3 Min. Gold News – Aug 30, 2019 – Jim Rickards with ABC Bullion

Aug 30, 2019

 

A synopsis of an interview by Nicholas Frappell of ABC Bullion with James Rickards, author of the New York Times bestselling books Currency Wars, The Death of Money, Road to Ruin and A New Case for Gold.

Rickard’s newest book is Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos.

by Elaine Diane Taylor

TOPICS:

China
US Dollar Shortage
The Fed
Australia
Russia
Central Banks
The SDR
Gold to Silver Price Ratio

 

Screen Shot 2019-08-30 at 1.12.16 PM

Interview Link: YouTube

 

CHINA

 

China wants all the gold they can get, and they’ve more than tripled their gold reserves in the last ten years.

China has the largest gold mining output in the world with about 500 tonnes per year.

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However, right now there’s a U.S. dollar shortage in China.

So they’re limiting their gold imports.

China has trillions in U.S. dollar denominated debt and they’re worried about their reserve position being depleted. Their dollar reserves dropped from $4 trillion down to $3 trillion in 2017. So they lost $1 trillion very quickly and are concerned it could happen again.

So China now has capital controls, which means they don’t want to buy and import gold because that would mean their dollars would leave China to pay for the metal.

This is part of the ongoing currency wars and it may go on for a while.

China wants gold, but they have a temporary limit on gold imports as a way to limit U.S. dollar outflow.

Will China strike a large deal with the U.S. and end the trade war and currency war?

If that happens they’ll open their capital account again. But Jim believes that this currency war, trade war, and “Cold War II” is going to get worse.

Meanwhile, the rest of the world still has a high demand for gold.

There are cracks in the system, and so we might have either a new financial crisis or a cyclical recession that turns into a depression.

The business cycle and a financial crisis are two different things, but sometimes they go on at the same time, like in the 2008 crisis.
U.S. DOLLAR SHORTAGE
The U.S. dollar is the primary world trade and reserve (nation’s savings) currency.

The Federal Reserve, the central bank of the U.S., printed $4 trillion woth of dollars between 2008 and 2014.

But while the Fed was busy creating all that currency the world added another $100 trillion in new debt.

The lack of velocity (the speed that the money is spent), the lack of global economic expansion, and the new broader definitions of money leave the world with a shortage of dollars relative to the debts that are denominated in dollars.

China is a big part of this problem. But so is Turkey and a lot of other countries.

There’s no shortage of reasons why there will be another financial panic, and why it will be severe, and the U.S. dollar shortage is near the top of that list.

The amount of U.S. Treasuries that China owns is declining, but they’re not selling because they want to dump the Treasuries as part of the currency war.

They’re selling them because they need the U.S. dollars.

That’s going to continue.
THE FED
Over the last two years, the Fed has done some balance sheet reductions with monetary tightening (taking currency out of circulation) and by increasing interest rates.

They recently reversed that policy.

On July 31st the Fed cut interest rates and announced they were ending the program of reducing the money supply.

So they’ve started to ease again instead of tightening.

But remember there’s a lag time between when the policy is created and when you get results. So, what we’re feeling right now is the effect of what they did in 2017 and 2018.

The benefit of the easing they’re doing now won’t be felt until next year.

We’ve seen the stress in Argentina, Turkey, Brazil, China and other countries.

Global economics is a complex system.

That means a bank failure in one country could lead to a worldwide contagion.
AUSTRALIA

 

Australia is called the “lucky country” and it’s approaching 30 years without a recession. They have a well-educated and productive population, as well as the benefit of natural resources and tourism.

But they’ve hitched their wagon to China.

So if China slows down then Australia is going to slow as well.

Exports from Australia to China will slow down because China has slowed down very rapidly.

It’s best to look at China’s official numbers as overstated.

Plus the currency coming out of China and bidding up real estate and cultural products in Australia is now slowing down, so that will affect prices.

The Australian dollar will probably come down more against the U.S. dollar.

Australia is the second largest gold producer in the world and most of that gold is going to China.

The U.S. is the largest holder of gold in the world with over 8,000 tonnes. About 78% of the U.S.’s reserves are in gold (because they can just print dollars), but the officials don’t take gold seriously as a monetary asset so they aren’t bothered by the amount of gold that Australia is selling to China – it’s under the radar.
RUSSIA
According to Henry Kissinger there are only three countries in the world that really matter: the United States, Russia and China.

Russia is important because it has the largest land mass in the world, the largest nuclear arsenal in the world, is one of the three largest exporters of oil and natural gas, and is one of the few countries that make nuclear power plants. Those reasons among many more mean Russia is a major player even with its problems.

When there are three players in poker, two of them work together to take out the third. And then they’ll turn on each other. That’s why it’s said that if you don’t know who the sucker is at the poker table then you’re the sucker.

The U.S. has in the past pivoted between working with either China or Russia and isolating the other.

But at this time it’s China and Russia working together with the U.S. on the outs.

President Trump understood that China was the main enemy and so when he came into office he wanted to reach out to Russia.

But the false accusations against President Trump of collusion with Russia hindered that communication. It has been difficult for Trump to normalize relationships with Russia because of all the allegations flying around.

As a result, Russia and China’s relationship blossomed at the expense of the U.S.

It’s not certain if it can be repaired.

The relationship between the U.S. and China is not getting better.

In October 2018, Vice President Mike Pence gave a speech where he put the trade war and currency war with China in a larger context.

 

He brought up China’s theft of intellectual property, human rights abuses, geopolitical expansion, and trouble in the South China Sea, among other issues.

Pence framed it as Cold War II.

The U.S. is confronting China over these issues.

It would be good if the U.S. had a better relationship with Russia, but unfortunately they don’t.
CENTRAL BANKS
The U.S. has had two central banks in the past.

They got rid of both of them.

One was in 1816 and one in 1836.

The U.S. had no central bank from 1836 to 1913 and it was a period of great prosperity and innovation.

Countries don’t need a central bank.
THE SDR
SDR stands for “Special Drawing Rights”.

It’s world money.

The IMF, International Monetary Fund, can print it and hand it out to its members as well as to other multi-lateral institutions.

For example, the IMF can print up SDRs (backed by nothing), and give them to the UN to pursue a climate change agenda, which is cover for global governance and taxation.

SDRs are going to come to the foreground in the next financial panic.

Back in 1998, we had a financial panic without a recession. It involved Russia and a large hedge fund called Long Term Capital Management. Wall Street banks bailed out the hedge fund and saved it from bankruptcy (really in order to save themselves).

Ten years later we had the 2008 crisis and the Wall Street banks were in trouble. The U.S. central bank, the Fed, stepped in and bailed out the Wall Street banks, saving them from bankruptcy.

That bank debt is now on the books of the Fed.

That means they can’t raise interest rates back up to the 4% they’ll need to cut in order to get out of the next recession, without causing the recession itself.

In the next crisis who is going to bail out the central banks?

The IMF will.

They’ll print SDRs and hand them out.

But in order to do that they’ll need Russia’s approval and China’s approval.

It could be the end of the U.S. dollar as the world reserve currency. Also, it could be hyper inflationary.

Jim’s basic advice is to have some physical gold for when that happens and to stay on the sidelines for a while.

The newest bull market in gold started in December 2015 and has a long way to go.
GOLD TO SILVER PRICE RATIO
If you take the price of gold and divide it by the price of silver, you get a number which people call the “gold silver ratio”.

Some believe that because the ratio used to be 16 to 1 that it will return to that ratio. Right now it’s about 80 to 1 so silver has to come up about five times in price to get back to the old ratio.

In the 1890s, the gold silver ratio was 16 to 1 as part of a political policy between the Republicans and Democrats, but there isn’t a fundamental or market reason for it.

Silver usually moves along in the same direction with gold.

Sometimes it climbs faster but not necessarily at a fixed ratio.

Gold has risen recently and silver hasn’t yet, which might mean it’s ready for an explosive breakout.

Jim is bullish on silver and owns physical silver.

But he says to not get too hung up on the ratio.

 

Jim can be found at www.jamesrickardsproject.com and on Twitter.

 

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THIS WEEK IN GOLD

 

Here’s How Gold Moved This Week:

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from The Gold Hub at www.gold.org

 

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Gold now sits at $1,523.20 US/oz.   from kitco.com

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The world events seem to be piling up on top of each other. It’s a bit harder to relax in the larger picture when there’s an escalating inflow of alarming information. Each seems to be trying to shock and distract from other goings on, which just may be more important to all of us.

Picking our thoughts like we pick what we’ll wear is a good idea. If we’re outraged by every passing event it’s harder to ride that tunnel through the air towards our destinations. Harder to smell the roses and ocean air. Harder to be ‘here’ ‘now’.

It’s good to be compassionate in balance with looking after your own needs. And to support a cause without falling down a hole of despair at every offence.

The real news is up and down and not left and right. Those with power, the banking elite and others, are in trouble as their “debt is money” system is reaching the end of its cycle. Who is left to lend to? What to do? How to keep and cement power? Ah, that old story of the rise and fall of empires and fortunes.

IndianaJones_sonervous

The world is in trouble and so capital flies towards the capital. Pun intended. Money is moving from the emerging markets back towards the last one standing – the United States. It’s an uber strong dollar that will be what brings the system to its knees.

We’re in the advent of a myriad of new technology, and that move from the mechanical age to the electric age with digital data is being looked at by markets, and those that move them. You can be sure.

It took over the publishing industry, music industry and TV industry. All forms of media. Money is also a form of media, and the digitizing of the money industry is a logical step. Thee step. Big institutions move slowly but that hammer will drop when they have it lined up and ready. Bitcoin is benefitting from that right now. Christine LaGarde at the IMF has made it clear where they’re aimed. They’re just getting the background events lined up to create consent. Either by social power or natural power.

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

 

Cover - EDT - World Without an Anchor

World Without an Anchor
words and music  Elaine Diane Taylor
©2019 Elaine Art & Media
ASCAP/SOCAN

Single available on iTunes.

 

In a world without an anchor
we are 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 will toss and boats will burn.

There’ll be ships that lie deep (in) state beyond (the) reach
Who will wear a yellow vest
and who will wash up on the beach?

In a world of flags and spices
we were playing pipes and drums
Sailing on the winds
and selling souls and sums
The gold sailing one way
and silver in return
But in a world without an anchor
we’ll all drown in debt in turn

In a world of borrowed soldiers
The captains’ damage owed
The treasure chests are missing
and the golden anchor sold
We are fed with cake and follies
We are tethered to the shell
After bailing out the breaches
We’re now bailing in the hell

There’ll be ships that lie
deep in state beyond the reach
Who will wear a yellow vest
and who will wash up on the beach?

Who will wear a yellow vest
and 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

© 2015 Intelligentsia Media, Inc. All rights reserved.

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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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.

……………………………………….

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.

The costs go up and the jobs go down. Hunger goes up and hope goes down. Then anger goes up and it all goes down.

 

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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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