talk about it.

 

RESULTS OF A GOLD STANDARD

Gold would need to be at $10,000 – $15,000 per ounce to be on an official gold standard but it would be highly deflationary.

This is exactly what happened in 1933. It rose from $20/ounce to $35/ounce — that’s a 75% increase.

This was in the middle of the greatest period of sustained deflation in American history — 1929 to 1933.

Yet the price of gold went up.

That’s because it was dictated by the government. The government made the price go up.

They were so fearful of deflation. Nothing happens in a vacuum. If the price of gold goes up then everything goes up.

That’s because it’s not really the price of gold going up, it’s the price of the dollar going down.

So when gold went up 75% it was really the dollar going down 75%.

That’s what they wanted. Oil, steel, wheat and other things went up and it worked.

That could happen again under one of two circumstances:

1. Deflation gets out of control

If the currency wars don’t work and Forward Guidance, QE,  and Operation Twist don’t work and inflation still rules then the U.S. government could raise the price of gold to get inflation.

2. The system collapses

If the system collapses like it did in 1914 or 1971 then you go back to gold to restore confidence.

But then this gets to the price issue.

Gold at $1,250 per ounce is extremely deflationary if you’re trying to support the money supply.

At $10,000 per ounce it works just fine and is slightly inflationary.

There’s always enough gold it’s just a matter of price.

CHINA

Jim has spoken to the Number #2 person at the IMF and the #1 person in the intelligence community on economic affairs, and both of them said they were completely relaxed.

The IMF person said that China needs to diversify their reserves from credit reserves to tangible reserves. Jim was shocked. When he said credit reserves he meant Treasury notes. When Jim asked if they were worried that China was buying all this gold, the intelligence community guy said, “Somebody has to own it.”, as if it was a yard sale.

So at the highest level of the U.S. government and the IMF they’re very relaxed because they understand that we are on a shadow gold standard.

And if China is the second largest economy in the world and they don’t have gold then it’s an unstable system.

So you’ve got to get the gold to China but you can’t talk about it because the price would skyrocket.

So there’s this big stealth game going on.

Is China more transparent now? Jim calls this a “Limited Modified Hang Out”. They’re a little bit more transparent but on the whole they sitll lie about it.

China says they raised their holdings from 1,054 tonnes to about 1,700 tonnes. But they actually have 4,000 tonnes — maybe more.

We know that from Hong Kong import data and from mining output. So we have other sources of information to form that estimate — it’s not a guess.

GOLD SHORTAGES

Jim was recently in Switzerland and met with the head of the world’s largest gold refinery.

A gold refinery brings gold in the front door, it gets processed, and goes out the back door. So he knows who all the buyers and sellers are.

He said he has a waiting list of buyers.

He sells China about 10 tonnes each week. They’d like to buy 20 tonnes but he won’t sell it to them because he doesn’t have enough gold.

He’s having difficulty sourcing it. He’s been in the business for 35 years and he’s never seen anything like it where he can’t find the gold.

So fiscal shortages are already popping up.

Jim doesn’t care what the COMEX says. Eventually the shortages will catch up with the market price and it will skyrocket.

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The New Case for Gold is available now at Amazon.

 

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

 

Many thanks to Jim for mentioning me in The New Case for Gold.

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In my final week and a half of academic degree work at Simon Fraser University in Vancouver, Canada. Very much looking forward to full time music, art + media. Please excuse the delay while the last finals for Communications Theory and Publishing are written. New branding, music, products, commentary and website coming.

Thank you for coming by .

Elaine Diane~

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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 live boutique album 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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