3 Min. Gold News – This Week in Gold – July 26, 2019 – Jim Rickards and USA Watchdog

July 26, 2019

TOPICS:

Aftermath
President Trump
Jay Powell
Debt Default
The Elite
Storms
Gold
Black Projects & Black Budgets
The Average Person

A synopsis of an interview by Greg Hunter of USA Watchdog with James Rickards, author of the bestselling books Currency Wars, The Death of Money, Road to Ruin and A New Case for Gold.

Jim’s new book Aftermath was released this week.

AFTERMATH

We’re still in the aftermath of the 2008 – 2009 financial crisis.

The problems that created that crisis haven’t been solved.

In 1998, the Wall Street banks bailed out a hedge fund called Long Term Capital Management. They did it in order to save themselves from losses that would have happened to the banks if the hedge fund went bankrupt.

In 2008, Wall Street itself was in distress and the Federal Reserve (Fed), the central bank of the U.S., came in and bailed them out. The Fed printed trillions of dollars and guaranteed every money market fund and bank account in the U.S. in order to save the big U.S. banks.

So now the bad debts, the leverage and the problems were lifted up to the central bank level.

The Fed hasn’t brought their balance sheet back down again. In ten years they still haven’t normalized to $2.5 trillion, so that they can bring it back up to $4 trillion if they need to print more money again (QE4).,

Plus, they will have to drop interest rates 4 – 5% to get out of a recession, and they haven’t brought interest rates back up enough so that they can drop it down when they need to.

When the next financial crisis hits the Fed won’t be able to help.

They can’t normalize because if they raise rates the stock market falls off a cliff. They can’t take much more money out of the system (QT) to lower their balance sheet because the system’s too close to a recession, and it could cause the recession they’re trying to avoid.

On top of the aftermath of the last crisis, there’s going to be another one coming up, with its own aftermath.

The next crisis will be worse than 2008 because the problems are bigger now, and the aftermath will be a different world from now.

It’s not a dystopian post-apocalyptic scenario.

It’s just that there will be another financial system.

There’s things a person can do to prepare for it.
TRUMP

Jim’s thinking that President Trump has a 65% chance of being re-elected.

The biggest factor is the economy.

No first term president has ever lost re-election, unless there was a recession. Jimmy Carter lost in 1980 and George H.W. Bush lost in 1992. There were recessions both times.

If you believe the odds of recession by next summer are 35% then Trump’s odds of winning are 65%. As time goes by without a recession the odds of a recession by next summer go down and his odds of winner go up.
JAY POWELL

Jim doesn’t think Jay Powell wakes up in the morning and wonders what Trump wants him to do. Jim believes the Fed is running and independent monetary policy.

Powell is doing the best he can. He got a shock last December and put interest rate changes on pause. He used the word “patience”, which is code for telling the market that rates aren’t changing until the Fed gives a heads up.

Now they’re going to cut interest rates and that’s going to help the stock market.

The Fed is doing what it needs to do to avoid a recession.

We’re not getting a boom but we’re getting enough, and Jim believes that will get Trump re-elected.
DEBT

When George Washington became president the U.S. already had debt left over from the Revolutionary War.

Congress said to default and Alexander Hamilton said, “No. Let’s borrow more and use it to pay off the old debt.”

That’s the origin of U.S. bonds.

The U.S. debt has gone up and down over time like a sine wave.

The cause has been war. Debt goes up in war and down in peace.

The leaders pay down their debt so they can borrow more to fight the next war. If there’s enough income then debt is sustainable. You haven’t to look at the ratio of debt-to-GDP in the case of a nation.

After World War II the U.S. debt-to-GDP ratio was 120% – the highest in U.S. history. But over the next 35 years both parties worked together and reduced it to 30%.

Ronald Reagan took it up to 50% and he won the Cold War.

George H.W. Bush and Bill Clinton didn’t lower it but they did keep a lid on it; they didn’t make it worse.

But then everything went off the rails with George W. Bush.

Bush doubled the debt from $5 trillion to $10 trillion.

Obama then doubled it again to $20 trillion.

Trumps added a few trillion on top of that. Today it’s $23 trillion.

It’s both parties spending and they don’t care.

Today the debt-to-GDP ratio is 106%.

The pattern is broken and the debt doesn’t go back down. Don’t expect the economy to boom because of the high debt.
DEFAULT

There’s no reason to default because the U.S. can print the dollars. The other nations can’t print dollars but the U.S. can.

Inflation is another way to get rid of debt.

The problem is that there’s no inflation and the Fed printed almost $4 trillion.

So it’s a solution but they haven’t been able to get there with it.

The other way out is through growth and that’s not happening.

There’s about 3.8% nominal growth right now but the debt is growing by 5, 6, 7 and soon 8% per year – it’s growing faster than the growth.

Research says you can’t grow out of debt that’s past 90% debt-to-GDP.

One outcome is an acute over-night debt crisis. But the other outcome is Japan – 30 years of no growth and periodic recessions.

There’s nothing different in the U.S. then what’s happening in Japan.
ELITE

The rich are getting ready for something that’s worse than what Jim’s predicting.

They’re building bunkers in New Zealand, buying farms and hiring private guards.. Every one of the large hedge fund managers that Jim’s spoken to has physical gold in their own personal portfolio. They keep it in a private vault outside the banking system.
STORMS

Most people have been through natural disasters. They have batteries, flashlights and water. Jim believes they should also have a monster box of 1 ounce U.S. silver eagles. He believes that in a crisis it could be used to barter for daily needs. A gold coin is too much for daily needs.

There’s a lot of things that can go wrong that don’t mean every critical infrastructure is down. But there could be a financial storm. There’s solutions to that Jim speaks about in his book Aftermath.
GOLD

The short and intermediate case for gold is very bullish.

The industry is still traumatized by the bear market that started in 2011.

In 1971 gold was $35/oz and went up 2,000% to $800/oz in 1980.

In 1998 gold was about $250/oz and went up 700% to $1,900 in 2011.

At that point the Fed, China, everyone wanted the price to stop climbing. There was massive price manipulation to keep it from going higher.

Jim Roger said that no commodity goes to a sky-high level without a 50% retracement beforehand, which is what the bear market had going down to $1,050/oz. in December 2015.

We’re in a new bull market now.

Since December 2015 gold has gone up to about $1,420 – it’s up 40%.

It’s just getting started. Gold is volatile but $1,400 seems like the new floor.

If the new bull market is anything like the last ones it has a long way to go.

Russia is still buying and China is still buying.

The supply has flatlined and the demand has risen. That will raise the price.

Geopolitical hotspots like Iran, North Korea, Syria, Ukraine, Venezuela, South China Sea, says that gold should be higher.

President Trump’s desire for a lower U.S. dollar points to gold going higher in U.S. dollars.

Jim’s intermediate call for gold to be $10,000 U.S./oz isn’t because of the above factors. It’s because he sees a coming global financial reset due to the global debt level.

If gold is needed to restore confidence in the dollar then it would have to be $10,000/oz in order to avoid a massive deflation that throws the world into something worse than the Great Depression.

If you divide the money supply with the gold supply and a 40% backing, and you end up with a price of $10,000/oz.
BLACK PROJECTS AND BUDGETS

Don’t underestimate secret weapons.

The U.S. is said to have a drone craft called the Flying Toaster that flies over an area and disables all the electronics, including Command and Control, and communications systems.

If the U.S. has such a craft, and rumour is they do, then how much would they want North Korea, China or others to know about it? There’s a legitimate role for black programs and black budgets, but if budgets for black projects were used instead as a means to be unaccountable then that would be concerning.
ADVICE FOR THE AVERAGE PERSON

For someone who has $10,000 then Jim recommends you buy one 1 oz. gold coin and put it in a safe place.

That way no matter what happens, the bank freezes your account or closes, or other assets are hard to get to because things get a little crazy, then you’ll have the coin and it will serve you well.

Or else buy 50 silver 1 oz. coins, which would be about the same price as a gold coin.

Jim says he’d rather have that than a credit card, because in a dire situation your credit card won’t work.

Whether you’re very wealthy or a person of modest means you can still buy some things that are real – gold and silver, land, natural resources, water, energy funds or stocks.

Real assets are good to have in this situation. So a little bit of gold, a little bit of silver, keep some cash in the bank, real estate, natural resource, water and energy funds. It’s not a good idea to be highly leveraged in the stock market, because if it gets wiped out then you’ll lose your house if the bank comes to collect the debt.

Nothing is risk free. Real diversification and not just one asset class is best.

Treasury notes and silver stocks aren’t closely correlated so they’re diversified.

While gold and other assets are volatile cash is less so, so it’s good to have some cash in the bank.

Plus, if everything is collapsing and people are sell things then if you have cash you can go shopping for bargains.

Everyone is worried about inflation but deflation is equally possible.

There’s nothing worse than being in debt in a deflation because the real value of the debt goes up.

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Here’s How Gold Moved This Week:

Gold now sits at $1,418.80 US/oz. from kitco.com

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I stopped at the beginning of my run to show you my route this past couple of months. I love this place. Print files are done and at the printer’s. She’s off sailing for a few weeks while I build resin rivers for the handmade packaging of the raw gold jewellery. A new trek into a new waterfall soon for more Gold Rush stones and gold.

The world out there is bobbing up and down without an anchor, but we attach and detach as we choose. That’s where the world is heading. Conciousness and non-locality is the new frontier. Grounded in gold. Elaine~

Single available on iTunes.

In a world without an anchor
you’re subject to the sea
Right before a tempest
Left screaming at the breeze
Walls of rage and water will test what you have learned,
That in a world without an anchor coins are tossed and boats will burn.
There’ll be ships that lie deep (in) state beyond (the) reach
Who will wear a yellow vest?
Who will wash up on the beach?

from “World Without an Anchor”

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Not Much of a Holiday

words and music Elaine Diane Taylor

SOCAN/ASCAP

Single available on iTunes

Bank holidays and long lines at ATMs to get enough for the day. Debt deals behind closed doors. The media telling us what to believe. China building islands in the South China Sea and claiming all the international waves. Markets close and rockets crash. Silken road, treasure, files hacked. Oil, fusion cold. News and nations all sold. 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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