Sunday, September 29, 2013

Gold to Get Stronger, the Dollar to Weaken

The first thing that anyone needs to know about gold is that it is volatile. The second is that in a dollar/gold trade, this is the dollar’s volatility. They are two sides of the same trade.

The problem this spring and summer has been that nobody can figure out the value of a dollar, and the reason for that is the debate inside the Federal Reserve about tapering. My view is that the Fed will not start the tapering off of its QE policy in September. If I’m right and they don’t taper [that is, they announce a continuance of the aggressive bond buying], then watch for the dollar to weaken and gold to get stronger. If they do start to taper, watch for the reverse.

- Source, Jim Rickards via Alpha Hunter:

Friday, September 27, 2013

Jim Rickards on the Keiser Report - Deja Fraud

Max Keiser and Stacy Herbert, report from the heart of hedge fund land in Stamford and Darien, Connecticut, where they discuss the deja fraud of highly leveraged markets five years after Lehman collapsed and the nonsense job economy in which highly trained engineers spend their working lives dividing one simple mortgage into thousands of pieces of complex derivatives like piles of stinky fried fish. In the second half, Max interviews Jim Rickards, author of Currency Wars, who compares the Fed relationship to the BRICS nations to that of a drunk driver who runs down pedestrians and then blames the pedestrians for being in the way.

- Source, Max Keiser:

Wednesday, September 25, 2013

Ron Paul, Doug Casey, Jim Rickards, Don Coxe at the Casey Summit 2013

Register now at to see and meet Dr. Ron Paul, Doug Casey, James Rickards, John Mauldin, Donald Coxe, Dr. Lacy Hunt, Catherine Austin Fitts, Rick Rule, Marin Katusa, Chris Martenson and many others at the upcoming Casey Summit 2013 October 4-6 in Tucson, Arizona.

- Source, Casey Research:

Monday, September 23, 2013

These Are the Currencies I am Buying

According to Currency Wars: The Making of the Next Global Crisis author Jim Rickards, traders (not investors) should short the British pound. In his eyes, a currency crisis is coming, and the British pound is ‘in the eye of the storm” because the UK has sold most of its gold, and they are printing money endlessly. He believes the UK is using monetary policy to try to solve structural problems, which will ultimately fail.

On the US situation, Rickards believes the US has used all its dry powder combating the Great Recession of 2008. “The problem is, the last time the Fed printed 3 trillion dollars between 2008 and 2013 to patch it over. What are they going to do next time, print 6 trillion dollars? Their balance sheet is shot. The next time there’s going to be a liquidity crisis, the Fed won’t be able to print because they already did that.”

- Source, Market Sanity:

Saturday, September 21, 2013

The Gold Standard is Misleading

It is important if, with me, you expect that the world will in time have to adopt some sort of gold standard. The phrase ‘the gold standard’ is misleading, there are many different ways in which one can structure a gold standard, or simply use gold as a reference of value, as suggested for example by Robert Zoellick in 2010. But given any resumption of a gold-based system, the most powerful countries will be the countries that have the gold.

What is the best way to consider gold as a measure of relative economic power? One approach sometimes used is a measurement of the percentage of a nation’s reserves that is held in gold. The U.S. is in good shape, then, because it has 70% of its reserves in gold, whereas China has only 1% of its reserves in gold. But that, I submit, is a misleading measure.
We don’t need a foreign currency, because we print dollars. So at least as long as the dollar retains its central measuring role in international transactions it isn’t surprising the U.S. doesn’t hold in reserve a lot of euros or pounds. We hold gold and we can produce dollars at will so we don’t really need foreign currency reserves.

If you want to measure gold as a potential future backing for the economy, though, you need something more germane, and for this purpose one might consider the gold-to-GDP ratio.
The ratio for the U.S. is now approximately 3%. For China, it’s at 0.7%. But that raises the issue of whether the Chinese are lying about their reserves. And clearly they are.

- Source, James Rickards via Alpha Hunter:

Thursday, September 19, 2013

A Collapse of the Dollar Standard

“A return to a gold standard is a possibility, but I don’t see that in the immediate future, I think we have to have a collapse first. A collapse of the dollar standard, and the petro-dollar deal. Then it (the dollar) will have to be replaced with something, which will either be the SDR or gold. The dollar standard is definitely collapsing … the collapse is definitely coming”

- Jim Rickards:

Wednesday, September 18, 2013

Federal Reserve Policy Affecting Emerging Markets

Jim is just back from safari in Africa, and says that bankers are more dangerous than rhinos because rhinos can only charge one person at a time, where bankers can take out entire countries and populations.

The FED relationship to the BRIC and emerging markets is like a drunk driver who runs down pedestrians and then blames the pedestrians for being in the way. Jim was in South Africa to attend an investment conference where he met the top institutional investors in the country, some of the wealthiest individuals, and government officials, and said you find out what their opinion is on what the FED is doing to the entire world.

The FED officials, reserve bank governors, say they know what is going on in the emerging markets but that they do not care. The FED says that it’s their job to take care of the United States economy and the rest of the world is on its own.

Jim believes that when you are manipulating every market in the entire world then you cannot be so careless about it. They are like a drunk driver running everyone else off the road. A lot of these markets are not that big, relative even to Europe.

When the FED calls interest rates down to zero, everyone wants to do the carry trade. They borrow dollars, then buy the local currency, invest in foreign assets, make a spread, leverage it up, and make a lot of money.

Well, as soon as the FED hints that they are going to raise interest rates, so called tapering, then everyone unwinds the carry trade. So they are now just massively dumping assets in Indonesia, Malaysia, Singapore, South Africa and elsewhere, dumping the currencies.

South Africa has seen their currency go from 8 to the dollar to almost 11 to the dollar in a matter of weeks. This is incredibly disruptive and damaging to them. The FED just says, “It’s your problem. You’ve got central banks so set your own policy.”

- Source, Elaine Taylor discussing Jim Rickards:

Sunday, September 15, 2013

Gold is Money

James Turk and Jim Rickards discuss the ongoing currency wars. Rickards discusses gold, the economy and inflation.

- Source, Gold Money:

Friday, September 13, 2013

Russia Aggressively Buying Gold

Russia now, after an aggressive pattern of buying gold in recent years, has acquired 1/8th of the gold of the U.S. Russia has 1/8th the economy of the U.S., too, so in terms of the gold-to-GDP ratio they have attained parity. They've been very transparent about their buying, in contrast to the Chinese. Putin has also, not coincidentally, been very clear that he doesn't want the U.S. dollar to continue to hold a central position in world markets.

- Source, James Rickards via Alpha Hunter:

Wednesday, September 11, 2013

Fed to Emerging Markets, Drop Dead

David Owen, Chief Euro Economist at Jefferies International, previews Mark Carney’s first inflation report and discusses U.K. economic data. He speaks on Bloomberg Television's “The Pulse.”

- Source, Bloomberg: