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 bestseller The New Case for Gold by CBC The Exchange.

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.

by: Elaine Diane Taylor

Topics:

Gold is Money
Hedge Against Inflation or Deflation?
Worry About Collapse?

Jim Rickards

Interview Link

GOLD IS MONEY

Gold trades differently at different times.

Sometimes it trades like a commodity on the commodities index and sometimes as an investment in terms of investor’s portfolio allocations.

But sometimes gold trades like money.

It’s a cameleon.

Right now the increase in the dollar price of gold is just a reflection of the decline of the dollar. So it’s like a vote of no confidence in central bank policies.

Investors are looking around saying, “We’re losing confidence in central bank money. We’d like another form of money. It’s called gold. Thank you very much.”

When the price of gold is going up it just means the dollar is going down.

HEDGE AGAINST INFLATION OR DEFLATION?

The textbooks tell you it’s a hedge against inflation, which it is, but the history books tell you it’s the best hedge against deflation.

The longest sustained period of deflation in U.S. history was 1929 to 1933. It was the longest period of deflation the U.S. had ever had, and the price of gold went up 75% from $20 per ounce to $33 per ounce.

Just two weeks ago, Ken Rogoff, former chief economist of the IMF and a professor at Harvard University, said emerging market economies should devote 10% of their reserves to gold. He said not to worry if it’s in short supply because the price will go up.

Gold does well in deflation because governments are desperate to avoid it. They actually want inflation. They tell you that as part of their policy.

But they’ve tried everything to get the inflation — QE 1, QE 2, QE 3, Helicopter Money, Currency Wars, Operation Twist, Forward Guidance — and they cannot get it.

There’s one way to get inflation and that’s to make the price of gold higher.

The Federal Reserve could walk in, take a vote, walk out and say, “Ladies and Gentlemen, as of now the price of gold is $5,000 per ounce and we’re a buyer at $4,999 and a seller at $5,050. We’ve got a printing press and the gold in Fort Knox. We’re going to make a two-way market.”

If the Fed does that then there’s your inflation because if gold went up that much then gasoline would be $10 per gallon at the pump and silver would be $100 per ounce. Oil, wheat, steel… everything would go up.

When you’re desperate to avoid deflation you can get inflation by raising the dollar price of gold.

That’s worked before and it’ll work again.

Jim’s expecting it to go to $10,000 per ounce.

One of the chief economists at PIMCO, the largest bond dealer in the world, owned by one of the largest insurance companies in the world, came out two weeks ago and suggested the same thing.

Jim first said this scenario in his book in 2011 and now the chief economist at PIMCO is also saying it.

$10,000 per ounce is the implied non-deflationary price. That price isn’t just pulled out of thin air or made up to be provocative. The price of $10,000 per ounce comes from taking all the gold in the world and all the money in the world, and dividing one by the other using 40% back up of gold.

That’s the price gold would have to be to restore confidence in the monetary system without causing deflation.

WORRY ABOUT COLLAPSE?

We should be worried about a collapse in the international monetary system. It’s happened three times in the last one hundred years – 1914, 1939 and 1971. So it does happen every thirty of forty years or so.

Jim talks about this but he’s not the only one. He recently had conversations with Ben Bernanke, former chairman of the Federal Reserve, and John Lipsky, the only American who ever headed the IMF. Two separate conversations nine thousand miles apart, but they both used the same word to describe the international monetary system — incoherent.

It means there’s no anchor.

There’s no gold anchor. There’s no dollar anchor — we had a de facto dollar standard from 1980 to 2010. We wake up every day and it’s jump ball in terms of currency valuations.

That’s why you have the currency wars.

It’s a very dynamically unstable system.

It will collapse unless there’s some kind of effort at reform. Countries like Canada or France could be leaders in calling for an international monetary conference. Jim thinks it would be welcomed by the heads of the IMF, BIS, G20 and other central banks.

The New Case for Gold is available now at Amazon.

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

@mattricks99 Save. First in cash; then when you have more, put about 10% in gold or silver.

— Jim Rickards (@JamesGRickards) June 22, 2015

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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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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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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.

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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3 Minute Gold News – Jim Rickards – CBC – May 22, 2016