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.”