Monday, September 18, 2017

Jim Rickards: The Next Financial Crisis Is Six to Eight Months Away

In this excellent video presentation, Jim Rickards tell's us that It is inevitable the next financial crises is six to eight months away and it will be triggered by a war between the US and North Korea. He still say's one of the best way to protect your wealth preservation is through gold.

Click on the image to view Rickards presentation;





Friday, September 15, 2017

Jim Rickards on How the North Korean Endgame Is Playing out Now


As mounting tensions rise from the latest round of nuclear testing out of North Korea, Jim Rickards believes a considerable window is closing by the United States. The threat of a nuclear armed and capable North Korea is a line that the currency wars expert and macro analyst believes the United States will now allow to be crossed. Speaking on CNBC’s Capital Connection Rickards offered his latest critique of the restrictions and response by the international community on North Korea.

The interview began with a question what an oil embargo would mean for North Korea and how it would impact that country. Rickards blasts, “North Korea has already beaten the world to the punch. They’ve been building up their strategic oil reserves. What that means is they have an estimated year’s worth of held in reserve and China has played a role in these things in the past.”


Tuesday, September 12, 2017

Weird Things Happening In Gold, Expert Sounds the Alarm


Two unusual stories are unfolding for gold — one strange and the other truly weird, this according to bestselling author Jim Rickards. "These stories explain why gold is not just money but is the most politicized form of money," Rickards, the author of Currency Wars said on Wednesday. 

"They show that while politicians publicly disparage gold, they quietly pay close attention to it," Rickards said. The first strange gold story involves Germany and its repatriation of its gold from New York and Paris, Rickards explained how this move was much more political than anything. The second weird event for Rickards is Treasury Secretary, Steve Mnuchin's visit to Fort Knox. After Mnuchin tweeted that all $200 billion dollars worth of gold is still there, Rickards said a few red flags went up for him. 

"Mnuchin is only the third Treasury secretary in history ever to visit Fort Knox and this was the first official visit from Washington, D.C., since 1974. The U.S. government likes to ignore gold and not draw attention to it. So why an impromptu visit by Mnuchin."


Saturday, September 9, 2017

It Won’t Be A Parabolic Rise But $10,000 Gold Is Coming


After hitting its highest level this year, gold has fallen back on profit taking, but best-selling author of Currency Wars Jim Rickards isn’t giving up on the metal just yet. ‘The bigger picture, the one I’m looking at, is that gold hit an interim low on Dec 15 and it’s been grinding higher ever since. 

It’s one of the best performing assets of 2017,’ he told Kitco News. Gold prices rallied to 11-month highs this week as North Korea launched a missile over Japan and even if tensions seem to have cooled off, pushing the safe-haven metal back down to around $1,312.70 an ounce, Rickards is not quite convinced. ‘People seem to have very short attention spans. I’m just looking down the road and you can see the war is coming,’ he said.

- Source, Kitco

Wednesday, September 6, 2017

Jim Rickards Warns - How Gold Regulation Could Come


James Rickards is interviewed and talks about how the system could crack down on gold and what gold regulation really means.


Sunday, September 3, 2017

EXPOSED: The Elite’s Plan to Freeze the Financial System

Today’s complacent markets are faced with a number of potentially destabilizing shocks.

Any one of them could potentially lead to another financial crisis. And the next crisis could see draconian measures by governments that most people are not prepared for today.

You’ll see what I mean in a moment.

But first, what are the catalysts that possibly trigger the next financial crisis?

First off, a debt ceiling crisis is just over a month away. If the ceiling isn’t raised by Sept. 29, the federal government is likely to default on at least some of its bills.

If a deal isn’t reached, it could rock markets and possibly trigger a major recession.

Given Washington’s current political paralysis and intense partisan infighting surrounding President Trump, it’s far from certain that a deal will be reached.

Second, despite some official comments over the weekend downplaying the odds of a war with North Korea, a shooting war remains a very real possibility.

North Korea’s Kim is determined to acquire nuclear weapons that can threaten the lower 48 U.S. states, and Trump is equally determined to prevent that from happening.

Third, a trade war between the U.S. and China seems imminent.

Trump has backed off his campaign pledges to label China a currency manipulator and an unequal trading partner.

And today, Trump is expected to present his case for sanctions against China.

China would likely retaliate, and that could ultimately result in a 10–20% “maxi-devaluation” of the yuan, perhaps by early next year.

That would likely cause a stock market rout. Since China devalued in August 2015, markets fell hundreds of points in single sessions. And that was a much smaller devaluation, less than 2%.

And if markets collapse from either of these scenarios — which is entirely possible — governments will move dramatically to contain the damage.

In my book The Road to Ruin, I discuss a phenomenon called “ice-nine.” The name is taken from a novel, Cat’s Cradle, by Kurt Vonnegut.

In the novel, a scientist invents a molecule he calls ice-nine, which is like water but with two differences. The melting temperature is 114.4 degrees Fahrenheit (meaning it’s frozen at room temperature), and whenever ice-nine comes in contact with water, the water turns to ice-nine and freezes.

The ice-nine is kept in three vials. The plot revolves around the potential release of ice-nine into water, which would eventually freeze the rivers and oceans and end all life on Earth. Cat’s Cradle is darkly comedic, and I highly recommend it.

I used ice-nine in my book as a metaphor for financial contagion.

If regulators freeze money market funds in a crisis, depositors will take money from banks. The regulators will then close the banks, but investors will sell stocks and force the exchanges to close and so on.

Eventually, the entire financial system will be frozen solid and investors will have no access to their money.

Some of my readers were skeptical of this scenario. But I researched it carefully and provided solid evidence that this plan is already in place — it’s just not well understood. But the ice-nine plan is now being put into practice.

Consider a recent Reuters article that admitted elites would likely shut down the entire system when the next financial crisis strikes.

The article claimed that the EU is considering actions that would temporarily prevent people from withdrawing money from banks to prevent bank runs.

“The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge,” said one source.

Very few people are aware of these developments. They get a brief mention in the media, if they get mentioned at all. But people could be in for a shock when they try to get their money out of the bank during the next financial crisis.

Think of it as a war on currency or a war on money. Even the skeptics can see how the entire financial system will be frozen solid in the next crisis.

The only solution is to have physical gold, silver and bank notes in private storage. The sooner you put your personal ice-nine protection plan in place, the safer you’ll be.

- Source, James Rickards via the Daily Reckoning

Thursday, August 31, 2017

The Coming Gold “Break Out”

Gold has conducted what some are calling a “stealth rally” over the past month.

After bottoming at $1,206 per ounce on July 10, gold is at $1,286 this morning, a healthy 6.5% gain in just over one month.

The has been welcome relief for gold investors after a series of “flash crashes” on June 14, June 26 and July 3 contributed to a gold drawdown from $1,294 per ounce to $1,206 per ounce between June 6 and July 10. At that point it looked as though gold might fall through technical resistance and tumble to the $1,150 per ounce range.

But the new rally restored the upward momentum in gold we have seen since the post-election low on Dec. 15, 2016. Gold seems poised to resume its march to $1,300 after the paper gold bear raids of late June.

The physical fundamentals are stronger than ever for gold. Russia and China continue to be huge buyers. China bans export of its 450 tons per year of physical production.

Gold refiners are working around the clock and cannot meet demand. Gold refiners are also having difficulty finding gold to refine as mining output, official bullion sales and scrap inflows all remain weak.

Private bullion continues to migrate from bank vaults at UBS and Credit Suisse into nonbank vaults at Brinks and Loomis, thus reducing the floating supply available for bank unallocated gold sales.

In other words, the physical supply situation is tight as a drum.

The problem, of course, is unlimited selling in “paper” gold markets such as the Comex gold futures and similar instruments.

One of the flash crashes was precipitated by the instantaneous sale of gold futures contracts equal in underlying amount to 60 tons of physical gold. The largest bullion banks in the world could not source 60 tons of physical gold if they had months to do it.

There’s just not that much gold available. But in the paper gold market, there’s no limit on size, so anything goes.

There’s no sense complaining about this situation. It is what it is, and it won’t be broken up anytime soon. The main source of comfort is knowing that fundamentals always win in the long run even if there are temporary reversals. What you need to do is be patient, stay the course and buy strategically when the drawdowns emerge.

Where do we go from here?

August and September are traditionally strong seasonal periods for gold. This is partly due to proximity to the wedding and gift season in India, when strong buying prevails.

Yet there’s more to the gold demand story this year.

Deteriorating relations between the U.S. and Russia will only accelerate Russia’s efforts to diversify its reserves away from dollar assets (which can be frozen by the U.S. on a moment’s notice) to gold assets, which are immune to asset freezes and seizures.

The countdown to war with North Korea has begun. A U.S. attack on the North Korean nuclear and missile weapons programs is likely by mid-2018. The stock market may not have noticed, but the gold market has. This is part of the reason for recent gold strength.

Finally, we have to deal with our friends at the Fed. The strong jobs report on Friday, Aug. 4, gave life to the view that the Fed would raise interest rates at least one more time this year. Rate hikes make the dollar stronger and are a head wind for the dollar price of gold.

But the Fed will not hike rates again this year. Once the market wakes up to the reality of a prolonged “pause” by the Fed, they will conclude correctly that the Fed is once again attempting to ease by “forward guidance.” This relative ease will keep the dollar on its downward trend and be a boost to the dollar price of gold.

The Fed will not hike rates regardless of the strong jobs report. The reason is that strong job growth was “mission accomplished” for the Fed over a year ago. Jobs are not the determining factor in Fed rate decisions today. The determining factor is disinflation.

The Fed’s main inflation metric has been moving in the wrong direction since January. The readings on the core PCE deflator year over year (the Fed’s preferred metric) were:

January 1.9%
February 1.9%
March 1.6%
April 1.6%
May 1.5%
June 1.5%

The July data will not be available until early September.

The Fed’s target rate for this metric is 2%. It will take a sustained increase over several months for the Fed to conclude that inflation is back on track to meet the Fed’s goal.

There’s no chance of this happening before the Fed’s September meeting. It’s unlikely to happen before December, because of weakness in auto sales, retail sales, discretionary spending and consumer credit.

A weak dollar is the Fed’s only chance for more inflation. The way to get a weak dollar is to delay rate hikes indefinitely, and that’s what the Fed will do.

And a weak dollar means a higher dollar price for gold.

Current levels look like the last stop before $1,300 per ounce gold. After that, a price surge is likely as buyers jump on the bandwagon, and then it’s up, up and away.

There’s an old saying that “a picture is worth a thousand words.” This chart is a good example of why that’s true:


Gold analyst Eddie Van Der Walt produced this 10-year chart for the dollar price of gold showing that gold prices have been converging into a narrow tunnel between two price trends — one trending higher and one lower — for the past six years.

This pattern has been especially pronounced since 2015. You can see gold has traded up and down in a range between $1,050 and $1,380 per ounce. The upper trend line and the lower trend line converge into a funnel.

Since gold will not remain in that funnel much longer (because it converges to a fixed price) gold will likely “break out” to the upside or downside, typically with a huge move that disrupts the pattern.

At the extreme, this could imply a gold price on its way to $1,800 or $800 per ounce. Which will it be?

The evidence overwhelmingly supports the thesis that gold will break out to the upside. Central banks are determined to get more inflation and will flip to easing policies if that’s what it takes.

Geopolitical risks are piling up from North Korea, to Syria, to the South China Sea and beyond.

The failure of the Trump agenda has put the stock market on edge and a substantial market correction may be in the cards.

Acute shortages of physical gold have set the stage for a delivery failure or a short squeeze.

Any one of these developments is enough to send gold soaring in response to a panic or as part of a flight to quality. The only force that could take gold lower is deflation, and that is the one thing central banks will never allow. The above chart is one of the most powerful bullish indicators I’ve ever seen.

Get ready for an explosion to the upside in the dollar price of gold. Make sure you have your physical gold and gold mining shares before the breakout begins.

- Source, James Rickards

Monday, August 28, 2017

How Badly Does China Want Gold?


In best-selling author Jim Rickards’ latest book, the New Case For Gold, he brings up one of the most common criticisms of a new gold standard – that there is not enough gold to support it. 

Rickards makes the argument that it would work at a certain price level. In his interview with Kitco News, Rickards also discusses China and gold buying. He suggests that China is suppressing the gold price through the COMEX market in order to build-up more physical supplies. 

Once they have a sufficient supply, equal to the United States, they will no longer care what the metal's price is and it will likely skyrocket, he explains.


Friday, August 25, 2017

Bitcoin No Threat To U.S. Dollar, Gold - Jim Rickards


The cryptocurrency craze continues with the leading virtual currency — Bitcoin — trading near record highs. But, to bestselling author and currency expert Jim Rickards, the new age currency may be in a bubble. 

Delving into the theory of valuation, the Currency Wars author said that even if investors seem to be expressing a liquidity preference for Bitcoin over the dollar, it doesn’t necessarily mean they are losing confidence in the greenback. ‘If you were losing confidence in the dollar than gold would be going up and it’s not, so it looks like a bubble,’ he told Kitco News. 

He added that investors should not worry that virtual currencies take over the U.S. dollar’s reserve currency status any time soon because the market is just too small. Another facet that investors may be ignoring, Rickards continued, is that investors racking up substantial gains from crypto investments might not be properly filing their taxes. “The IRS could subpoena one of these [cryptocurrency] exchanges and freeze up all the bitcoin,’ he said. ‘The IRS did this with Americans with Swiss bank accounts, they’ll do it with bitcoin.’

- Source, Kitco News

Tuesday, August 22, 2017

Why Elites Are Winning the War on Cash

Visa recently unveiled its own offensive in the war on cash. Visa is offering certain merchants a $10,000 reward if they refuse to accept cash in the future.

Not surprisingly, Visa’s competitor is also part of the war on cash. Mastercard is increasing its efforts to encourage merchants to refuse cash. Here’s Bloomberg, quoting the CEO of Mastercard:

“Mastercard Chief Executive Officer Ajay Banga has been one of the most ardent supporters of ditching paper currency in the U.S. The 57-year-old first declared his war on cash in 2010.”

These private efforts by Visa and MasterCard exist side by side with official efforts to eliminate or discourage the use of cash coming from governments in India, Australia, Sweden as well as the United States.

These efforts are always portrayed in the most favorable light. Private parties talk about convenience and lower costs. Governments talk about putting pressure on tax cheats, terrorists and criminals.

Governments always use money laundering, drug dealing and terrorism as an excuse to keep tabs on honest citizens and deprive them of the ability to use money alternatives such as physical cash and gold.

But the so-called “cashless society” is just a Trojan horse for a system in which all financial wealth is electronic and represented digitally in the records of a small number of megabanks and asset managers.

Once that is achieved, it will be easy for state power to seize and freeze the wealth, or subject it to constant surveillance, taxation and other forms of digital confiscation.

The war on cash has two main thrusts. The first is to make it difficult to obtain cash in the first place. U.S. banks will report anyone taking more than $3,000 in cash as engaging in a “suspicious activity” using Treasury Form SAR (Suspicious Activity Report).

The second thrust is to eliminate large-denomination banknotes. The U.S. got rid of its $500 note in 1969, and the $100 note has lost 85% of its purchasing power since then. With a little more inflation, the $100 bill will be reduced to chump change.

Last year the European Central Bank announced that they were discontinuing the production of new 500 euro notes. Existing 500 euro notes will still be legal tender, but new ones will not be produced.

This means that over time, the notes will be in short supply and individuals in need of large denominations may actually bid up the price above face value paying, say, 502 euros in smaller bills for a 500 euro note. The 2 euro premium in this example is like a negative interest rate on cash.

The real burden of the war on cash falls on honest citizens who are made vulnerable to wealth confiscation through negative interest rates, loss of privacy, account freezes and limits on cash withdrawals or transfers.

The whole idea of the war on cash is to force savers into digital bank accounts so their money can be taken from them in the form of negative interest rates. An easy solution to this is to go to physical cash.

The war on cash is a global effort being waged on many fronts. My view is that the war on cash is dangerous in terms of lost privacy and the risk of government confiscation of wealth. India provides the most dramatic example.

How would you like to go to bed one night and then wake up the next morning to discover that all bills larger than $5.00 were no longer legal tender? That’s essentially what happened in India not long ago.

The good news is that cash is still a dominant form of payment in many countries including the U.S. The problem is that as digital payments grow and the use of cash diminishes, a “tipping point” is reached where suddenly it makes no sense to continue using cash because of the expense and logistics involved.

Once cash usage shrinks to a certain point, economies of scale are lost and usage can go to zero almost overnight. Remember how music CDs disappeared suddenly once MP3 and streaming formats became popular?

That’s how fast cash can disappear.

Once the war on cash gains that kind of momentum, it will be practically impossible to stop. That’s why I’m always saying that savers and those with a long-term view should get physical gold now while prices are still attractive and while they still can.

Given these potential outcomes, one might expect that citizens would push back against the war on cash.

But in some places, the opposite seems to be happening.

A recent survey revealed that more than a third of Americans and Europeans would have no problem at all giving up cash and going completely digital.

Specifically, the study showed 34% of Europeans and 38% of Americans surveyed would prefer going cashless.

Notably, Germans are the most resistant to going cashless. Almost 80% of transactions in Germany are done in cash, and many Germans never use credit cards.

The German experience with hyperinflation after WWI and additional monetary chaos after WWII certainly plays a part in this resistance to the cashless society.

Incidentally, the German word for debt, schuld, also means guilt.

Other countries, such as Romania and Bulgaria, which have recent experiences with currency and financial crises, also tend to use cash extensively.

Of course, there’s no denying that digital payments are certainly convenient. I use them myself in the form of credit and debit cards, wire transfers, automatic deposits and bill payments.

The surest way to lull someone into complacency is to offer a “convenience” that quickly becomes habit and impossible to do without.

The convenience factor is becoming more prevalent, and consumers are moving from cash to digital payments just as they moved from gold and silver coins to paper money a hundred years ago.

But when the next financial panic comes, those without tangible wealth will be totally at the mercy of banks and governments who will decide exactly how much of your own money you’re allowed to have each day.

Just ask the citizens of Cyprus, Greece and India who have gone through this experience in recent years.

It will come to the U.S. soon enough.

Other dangers arise from the fact that digital money, transferred by credit or debit cards or other electronic payments systems, are completely dependent on the power grid. If the power grid goes out due to storms, accidents, sabotage or cyberattacks, our digital economy will grind to a complete halt.

That’s why it’s a good idea to keep some of your liquidity in paper cash (while you can) and gold or silver coins. The gold and silver coins in particular will be money good in every state of the world.

I hold significant portion of my wealth in nondigital form, including real estate, fine art and precious metals in safe, nonbank storage.

I strongly suggest you do the same.

- Source, The Daily Reckoning via Jim Rickards

Saturday, August 19, 2017

Jim Rickards: Thoughts on the US Economy, Section 232 and the Gold Price


Jim Rickards chats about his latest book, the potential for future interest rate hikes and US President Donald Trump's steel probe. He also shares his advice for investors.

- Source, Investing News

Wednesday, August 16, 2017

Gold prices have nowhere to go but up: Jim Rickards

Gold prices have nowhere to go but up: Jim Rickards from CNBC.

Gold prices stand to benefit as central banks continue targeting higher inflation rates, says Strategic Intelligence's Jim Rickards.

- Source, CNBC

Friday, August 11, 2017

Michael Pento and Jim Rickards on When it All Comes Apart


Join Michael Pento and best selling author & National security expert Jim Rickards as they discuss North Korea, debt the stock markets and when this all unravels .

Rickard's says "What Are You Waiting For, Get Your Gold Before Your Not Going To Get It Anymore".


Thursday, August 3, 2017

James Rickards: Gold Will Start Heading Higher On “Dwindling” Supply

Gold was down after the Fed’s hike, but I expect it to start heading higher again. Too many powerful forces are driving it behind the scenes. Dwindling physical supply is a major one.


Gold in USD (5 Years)

On a recent visit to Switzerland, I was informed that secure logistics operators could not build new vaults fast enough and were taking over nuclear-bomb proof mountain bunkers from the Swiss Army to handle the demand for private storage.

Geopolitical fear is another. The crises in North Korea, Syria, Iran, the South China Sea, and Venezuela are not getting better. The headlines may fade in any given week, but geopolitical shocks will return when least expected and send gold soaring in a flight to safety.

Fed policy tightening is normally a headwind for gold. But, the last two times the Fed raised rates — December 14, 2016 and March 15, 2017 — gold rallied as if on cue.

Gold is the most forward-looking of any major market. It may be the case that the gold market sees the Fed is tightening into weakness and will eventually over-tighten and cause a recession.

At that point, the Fed will pivot back to easing through forward guidance. That will result in more inflation and a weaker dollar, which is the perfect environment for gold.

In short, all signs point to higher gold prices in the months ahead based on Fed ease, geopolitical tensions, and a weaker dollar.

- Source, Gold Seek

Monday, July 31, 2017

James Rickards: The Fed’s Road Ahead

I’m a big critic of the Fed models, but that’s because they’re obsolete and they don’t record with reality. You need the right ones.

In a typical business cycle, the economy starts from a low base, then gradually business starts expanding, hiring picks up, more people spend money, and businesses expand.

Eventually, industrial capacity is used up, labor markets tighten, resources are stretched. Prices rise, inflation picks up and the Fed comes along and says “Aha! There’s some inflation. We’d better snuff it.”

So it raises rates, usually for a full cycle.

Eventually it has to lower rates when the process goes into reverse. That’s the normal business cycle. It’s what everyone on Wall Street looks at. And historically, they’re right. That process has been happening 40 times since the end of World War II.

The problem is, that’s not what’s happening now. We’re in a new reality.

This is a result of nine years of unconventional monetary policy — QE1, QE2, QE3, Operation Twist and ZIRP. This has never happened before. It was a giant science experiment by Ben Bernanke.

And that’s the key…

You have to have models that accord to the new reality, not the old. Wall Street is still going by the old model.

The new reality is that the Fed basically missed a whole cycle. They should have raised in 2009, 2010 and 2011. Economic growth was not powerful. In fact it was fairly weak. But it was still the early stage of a growth cycle. If they had raised rates, many would have grumbled, the stock market would have hit a speed bump, but it wouldn’t have been the end of the world.

We’d just had a crash. But by the end of 2009, the panic was basically over. There was no liquidity crisis. There was plenty of money in the system. There was no shortage of money and interest rates were zero. They could have tried an initial 25-point rise but they didn’t.

This isn’t Monday morning quarterbacking, either. I was on CNBC’s “Squawk Box” in August ’09. The host turned to me and asked, “Jim, what do you think the Fed should do?”

My response was, “They should raise rates a little bit, just to say they were going to get back to normal.” Of course, that never happened.

Now we’re at a very delicate point, because the Fed missed the opportunity to raise rates five years ago. They’re trying to play catch-up, and yesterday’s was the third rate hike in six months.

Economic research shows that in a recession, they have to cut interest rates 300 basis points or more, or 3%, to lift the economy out of recession. I’m not saying we are in a recession now, although we’re probably close.

But if a recession arrives a few months or even a year from now, how is the Fed going to cut rates 3% if they’re only at 1.25%?

The answer is, they can’t.

So the Fed’s desperately trying to raise interest rates up to 300 basis points, or 3%, before the next recession, so they have room to start cutting again. In other words, they are raising rates so they can cut them.

And that’s what Wall Street doesn’t understand. It’s still operating from its old assumptions about the business cycle.

Wall Street thinks the Fed’s raising rates because official unemployment is low and the economy’s strengthening. But as I just explained, that’s not the reason at all. The reality’s quite different.

The Fed is hiking rates not because economy is strong, but because it’s desperate to catch up with the fact that Bernanke skipped a whole cycle in 2009, 2010 and 2011. So as usual, Wall Street is reading the signals exactly backwards.

The Fed’s actually tightening into weakness.

So now what?

After yesterday’s hike, the Fed still has a long way to get to 3%. That means seven more hikes of 25 basis points each, every other meeting, or four hikes a year. That means the mission won’t be accomplished until June 2019.

What would cause the Fed to back off? Any of three conditions…

Number one is a market meltdown. If the stock market sells off 5%, which would be over 1,000 points on the Dow, that would not be enough to throw them off. But if it goes down 15%, that’s a different story. Ben Bernanke actually told me that not long ago.

Now, if the stock market falls 10%, the Fed will pause. It won’t raise. But it won’t cut either at that point.

Now, markets are complacent right now and are not expecting any sudden moves to the downside. But it’s when markets are most complacent that sudden drops are most likely. August 2015 and January 2016 are good examples. Another drop could be right around the corner.

The second condition is if job creation dries up. Now, job creation does not have to be 200,000 jobs a month, or even 150,000 jobs a month. Their baseline is around 75,000, which is a very low base. If you see jobs go below 75,000, the Fed may pause.

The third condition is disinflation. Now, I’m not talking about outright deflation. I mean inflation falling substantially short of the Fed’s target under a metric called PCE, or the Personal Consumption Expenditure Price Deflator Core.

You may be skeptical of how the Fed measures inflation, and rightly so. But you have to look at what the Fed looks at to know what they’re up to, right or wrong. And they look at the PCE, year over year.

The Fed wants 2% inflation. Lately it’s been getting close. But if that figure drops to, say, 1.4, that’s another reason to hit the pause button. That seems unlikely at this point.

Unless any of these three conditions materialize, the Fed intends to raise rates four times a year, every other meeting, until the middle of 2019. If any one of those three things happen along the way, the Fed will probably hit the pause button. If all three happen, it will definitely pause.

Gold is down today after yesterday’s hike, but I expect it to start heading higher again. Too many powerful forces are driving it behind the scenes. Dwindling physical supply is a major one.

On a recent visit to Switzerland, I was informed that secure logistics operators could not build new vaults fast enough and were taking over nuclear-bomb proof mountain bunkers from the Swiss Army to handle the demand for private storage.

Geopolitical fear is another. The crises in North Korea, Syria, Iran, the South China Sea, and Venezuela are not getting better. The headlines may fade in any given week, but geopolitical shocks will return when least expected and send gold soaring in a flight to safety.

Fed policy tightening is normally a headwind for gold. But, the last two times the Fed raised rates — December 14, 2016 and March 15, 2017 — gold rallied as if on cue.

Gold is the most forward-looking of any major market. It may be the case that the gold market sees the Fed is tightening into weakness and will eventually over-tighten and cause a recession.

At that point, the Fed will pivot back to easing through forward guidance. That will result in more inflation and a weaker dollar, which is the perfect environment for gold.

In short, all signs point to higher gold prices in the months ahead based on Fed ease, geopolitical tensions, and a weaker dollar.

- Source, James Rickards via the Daily Reckoning

Thursday, July 27, 2017

Why the Fed Will Fail Once Again

John Maynard Keynes once wrote, “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

Truer words were never spoken, although if you updated Keynes today, the quote would begin with “practical women” to take account of Fed Chair Janet Yellen. The “defunct economist” in question would be William Phillips, inventor of the Phillips curve, who died in 1975.

In its simplest form, the Phillips curve is a single-equation model that describes an inverse relationship between inflation and unemployment. As unemployment declines, inflation goes up, and vice versa. The equation was put forward in an academic paper in 1958 and was considered a useful guide to policy in the 1960s and early 1970s.

By the mid-1970s the Phillips curve broke down. The U.S. had high unemployment and high inflation at the same time, something called “stagflation.” Milton Friedman advanced the idea that the Phillips curve could only be valid in the short run because inflation in the long run is always determined by money supply.

Economists began to tweak the original equation to add factors — some of which were not empirical at all but model-based. It became a mess of models based on models, none of which bore any particular relationship to reality. By the early 1980s, the Phillips curve was no longer taken seriously even by academics and seemed buried once and for all. RIP.

But like a zombie from The Walking Dead, the Phillips curve is baaaack!

And the person who has done the most to revive it is none other than Janet Yellen, the 70-year-old liberal labor economist who also happens to be chair of the Federal Reserve.

Unemployment in the U.S. today is 4.3%, the lowest rate since the early 2000s. Yellen assumes this must result in inflation as scarce labor demands a pay raise and the economy pushes up against the limits of real growth. Yellen also agrees with Friedman that monetary policy works with a lag.

If you believe that inflation is coming soon and that policy works with a lag, you better raise interest rates now to keep the inflation from getting out of control. That’s exactly what Yellen and her colleagues have been doing.

Meanwhile, back in the real world, all signs point not to inflation but to deflation. Oil prices are declining, intermediate-term interest rates are falling, labor force participation is falling, demographics favor saving over spending and logistics and supply-chain giants like Wal-Mart and Amazon are relentlessly squashing price increases wherever they appear.

Even traditional high-price sectors like college tuition and health care have been cooling off lately.

Yellen and a small group of Fed insiders, including Bill Dudley and Stan Fischer, are keeping up the drumbeat for more rate hikes later this year. Opposition to more rate hikes among Fed officials is growing, including from Neel Kashkari, Lael Brainard and Charles Evans.

This intellectual tug of war is coming to a head.

First, bonds are rallying because the bond market expects a recession or slowdown due to unnecessary tightening by the Fed. Which brings me to Bill Gross…

Practically every investor has heard of Bill Gross. For decades he was the head of PIMCO and ran the world’s largest bond fund. His specialty was U.S. Treasury debt..

PIMCO was always a “bigfoot” in the bond marketplace. In the 1980s and 1990s, I was chief credit officer at a major U.S. Treasury bond dealer, one of the so-called “primary dealers” who get to trade directly with the Federal Reserve open market operations trading desk.

PIMCO had dedicated lines and a dedicated sales team at our firm. When they called to buy or sell, it would move markets. Every primary dealer wanted to be the first firm to get the call.

Gross is famous for outperforming major bond indices by a wide margin. The way to do that is market timing. If you sell bonds just ahead of a rising rate environment, and buy them back when the Fed is ready to reverse course you not only capture most of the coupon and par value at maturity, you can book huge capital gains besides.

Now Gross has issued one of his most stark warnings yet. He says that market risk levels today are higher than any time since just before the 2008 panic. We all know what happened then. Gross says it could happen again, and soon.

No one reads the market better than Bill Gross. So, when he issues a warning, investors are wise to pay attention.

The stock market is giving a different signal. Stocks are rallying because markets interpret Fed rate hikes as a signal that the economy is getting stronger.

Both markets cannot be right. Either stocks or bonds will crash in the weeks ahead.

Gold is watching and waiting, moving down on deflation fears and then up again on the view that the Fed will have to reverse course once the economy cools down.

My models show that bonds, Bill Gross and gold have it right and that stocks are heading for a fall.

The stock market correction won’t come right away, because the Fed is still in a mode to talk up rate hikes and strong growth and to dismiss disinflation as “transitory.”

Yet even Janet Yellen can’t ignore reality forever. The Atlanta Fed GDP growth forecast for the second quarter has gone from 4.3% on May 1, to 3.4% on June 2, to 2.9% on June 15.

Today it released its latest growth forecast, which remains unchanged from its June 15 reading — 2.9%.

Something is slowing down the economy, and that something is Fed rate hikes.

By August, even the Fed will get the message. But by then it may be too late. If Q2 growth comes in at 2.5% combined with Q1 growth of 1.2%, that would put 2017 first-half growth at about 1.85%.

That’s even weaker than the historically weak 2.0% growth of the current expansion since June 2009. This is not the stuff of which inflation is made.

The Fed’s bungling should come as no surprise.

The Federal Reserve has done almost nothing right for at least the past twenty years, if not longer. The Fed organized a bailout of Long-Term Capital Management in 1998, which arguably should have been allowed to fail (with a Lehman failure right behind) as a cautionary tale for Wall Street.

Instead the bubbles got bigger, leading to a more catastrophic collapse in 2008. Greenspan kept rates too low for too long from 2002-2006, which led to the housing bubble and collapse.

Bernanke conducted an “experiment” (his word) in quantitative easing from 2008-2013, which did not produce expected growth, but did produce new asset bubbles in stocks and emerging markets debt.

Yellen is now raising rates in a weak economy, which should produce the same recessionary reaction as 1937, the last time the Fed raised into weakness.

Why this trail of blunders?

The answer is that the Fed is using obsolete and defective models such as the Phillips Curve and the so-called “wealth effect” to guide policy. None of this is new; I’ve been saying it for years in books, interviews and speeches.

What is new is that even the mainstream media is beginning to see things the same way. Fed leaders have been exposed as charlatans, like the Professor in the Wizard of Oz.

The Fed’s latest failure will cause policy to shift to ease before September in the form of forward guidance on no further rate hikes this year. Just one more failure in a long list.

It’s time to load up on Treasury notes, gold and cash and lighten up on stocks. The Fed may be the last to learn about deflation, but when they do, the policy response could be instantaneous and markets could suffer whiplash.

That’s what happens when zombies are on the loose.



Monday, July 24, 2017

Rickards: The Real Reason for the Fed Hikes


It’s been an interesting day. Cryptocurrency Ethereum hits a record high as OPEC oil production increases thanks to Iraq and Libya. Jim Rickards joins us live to talk about what’s going on tomorrow at the Federal Reserve while Beijing scores a major win as Panama establishes ties with China, leaving Taiwan out in the cold. Rounding us out, Manuel Rapalo takes a look at a malware that reportedly cause a major power outage. All that and more on today’s Boom Bust!

- Source, Boom Bust

Friday, July 21, 2017

Jim Rickards: Bitcoin vs. Gold

Jim Rickards joined The Street and Kitco’s Gold Report to discuss bitcoin, gold and the future economy with Daniela Cambone-Taub. The conversation covered a leader in virtual currency, bitcoin, which continues to make headlines in financial media coverage. Jim Rickards’ interview takes on investor confidence, liquidity preferences and what it might mean for the U.S dollar and gold.

To begin the conversation the host asked how Rickards’ saw the cryptocurrency and the craze unfolding. Rickards’ pressed, “It is interesting. I looked at it last night and it was nearing $3,000 for one bitcoin. It could be closing $4,000 by tonight.”

“Bitcoin is a form of money. I have no quarrel with that. When people say the price is $2,000 or $3,000 it is still not an investment and has no yield. When you buy stock in a company you can analyze the company, the management, the assets, etc. When you buy a bond you can see the interest rate, who is the issuer, creditworthiness, inflation. There are ways to analyze all of these things.”

“There are ways to analyze these things. When you buy a bitcoin and give dollars, euro, yuan to get bitcoin all you are doing is exchanging one form of money for another. It has no yield. There are no bitcoin investable assets. There are no bitcoin bonds. You are just swapping money. When you see the price going to $2,000-$3,000 you can say that bitcoin is going up, but you can also say that the dollar is going down.”

Jim Rickards is a currency expert and economist who examines the complex dynamics of geopolitics and global capital. Rickards’ has worked as a portfolio manager, lawyer and held various senior positions on Wall Street. His most recent New York Times best seller, The Road to Ruin offers his critical analysis of financial crises and what he believes is ahead for the global economy.

When speaking on the trend and value of the cryptocurrency Rickards’ noted, “People are expressing a liquidity preference for bitcoin as a form of money over dollars. That’s one theory of valuation. What’s the evidence for that? None. Because, if that were true, if you were losing confidence of the dollar then gold would be going up and it’s not. So it looks like a bubble.”

The host then pressed on the restriction on “printing” of the virtual money and its reproduction Rickards’ responded that it, “is capped to some level but we’re not there yet. Where does bitcoin come from? Yes, bitcoin can be purchased on a secondary market. But they are created by “miners” which is a bit of a misnomer. They’re basically people with a lot of computing power and developing expertise that solve very hard math problems and give a bitcoin as a reward. When bitcoin reaches levels similar to today, two or three thousand dollars, that is a pretty big incentive.”

“While the cost of [digital] “mining” is not zero, but it is pretty low relatively to the cost. To me it looks a bit more like the Fed. How much does it cost the Fed to create a dollar? The answer is zero. It doesn’t cost them anything to create a dollar.”

“What does it cost to create bitcoin? Sure, you have some investment in computing but it is nowhere near the market price. [So that’s why] it looks a bit like the Fed where you keep cranking them out, they are money, and when you buy bitcoin for dollars you are just swapping money.”


Tuesday, July 18, 2017

We Are Due For Another Financial Crises and Gold Will Explode Higher

Every five, six, seven years, financial crises happen. It’s been eight years since the last one. How long do you think we’re going to go? So that is a catalyst for much higher gold prices.

But I don’t worry much about manipulation. I know it goes on, and I know why it goes on, as I spoke to the statistician’s expert witnesses in some of the pending litigation on gold manipulation.

On June 6th, for example, gold got whacked 2 percent because somebody sold $4 billion’s worth of future contracts on the COMEX. Gold was getting close to $1,300 an ounce.

The impact on the markets is like selling $4 billion in gold. But it wasn’t gold. It was paper gold.

Four billion dollars’ worth of gold is 90 tons. Do you think you could sell 90 tons of physical? You can’t source 90 tons of real gold. You are lucky if you can get a couple of tons of gold. All the mines in the world produce a little over 3,000 tons a year. Those 90 tons are close to 3 percent of all the output of all the gold in the world, with one phone call.

But the point is, all manipulations fail. Jim Fisk and Jay Gould ran a gold corner in 1869, and it failed. The London Gold Pool in the late 1960s failed.

So just get your gold allocation—I recommend 10 percent of investable assets—and put it in a safe place, keep out of the banking system, and sit tight.

- Source, Jim Rickards via Epoch Times

Saturday, July 15, 2017

James Rickards: Fed Is Going to Cause Recession

James Rickards, author of “The Road to Ruin,” has successfully predicted Federal Reserve (Fed) policy in the past. In this interview with The Epoch Times, he explains why the recent tightening could lead to a recession and why he recommends gold as a “crisis hedge.” He also explains why he thinks bitoin is in a bubble.

The Epoch Times: Why did the Federal Reserve (Fed) hike rates last week, and what will its policy look like in the future?

James Rickards: They’re trying to prepare for the next recession. They’re not predicting a recession, they never do, but they know a recession will come sooner rather than later. This expansion is 96 months old. It’s one of the longest expansions in U.S. history. It’s also the weakest expansion in U.S. history. A lot of people say, “What expansion? Feels like a depression to me.”

I think it is a depression defined as depressed growth, but we’re not in a technical recession and haven’t been since June 2009. So it’s been an eight-year expansion at this point, but it won’t fare well, and the Fed knows that. When the U.S. economy goes into recession, you have to cut interest rates about 3 percent to get the United States out of that recession.

Well, how do you cut interest rates by 3 percent when you’re only at 1 percent? The answer is, you can’t. You’ve got to get them up to 3 percent to cut them back down, maybe to zero, to get out of the next recession. So that explains why the Fed is raising interest rates. That’s the fourth rate hike getting them up to 1 percent. They would like to keep going; they would like to get them up to 3, 3.5 percent by 2019.

My estimate is that they’re not going to get there. The recession will come first. In fact, they will probably cause the recession that they’re preparing to cure. So let’s just say we get interest rates to 1 percent and now you go into recession. We can cut them back down to zero. Well, now what do you do? You do a new round of quantitative easing (QE).

The problem is that the Fed’s balance sheet is so bloated at $4.5 trillion. How much more can you do—$5 trillion, $5.5 trillion, $6 trillion—before you cause a loss of confidence in the dollar?

There are a lot of smart people who think that there’s no limit on how much money you can print. “Just print money. What’s the problem?” I disagree. I think there’s an invisible boundary. The Fed won’t talk about it. No one knows what it is. But you don’t want to find out the hard way.

The Epoch Times: What about balance sheet reduction, reversing the QE that you are talking about?


James Rickards thinks bitcoin is a bubble, he prefers gold as a crisis hedge.

Mr. Rickards: You probably want to get from $4.5 trillion, down to $2.5 trillion. Well, you can’t sell any treasury bonds. You destroy the market. Rates would go up, putting us in recession, and the housing market would collapse. They’re not going to do that. What they’re going to do is just let them mature.

When these securities mature, they won’t buy new ones. They won’t roll it over, and they actually will reduce the balance sheet and make money disappear. They’re going to do it in tiny increments, maybe $10 billion a month or $20 billion a month.

They want to run this quantitative tightening in small increments and pretend nothing’s happening. But that’s nonsense. It’s just one more way of tightening money in a weak economy; it will probably cause a recession.

- Source, Epoch Times, Read the Full Interview Here

Wednesday, July 12, 2017

Dollar May Become Local Currency Of The U.S.

Welcome to this week's Market Wrap Podcast, I'm Mike Gleason.

Coming up, we'll hear part one of an amazing two-part interview with Jim Rickards, author of Currency Wars, The New Case for Gold and The Road to Ruin. Jim shares his insights on the Fed's supposed plan to unwind its balance sheet and what it will mean for the economy and for gold prices. He'll discuss some potential fireworks involving the U.S. dollar as it continues losing its reserve currency status. Don't miss a must-hear interview with Jim Rickards, coming up after this week's market update.

Beaten down gold and silver markets showed signs of recovering late this week as prices have risen above recent lows. Mining stocks are rallying strongly, pointing to upside potential for metals in the days ahead.

As of this Friday recording, gold prices come in at $1,256 an ounce, unchanged since last Friday's close. The silver market is also flat on the week with spot prices currently coming in at $16.74. Platinum is off very slightly at $932 an ounce. While palladium, which was outperforming again through Thursday close when it posted a new high for the year, is off 2.5% so far today and is now down 0.5% overall this week to trade at $869.

All of the precious metals are outperforming crude oil this year. Oil prices took another dip earlier this week on concerns about over-supply. The glut has persisted despite OPEC's vows to cut production.

The longer prices persist below $50 a barrel, the more non-OPEC producers will also have to hunker down. Many shale and offshore drilling projects that came online a few years ago are simply uneconomic at today's prices.

By next year, things could look quite different in the market for crude and other commodities. Despite a surge in sales of electric vehicles, global demand for oil will continue to rise. The U.S. Energy Information Administration projects the world will use 100 million barrels of oil per day in 2018, up from 98.5 million this year.

Demand for industrial and precious metals will also rise. But the beleaguered mining industry will have difficulty meeting it. In 2018, we could be facing record supply deficits in copper, silver, and other metals...

- Source, Seeking Alpha, Read the Full Article Here

Saturday, July 8, 2017

Jim Rickards - Bitcoin Looks Like A Bubble


Is Bitcoin now in bubble territory? Will it scream higher before it comes crashing down? Or could it possibly be the next big thing, the replacement for the flawed fiat currency system that we now find ourselves under? Jim Rickards discusses.

- Video Source

Wednesday, July 5, 2017

Will gold and silver prices be climbing higher?


Gold and silver prices generally move inversely to the U.S. dollar, which is expected to remain weak, says Strategic Intelligence's Jim Rickards.

- Source, CNBC

Thursday, June 29, 2017

Bitcoin No Threat To U.S. Dollar, Gold


The cryptocurrency craze continues with the leading virtual currency — Bitcoin — trading near record highs. But, to bestselling author and currency expert Jim Rickards, the new age currency may be in a bubble. Delving into the theory of valuation, the Currency Wars author said that even if investors seem to be expressing a liquidity preference for Bitcoin over the dollar, it doesn’t necessarily mean they are losing confidence in the greenback. ‘If you were losing confidence in the dollar than gold would be going up and it’s not, so it looks like a bubble,’ he told Kitco News. 

He added that investors should not worry that virtual currencies take over the U.S. dollar’s reserve currency status any time soon because the market is just too small. Another facet that investors may be ignoring, Rickards continued, is that investors racking up substantial gains from crypto investments might not be properly filing their taxes. “The IRS could subpoena one of these [cryptocurrency] exchanges and freeze up all the bitcoin,’ he said. ‘The IRS did this with Americans with Swiss bank accounts, they’ll do it with bitcoin.’

- Source, Kitco

Saturday, June 3, 2017

China, Currency Wars and Gold

When asked about President Trump’s commentary on China not being a currency manipulator and whether the U.S and China currency war may be over Rickards’ indicated, “It is not over. I would say we’ve been in one big currency war since 2010… This is just one long currency war. They can last for 10 or 15 years. At times it will get more intense.”

“What Trump is doing is all part of The Art of the Deal. They’ve made it clear that they’re not going to label China a currency manipulator. That was a bargaining chip for Trump to get help [from China] on North Korea. We’re headed to war with North Korea and the Chinese have helped. They’ve mobilized the People’s Liberation Army (the Chinese army) and put them on the border, they have said that they are not going to import coal from North Korea. Trump is situational, mercurial and not terribly hard to predict in the sense that you can predict the unpredictable.”


When asked about Trump’s leverage for the Federal Reserve, Rickards indicated, “Right now Trump does not want the Federal Reserve to raise rates because it would slow the economy. The Fed is going to raise rates because they have bad models… They have bad models and can’t see the recession coming. Trump is trying to understand what leverage he has on Janet Yellen – and that is her job position. He has indicated that he may very well keep Yellen if she does not raise rates. Then, along comes the Godfather – Robert Rubin, who is the most powerful figure in finance that is behind the scenes. He came out yesterday with an Op-Ed that said “don’t play politics with the Fed.” There is a struggle going on with the Fed. Trump will have five open seats at the Fed over the next year. Trump essentially owns the Fed.”

When asked about what actions he might recommend be taken ahead of perceived economic trouble Rickards urged, “The first thing I would recommend is to have 10% of your investable assets in gold. When I say investable assets, what I mean is take your home equity, your business equity, etc. and put that to one side… whatever is left from that investable asset remainder should be put into physical gold. I don’t recommend paper gold. They trade GLD ETF’s here on the NYSE. That’s good for short term but will not save you in a panic. I would also recommend real estate and even cash… I might not have it for long, but I like it in the short run. It gives you optionality. You can pivot. Inflation and deflation are both in play. The person with cash can be nimble.”


Tuesday, May 30, 2017

Trump, The Federal Reserve and the Looming Recession

“Here’s the point I make in my book, in 1998 Wall Street got together and bailed out a hedge fund. Then in 2008 the central banks and bailed out Wall Street. In the next crisis, who is going to bail out the big banks. In other words, each crisis gets bigger than the one before. Each bailout gets bigger than the one before. We’re now to the point where we’ve exceeded the capacity of the central banks to “save the day.” When the next crisis hits… where’s the money going to come from next? The Fed balance sheet has expanded from $800 billion to $4 trillion to deal with the last crisis. The problem is they have not normalized and are still at the $4 trillion mark. What are they going to do in the next crisis… Go to $8 trillion? What’s the limit? There is an invisible limit. The Fed knows it. They’re not prepared for the next crisis right now.”

“Where is the money going to come from if you have to reliquify the system? It has to come from the International Monetary Fund (IMF). They have the only clean balance sheet left. We’re focused on trillions of Special Drawing Rights (SDR’s), or world money, that they will print. These outcomes are very predictable based around the models and complexity theory.”

When asked about the Federal Reserve plan to reduce its balance sheet by the Modern Wall Street host, Rickards responded, “I wish they had done it eight years ago. Creating liquidity to deal with the crisis in 2008 was what they were supposed to do. I’ll give them credit QE 1 (quantitative easing), but QE 2 and QE 3 were just experiments by Ben Bernanke. I’ve spoke to Ben Bernanke about this and those are his words, not mine. He indicated that thirty years from now scholars will look back and tell us if we did a good job.”

“Right now, it’s not working. We never got growth [in the economy]. The Fed in 2009 and 2010 when it set out on QE 2 never thought we would be in 2017 with a $4 trillion balance sheet and less than 1% growth – but here we are. I’ll give Janet Yellen for starting the process – but it should’ve been done seven or eight years ago.”


Saturday, May 27, 2017

Rickards: Predict the Unpredictable... We're Heading Straight Into a Recession


Jim Rickards joined Modern Wall Street and host Olivia Bono-Voznenko outside of the New York Stock Exchange in order to discuss his latest book, “The Road to Ruin” along with a series of topics focused on currency wars, the Federal Reserve and the looming recession facing Trump.

When asked about whether he is suggesting an inevitable economic catastrophe or whether the system is setting up for disaster he responded, “Both items are true. It is the way we’re structured and the risk in the system that will lead to a catastrophe. I would distinguish between a financial panic seen in 1998 and 2008, and a normal business cycle. Right now I think we’re more vulnerable to the business cycle. I think we’re headed into a recession.”

Jim Rickards is a New York Times best-selling author of The Road to Ruin. He is a lawyer who worked on Wall Street for decades. Currently, he advises the U.S intelligence community and military outlets on topics covering currency wars and international economics.


Tuesday, May 23, 2017

The Instability of the System is Something We Should All Be Concerned About


When asked about the confidence that is currently boosting the markets, Rickards’ remarked, “First off, I don’t put a lot of stock in confidence reports… There is a high correlation between consumer confidence and the stock market. The reason consumers are confident is because the stock market is going up. As soon as the stock market goes down, consumer confidence is going to plunge. So what could cause it? Imagine that snow is building up on a mountainside. You could look at it and see its unstable and know it is going to collapse. All it takes is one snowflake to come along, start a slide and disturb others while gaining momentum. The next thing you know the whole avalanche is coming down. Who do you blame? The snowflake or the system as a whole?”

“What I am doing is looking at the system as a whole. It is the instability of the system that we need to be concerned about… There are lots of things that could cause it. That’s not the important aspect to focus on. My advice to investors is get gold now. Don’t go all in, I recommend 10% of your investable assets. That’s not 50% or 100%. That’s your insurance if everything I am saying is wrong, you won’t get hurt with that slice of gold… But if things do get bad and fall apart you’ll be very happy to have it.”


Wednesday, May 17, 2017

The Reality of the Trump Tax Plan

Offering his insights the author explained, “I’ve looked at it and understand the details but it is almost meaningless. I think this is for show and something of a “trophy” for Donald Trump’s first hundred days. They want to put a stake in the ground and begin negotiation but the numbers [on the tax bill] don’t add up and it would never get through the U.S Congress with the present form.”

“It is completely devoid of detail and even the points given don’t give specifics. It is an interest starting place and a good discussion point but I don’t take it very seriously at all. There will be a tax bill later on in the year though.”

When asked how the market has responded in the past months to the talk about the tax plan he pressed. “President Trump was elected in November and the U.S market went up with the S&P jumping 100 points, the Dow Jones went up 1000 points – because of the possibility of the Trump tax cuts. Then in December the Dow Jones went up another 1000 points because of the possibility of the Trump tax cuts. Then again in January the market went up another 1000 points because of the Trump tax cuts. This is bubble behavior. The market went up three times based on the same tax cuts.”

“[The President] is only going to cut taxes once. The market seems to react at every rally opportunity. There is an old saying on Wall Street “buy the rumor, sell the news.” Late today the U.S stock market averages turned down because they took a look at the tax cut proposals released today and it didn’t have a lot of the things they wanted with details expected. It is a one page press release, so we still have more to see. I think the market is going to reserve judgement.”

“If, in fact, the proposed tax bill doesn’t come anywhere close to what Trump is describing the market is going to sell off because they cannot meet expectations.”


Sunday, May 14, 2017

Rickards: Trump Tax Plan is a Sideshow


Jim Rickards joined Sky News Australia while speaking from New York City he delved into the expectations of the Trump tax plan proposals, what the political landscape shows the general public and how the market could react.

When asked about his read on the proposed “largest tax reform in U.S history” Rickards did not hold back. “In a carnival or circus you used to have something called a side show. It would have funny acts with sword swallowers, flame swallowers or living mermaids. I view this whole thing as a side show. I don’t think that analysts should take it very literally. I think it is very difficult for viewers outside of the United States to understand. Most democratically elected parliamentary systems operate under where when the Prime Minister directs something, if they have a working majority, it becomes the law. While there is usually some debate, the leadership typically gets what they want.”


Wednesday, May 10, 2017

Jim Rickards: The Numbers Impacting the Fed

Jim Rickards joined Stephen Guilfoyle on The Street to discuss his latest take on the numbers that will move the Fed in through its decision making process. During the conversation Jim Rickards and Mr. Guilfoyle, also known as “Sarge” on Wall Street, cover how the Federal Reserve will continue to push rates higher and potentially trigger a recession.

To begin the discussion Sarge prompted Rickards’ on his read regarding the trajectory of monetary policy in the United States. Rickards noted, “I see the Federal Reserve raising rates in June — the market is getting there, they’re not quite ready yet though. The Fed is on track to raise rates four times a year until 2019 in order to get the Federal funds rate at 3.25%. The expectation is rate hikes in March, June, September, December in a sequence until 2019.”

“There are only three reasons that the Fed might his a “pause button.” There are only three reasons they would do so. First, if job creation falls below 75 thousand per month, which is a pretty low hurdle. Second, if the stock market fell out of bed and I don’t mean 5%. If the Dow was to fall more than 2000% that would cause the Fed to pause. The third thing would be disinflation. Inflation is currently moving toward the Fed’s goal but if it started to move the over way [you could see the central bank take a pause]. If you don’t see those things then expect the Fed to raise four times a year.”


The bestselling author went on to note, “This has nothing to do with the business cycle. This is where I think Wall Street has got it wrong in assuming “you’re raising rates when the economy is strong, so the economy is strong” which has been true for seventy years – it’s not true now. They’re raising rates into weakness. The Fed has to get rates up so that they can cut them in the next recession. They skipped a cycle and now have to make up for lost time.”

Jim Rickards is an American economist and bestselling author who just released the paperback version of his book The Death of Money. Rickards’ is a currency wars expert who has advised the United States government on issues related to currency wars and international economics.

When asked whether the Fed could cause the next recession Rickards’ pressed, “They might. That’s the finesse. Can you raise rates in order to prepare to cure the next recession, without causing the recession you’re trying to cure? I think the answer is probably no. For the first time ever the Fed is tightening into weakness. Now the Fed is tightening for a completely different reason than the business cycle. They’re trying to make up for lost time.”

When asked whether the Federal Reserve is acting on partisan reasoning Rickards’ did not hold back in expressing, “I have recently written on just that where I noted – Donald Trump owns the Fed. What I mean is he’s got three vacancies that he’ll be able to fill. There is a lone Republican on the Federal Reserve’s board with Jay Powell. He’s been alone ‘in the sandbox’ for years and he’s going to potentially three Republican replacements joining him to take up four seats. Janet Yellen [the chairman of the Federal Reserve] is up in January 2018.”

“While that will need Senate confirmation, expect President Trump to name her replacement by November – if not sooner. So that will allow for a fifth Republican on board. Then, Stanley Fischer term with end in June 2018. That will allow for six seats to be filled. At that point Lael Brainard will be the last remaining board member from a Democrat. No president has had that many vacant seats at one time since Woodrow Wilson… You’d have to go all the way back to the creation of the Fed in 1913 when Woodrow Wilson had a vacant board except for two automatically filled seats.”


“Trump owns the Fed. Whatever Trump wants, he’s going to get. The question is, what does Trump want? A lot of speculation is that he’ll want ‘easy money’ because he’s talking about a cheaper dollar. [Expect Trump] to put ‘hard money’ people on the board to not fight the currency wars but to fight the trade wars.”

The Street host then asked whether Rickards’ whether he expected practitioners rather than academics to be appointed? Rickards took the case to point saying, “I think there will be a mixture. The leading candidate right now to replace Janet Yellen is Kevin Warsh. He was on the board before and there is no reason for him to go back on the board unless he’s going to be chairman.”

Rickards’ signals, “If he is seen being appointed to one of the vacancies, you know he’ll be the future chairman. That would make Yellen a lame-duck from day one. I think we will see people appointed who will believe that interest rates should already be at 2%.”


Sunday, May 7, 2017

Jim Rickards: Trump Owns The Fed


Jim Rickards joined The Lance Roberts Show to discuss Trump’s first 100 days in office, the Fed and what he has identified as The Death of Money. During the conversation Rickards calls attention to the biggest underreported story facing Trump and what to anticipate in the economy going forward.

Lance started the conversation asking about Rickards impressions on Donald Trump’s initial first weeks in office and the “bumps out of the gate” coming out. Rickards began by noting, “Historians and pundits like to talk about the first 100 days of a president. It is a big deal because there is no doubt that a President’s power is at its peak just after the election. The second term and lame-duck periods are difficult to getting much done. With Trump it has been a mixed bag. He’s had some high profile legislative failures. They failed with repealing Obamacare and it appears it is going to take longer than expected with tax reform.”

“On the executive order side, this has been a revolution. Whether you look at climate change, more military spending the U.S profile in the middle east, trade and tariffs, etc. Trump has done a lot of what he said he was going to do. So, on the one hand a lot of activity and promises kept. I would think that to continue but with some high profile failures also… Most presidents get Congressional Honeymoon, but it appears Trump’s got more of a burning bed.”


Monday, May 1, 2017

James Rickards - Gold Repeats Itself


James Rickards discusses the cyclical nature of the markets and how they always repeat themselves time and time again throughout history. This time, it is never different. Gold will rise again.


Friday, April 28, 2017

They're Going To Lock Down The System


This week, seasoned financier, risk manager and author Jim Rickards returns to the program to share the predictions from his new book The Road To Ruin: The Global Elite's Secret Plan For The Next Financial Crisis.

Rickards warns of a coming confidence boundary in central bank omnipotence. Once breached, trust and belief in the central banking cartel quickly vaporizes. Rickards predicts that boundary will be crossed by 2018 or sooner; and when it is, the entire financial system will go into lockdown, freezing access to our money.


Friday, April 21, 2017

James Rickards: End Game for the Global Economy


On Mises Weekends this week, James Rickards joins Jeff to discuss The Road to Ruin, his latest book outlining what financial elites have planned for the next financial crisis. Rickards highlights a number of policy tools governments and central bankers have created for themselves, and points to their handling of recent crises in Cypress and Greece bail-in approach as patterns for the rest of the world.

- Source

Friday, April 14, 2017

James Rickards: China Disaster to Trigger Gold Run...


Is a massive collapse brewing in the Chinese economy? Perhaps, and what would this entail? Can it be staved off, or are we looking at a massive economic collapse on the horizon, that will have drastic effects on the world? James Rickards explores.

- Source

Monday, April 10, 2017

I'm Extremely Bullish on Gold Under a Trump Presidency

Gold's got a little bit of a headwind right here in the short run, because I expect the Fed to raise interest rates in March.

If they don't, they'll almost certainly raise them in June, I think March, but whether it's March or June, you're looking at a rate hike, you're looking at the market discounting further rate hikes. This is what Janet Yellen said in her recent testimony before the Congress, and so that's going to make the dollar stronger which is a little bit of a headwind for gold. But just looking passed that a little bit, we have an extraordinary situation where there are three vacancies on the Federal Reserve Board right now. Two completely empty seats, and one, Dan Tarullo, who just announced his resignation.

He announced it, but I think it'll be effective sometime in April, so count that as a third seat and then we have two others, one Janet Yellen, her term expires next January, so the President's going to have announce that replacement by December, and then beyond that, Stan Fisher in the middle of next year. You're looking at three seats immediately for appointees by the end of the year, including a new chairman, and then one just six months behind that. There are only seven seats on the Board of Governors at the Fed, so Trump is going to fill five of them at a minimum, so five of them in the next 16 months, and there's one Republican already on the board, Jay Powell, you don't hear much about Jay Powell, that's because he's outnumbered by the Democrats. Well, that's about to change.

He's going to find a lot of his buddies sitting next to him, so Yellen, to say her days are numbered as Chairman is an understatement. She's going to be outvoted, outgunned, out manned almost immediately once the President makes these announcements. So, Trump basically owns the Federal Reserve Board because of this appointment position situation, so Trump's going to get whatever he wants. The question is what does he want? Well, he kind of told us. He and Steve Mnuchin, the new Secretary of the Treasury said they want a weaker dollar. Well, okay, if you want a weaker dollar, then don't be raising rates, don't be pursuing a tight money policy.

If Trump follows through on the logic of the cheaper dollar, he's going to appoint doves to the board, the market's going to get the signal immediately, and the price of gold is going to soar because easy money, weak dollar means higher dollar price for gold. So, we've got some very short run headwinds, maybe between now and April, but for the certainly the second half, even the last three quarters of the year, I'm extremely bullish on gold.

- Source, Jim Rickards

Friday, April 7, 2017

Jim Rickards' Predictive Analytics: Brexit and U.S. Election 2016


Meraglim's Chief Global Strategist Jim Rickards demonstrates our predictive analytics on international news shows ahead of BREXIT and US presidential elections...


Tuesday, April 4, 2017

China Will Doing Everything They Can to Stay in the IMF's SDR

If your investors, your citizens perceive that the exchange rate is going to break and you're trying to maintain the exchange rate, the way you do it, you use your reserves to buy your own currency. So, if money's going out the door and my currency's trying to get weaker, and I'm trying to hold it up to a certain level, I'm trying to peg it to a certain level, how do I actually do that?

Well, the way I do it if I'm China, and I'm trying to prop up the yuan, I take dollars and I buy the yuan. Some businessman says, "I want to get my yuan out of the country," and I'm the central bank, I say, "Okay, give me your yuan. Here are the dollars," and you send the dollars out of the country. But I buy it at a fixed rate and that's how I maintain the pace. In other words, you have to use up your reserves to maintain the peg if you have an open capital account and the peg's always going to be under stress because of these interest rate and currency differentials. That's what China's doing. It cannot work, they will go broke, you always fail.

Now, having said that, China is not actually going to go broke. They understand what I just described to the listeners, they see this coming, so they're saying to themselves, "What can I do? What can China do to keep it from happening?" Well, they can close the capital account and they're starting to do that in a small way. The problem is it's kind of all or none. You can completely close the capital account and use firing squads for anyone who tries to get the money out of the country, but now you've taken yourself out of the international monetary system. They can't do that. They just got into the international monetary system, the Chinese yuan was just included in the IMF's special drawing rights, that's this world money that the IMF prints.

Having gone to great lengths to join the club, they can't now quit the club and close the capital account. So, they're working around the edges, but it will not be successful and always fails. They could raise interest rates, give up the independent monetary policy and say, "We're going to raise interest rates to 10%." Well, that could work because hey, you put the interest rates that high people will say, "Well, I'll leave my money here. I'm not worried about the devaluation anymore because I'm getting so much interest that I'll keep my money here." The problem with that is going back to what I said earlier about the bad loans, there are companies who are already going bankrupt. What's going to happen if you raise interest rates?

They'll go bankrupt faster and then that's going to cause unemployment, that's going to destabilize the people in the Communist Parry of China, so they can't do that, so what's the third thing? If you can't close the capital account, at least not completely, and if you can't raise interest rates without sinking the economy, what can you do? You can devalue the yuan. That's what they're going to do. That makes that a very easy forecast. Now, I'm not going to say it's going to happen tomorrow morning, but you look at how George Soros broke the Bank of England in 1992, this is how he did it. He just said, "I can sell Sterling longer than you can buy dollars," and he did, and eventually the Bank of England devalued the currency.

That's what China's going to have to do, but now, come over to our friend, Donald Trump, President of the United States. What is his biggest complaint? He says that China's a currency manipulator, they keep their currency too weak. Well, from 2000 to 2014, approximately, that was a valid complaint. They were keeping their currency too weak, but it's not true anymore, as I described. China's using their hard currency reserves to prop the yuan up, actually make it stronger, so it's not true that they're weakening the yuan today. They're actually propping it up, as I said, they're going broke in the process, but what's going to happen if they devalue to save the capital account, to save the reserves? What's that going to do? That's going to inflame Trump and he's going to come down with them with hammer and tongs and tariffs, and we're going to have a trade war with China.

By the way, this has happened time and time again where something starts out as a currency war and it turns into a trade war. It's what happened in the 1930's, and I can kind of see that happening again. So, we're looking at a train wreck, but in terms of what to expect, on August 10th, 2015, China devalued 3% in two days. Not 10%, not 20%, 3%. The U.S. stock market crashed immediately from August 10th to August 31st, 2015. The U.S. stock market went down over 10%. Think about where you were at the end of the summer in 2015, on vacation or taking the kids back to school or whatever, but people thought they were staring into the abyss.

Now, the Fed came out, they didn't hike rates in September '15, as expected. That was the famous liftoff which got postponed and there was a lot of happy talk, and yeah, the market turned around and I know it's at an all-time high, but for those three weeks you saw the market completely crash. Well, what do you think's going to happen if China devalues 5% or 10%? It's going to be even worse. So, there's just some big, big stressors in the system and I'm watching them all very closely. Interesting times.

- Source, Minyanville