3 Min. Gold News – This Week in Gold – Jim Rickards Q & A with Sprott Money News Pt. 2 – Oct. 11, 2019

October 11, 2019

Synopsis of Part 2 of a Q & A with James Rickards, author of the bestselling books Currency Wars, The Death of Money, Road to Ruin, Aftermath and A New Case for Gold, with Sprott Money News.

 

TOPICS:

Gold-backed U.S. Dollar Alternative
Gold & Cashless Society
Shortage of U.S. Dollars
Q.E.
Central Bank Balance Sheets
Hard Assets
EU Banks
Stocks
Rigged System
Gold

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Link to Q & A video.

 

GOLD-BACKED U.S. DOLLAR ALTERNATIVE

The first countries to offer an asset-backed alternative to the U.S. dollar will be a combination of Russia and China. They’re working on it already.

It will be a digital currency that is called a “permissioned distributed ledger”.

It’s a fancy name for a blockchain where you need permission to be admitted.

Bitcoin is a permissionless distributed ledger – a blockchain where you don’t need permission to mine it, trade it, buy it or sell it.

Anyone can jump into the Bitcoin pool.

A permissioned blockchain is more like a club.

You can only join the club if the membership committee says you can.

Russia and China could set up their own gold-backed cryptocurrency where they trade with Iran, Turkey and North Korea – all the countries who have U.S. sanctions put on them.

Maybe they’ll let others like Hong Kong and Brazil join.

The nations would trade between themselves and keep score with the new currency.

Then once or twice a year they would all settle up on a net basis with physical gold.

It’s a hybrid gold standard where they keep score with a cryptocurrency and then settle up the net balance with gold.

You can see that coming in the next few years. They’re already working on it.

CASHLESS SOCIETY

A cashless society would be bullish for precious metal because it would be your only alternative.

As nations go to negative interest rates the savers have to be herded into a pen before their savings are taken. That pen is a digital currency.

Right now you’d just take your money out of the bank in cash if your account has a negative interest rate (they charge you to hold your money). If society goes cashless then you could buy physical gold and not pay their negative interest.

That’s a way around negative rates and it would be bullish for gold.

SHORTAGE OF U.S. DOLLARS

There is a dollar shortage.

The Fed printed $4 trillion from 2008 – 2014, but the world created $100 trillion of debt at the same time.

There has to be some money to support that kind of debt. There can’t be zero money.

That’s what’s going on right now.

That’s why the REPO market started to seize up at the end of September 2019.

The Fed can put cash in the system and take out U.S. Treasuries as collateral, but then there’s a collateral shortage in the system.

It’s a system problem because the Fed has been tightening (taking cash out) for 2 years. Policy changes don’t show up for about 1 – 2 years so there’s no surprise that there’s a dollar shortage today.

QE

Official QE won’t come until rates hit zero. What the Fed is doing right now is QE… they just don’t call it QE.

CENTRAL BANK BALANCE SHEETS

There is no legal limit to the Federal Reserve and other major central banks’ balance sheets. There may be some central banks where there’s a limit.

The Fed can take their balance sheet as far as they want.

They could fund the Green New Deal but there’s a psychological limit to how much debt the U.S. could take on before there’s a loss of confidence in the dollar.

At that point people would stop using the dollar and they would buy gold, land, natural resources, and anything to get out the dollar. The dollar would crash in value.

That itself could cause hyperinflation.

The trouble is that you don’t know the limit until you’ve crossed it and there’s a crisis.

HARD ASSETS BESIDES GOLD

Good things to own other than gold are energy, water, silver and land.

EU BANKING SECTOR A RISK TO THE SYSTEM?

There are EU banks that are technically insolvent and in distress, but they’re too big to fail so they’ll be bailed out by the central bank of whatever country they’re in.

What will the bail out look like? There are new rules where instead of the government bailing the bank out the banks’ shareholders are at risk of a “bail in”.

Stockholders would be wiped out. Bondholders would take a haircut. Depositers might not get cash and instead be given stock in the bank.

The thing that triggers it is probably something that no one has thought of. We can just see that something will happen, but not the exact trigger or timing.

Good to get ready before it happens because when it goes it goes fast.

CENTRAL BANKS AND STOCKS

Some central banks buy stocks but the Fed just has to cut rates and the stock market goes up.

RIGGED SYSTEMS

All monetary systems are rigged in favour of the wealthy. Just in different ways.

There are only four things that have historically reduced massive income inequality:

1. Mass mobilization warfare

2. A plague

3. A real revolution

4. A systemic collapse.

We don’t want deaths and societal collapse so some income inequality is inevitable.

 

MORE THAN 10% GOLD?

If you actively see signs of inflation then increasing how much gold you have as a percentage of your personal reserves would be a good idea.

Right now there aren’t any official signs.

Along with 10% in gold, Jim recommends holding 30% in cash for now. It’s good to have cash in deflation because you can be quick to get into another asset class when the time comes.

If you’re fully invested in things that are less liquid then you’re stuck.

QE doesn’t cause inflation. A change in psychology causes inflation.

 

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

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Here’s How Gold Moved This Week:

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from The Gold Hub at www.gold.org

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Gold is still hanging around the $1,500 U.S. per ounce area. Since the price is manipulated to wherever those-who-know want it to be (for now), it looks like it’s still the accumulation phase for them.

Nations and parties are buying gold to prep for a monetary reset meeting. It looks like those in power aren’t ready yet.

At the end of a system the middle is the last part standing. The hub of the wheel lasts the longest. The capital in the world is leaving the edges and moving towards the center – the U.S. markets. That’s why the U.S. dollar is soaring. But it can only take so much. If the one part is too strong the system is unbalanced and crashes. People lose confidence in the government itself.

When the hub of the wheel reaches the phase transition stage then it all changes very quickly. What was is not there anymore, it dies and a new system is born.

It looks the same for a long time and then changes quickly and without warning.

Those with power don’t want to lose their advantage in the change. The central bank debt system has reached its end. They’re quietly buying gold to prep for the rules of the new game of Coins & Crowns.

Lots of things could set plans and time off course, like Isaac Asimov’s Mule.

Capital can move like a loose cannon on a ship in a storm. Too fast to tie down.

No one wants to sink the leaky vessel before a new one is built.

But it’s a world without an anchor.

Elaine~

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Gold now sits at $1,504.80 US/oz.   from kitco.com

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Mandolin practice…

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More rivers completed for the bottom of the jewelry boxes. All handmade. All stones and gold from the Gold Rush Trail. The rivers come from a hidden waterfall I hike into. Very unique and limited edition. Low carbon footprint. All gold is fair paid and ethically sourced from artisnal miners along the Canadian Gold Rush Trail. Unrefined and raw. The glass is handtorched in my studio from boro silicate glass. The chain is Italian-made medium curb 18K gold. Each jewelry box has a nugget of gold in the resin rivers I designed and make by hand. Closer to being ready for the sale of the first pieces.

The Raw Luxury collection by Elaine Diane Taylor.

GoldPendant (6 of 9)-Edit

I care about this planet and how we live in it. I care about a sound society and a feeling of ambient peace. I love being in nature. Raw. Pure. Eternal. As nature, as love and as gold.

Elaine~

 

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. Anger goes up and it all goes down, down, down.

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

In a world of flags and spices
We were playing pipes and drums
Sailing on the winds
Selling souls and sums
Gold floating one way
Silver in return
But in a world without an anchor
We all drown in debt in turn
There’s ships that lie
Deep in state beyond the reach
Who will wear a yellow vest?
Who will wash up on the beach?

In a world of borrowed soldiers
The captains’ damage owned
Treasure chests are missing
And the golden anchor sold
We are fed with cake and follies
We are tethered to the shell
Bailing out the breaches
They’re now bailing in the hell
There’s ships that lie
Deep in state beyond the reach
Who will wear a yellow vest?
Who will wash up on the beach?

 

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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.

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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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