Jim Rickards: Gold and Its Role in the Next Financial Crises

Jim Rickards On $10,000.00 Gold: It's important to understand that this isn't a made up number or one I throw out there just to get attention. 

It's the implied, non-inflationary price of gold in a system where you have either a gold system or some reference to gold. Now, there's not a central bank in the world that wants the gold standard, but they may have to go to it — not because they want to, but because they have to — in order to restore confidence in some sort of future financial crisis. The problem right now is that central banks have not normalized their balance sheet since 2009. They're trying, but it's not even close. 

If we had another crisis tomorrow, and you had to do QE4 and QE5, how could you do that when you're already at $4 trillion? They might have to turn to the IMF or SDR or to Gold.

Then, if you go back to the gold standard, you have to get the price right. People say there's not enough gold to support a gold standard. That's nonsense. There's always enough gold, it's just a question of price. Take Japan, Europe, China and the US — the big four economies — their m1 is approximately $24 trillion. If you had 40% gold backing, that would be $9.6 trillion. There are about 33,000 tons of official gold in the world. So you just divide 9.6 trillion by 33,000 tons and what you get is about $10,000 an ounce. 

If you had a gold standard with a lower price, that would be deflationary. You'd have to reduce the money supply. That was the mistake that was made in 1925. It did contribute to the Great Depression, and it wasn't because of gold, it was because they got the price wrong. So to have a gold standard today and not cause another depression, you'd have to have a price around $10,000 an ounce.

- Source

The Fear of Missing Out

A lesson in bubble dynamics and market crashes...

To PARAPHRASE one of the great gems of Wall Street wisdom, "Nothing infuriates a man more than the sight of other people making money," writes Jim Rickards in The Daily Reckoning.

That's a pretty good description of what happens during the late stage of a stock market bubble. The bubble participants are making money (at least on a mark-to-market basis) every day.

Meanwhile, the more patient, prudent investor is stuck on the sidelines – allocated to cash or low-risk investments while watching everyone else have fun. This is especially true today when the bubble is not confined to the stock market but includes exotic sideshows like crypto-currencies and Chinese real estate.

It gets even worse when investors are taunted by headlines like the one in a recent article, "Investors Can Either Buy Bubbles or Be Left Far Behind." The article is a case study in the "Bubblicious Portfolio". Infuriating indeed. Actually it should not be.

On a risk-adjusted basis, the prudent investor is not missing much.

When markets go up 10%, 20% or more in short periods, market participants think of their gains as money in the bank. Yet, that's not true unless you sell and cash out of the market. Few do this because they're afraid to "miss out" on continued gains.

The problem comes when the bubble bursts and losses of 30%, 40% or more pile up quickly. Investors tell themselves they'll be smart enough to get out in time, but that's not true either.

Typically investors don't believe the tape. They "buy the dips" (which keep dipping lower), then they refuse to sell until they "get back to even", which can take ten years. These are predictable behaviors of real investors caught up in real bubbles.

It's better just to diversity, build up a cash reserve, have some gold for catastrophe insurance, and then wait out the bubble crowd. When the crash comes, which it always does, you'll be well positioned to shop for high-quality bargains amid the rubble. Then you'll participate in the next long upswing without today's risks of a sudden meltdown.

Okay, so I just argued that the stock market (and other markets) are in bubbles. But where's the actual proof for this?

Actually, it's everywhere.

The Shiller CAPE ratio (a good indicator of how expensive stocks are) is at levels only seen at the 1929 crash that started the Great Depression, and the 2000 dot.com bubble. Likewise, the market capitalization-to-GDP ratio is above the level of the 2008 panic and comparable to the 1929 crash.

The list goes on, including historically low volatility and unprecedented complacency on the part of investors.

For almost a year, one of the most profitable trading strategies has been to sell volatility. That's about to change.

Since the election of Donald Trump stocks have been a one-way bet. They almost always go up, and have hit record highs day after day. The strategy of selling volatility has been so profitable that promoters tout it to investors as a source of "steady, low-risk income".

Nothing could be further from the truth.

Yes, sellers of volatility have made steady profits the past year. But the strategy is extremely risky and you could lose all of your profits in a single bad day.

Think of this strategy as betting your life's savings on red at a roulette table. If the wheel comes up red, you double your money. But if you keep playing eventually the wheel will come up black and you'll lose everything.

That's what it's like to sell volatility. It feels good for a while, but eventually a black swan appears like the black number on the roulette wheel, and the sellers get wiped out. I focus on the shocks and unexpected events that others don't see.

In short, we have been on a volatility holiday. Volatility is historically low and has remained so for an unusually long period of time. The sellers of volatility have been collecting "steady income," yet this is really just a winning streak at the volatility casino.

I expect the wheel of fortune to turn and for luck to run out for the sellers.

But it's time to add another warning sign to the list. Certain high-yield (or "junk bond") indices have fallen below their 200-day moving average. This can be indicative of a stock market correction.

Junk bonds are riskier than equity. When they get in trouble, it's a sign that the corporate issuers are having trouble meeting their obligations. That in turn is indicative of reduced revenues or profits, tight financial conditions, and lower earnings.

Panics in October 1987 and December 1994 were preceded by distress in bonds about six months earlier. While there is no deterministic relationship, bonds are a good leading indicator of stocks because they are higher in the capital table and feel distress sooner. The October 1987 one-day 22% decline in stocks, and the December 1994 Tequila Crisis in Mexican debt were ugly for investors. The bond market gave a six-month early warning both times.

It may be doing so again.

But what the Fed? Is it setting markets up for a fall?

It's true that the Fed has been raising interest rates since 2015, and had engaged in tapering for two years before that. Yet, these actions hardly constitute tight money. The tightness or ease of monetary policy needs to be judged relative to financial and economic conditions.

You can have "easy money" at a 10% interest rate if inflation is running at 15% (something like the conditions of the late 1970s). In that world, the real interest rate is negative 5.0%, (10% minus 15% = -5%).

In effect, the bank pays you to borrow. That's easy money.

By most models including the famous Taylor Rule, rates in the US today should be about 2.5% instead of 1.0%. We have easy money today and have had since 2006. This comes on top of the "too low, for too long" policy of Alan Greenspan from 2002-04, which led directly to the housing bubble and collapse in 2007.

The US really has not had a hard money period since the mid-1990s. That's true of most of the developed economies also.

What's going to happen when central banks start to normalize interest rates and balance sheets and return to a true tight money policy in preparation for the next recession?

We're about to find out.

Central banks all over the world including the Fed, ECB, and the People's Bank of China are in the early stages of ending their decade-long (or longer) easy money policies. This tightening trend has little to do with inflation (there isn't any) and more to do with deflating asset bubbles and getting ready for a new downturn.

But, in following this policy, central bankers may actually pop the bubbles and cause the downturn they are getting ready to cure. This is one more reason, in addition to those described above, why the stock market bubble is about to implode.

It's important to realize that market crashes often happen not when everyone is worried about them, but when no one is worried about them.

Complacency and overconfidence are good leading indicators of an overvalued market set for a correction or worse.

- Source, Bullion Vault

The Fed Is in Limbo

In yesterday’s analysis, I compared Janet Yellen to an athlete running the high-hurdles at a track meet. Her finish line is a rate hike on December 13.

The hurdles are inflation data, the Trump tax cut, and a government shutdown on December 8. She has to clear all three hurdles to make it to the finish line.

These hurdles are all conveniently time-stamped. The inflation data came out this morning, the tax bill vote is scheduled for Friday, and the government shutdown is scheduled for next Friday, December 8.

As New York Mayor Ed Koch used to ask, “How am I doin’?”

Well, the inflation data this morning was decisively… indecisive.

The particular metric in focus was the personal consumption expenditure core deflator on a year-over-year basis released monthly by the Commerce Department with a one-month lag. Call it PCE Core year-over-year for short.

Sounds technical, but it’s important because that’s the number the Fed watches. There are plenty of other inflation readings out there (CPI, PPI, core, non-core, trimmed mean, etc), but PCE Core year-over-year is the one the Fed uses to benchmark their performance in terms of their inflation goal.

The Fed’s target for PCE Core is 2%. The October reading released this morning was 1.4%. For weeks I’ve been saying that a 1.3% reading would put the rate hike on hold, and a 1.6% reading would make the rate hike a done deal. So, the actual reading of 1.4% was in the mushy middle of that easy-to-forecast range.

What’s interesting is that the prior month was also 1.4%, so the new number is unchanged from September. That’s not what the Fed wants to see. They want to see progress toward their 2% goal.

On the other hand, the 1.4% from September was a revised number. It was earlier reported at 1.3% (the same number as August).

You can read this two ways. If you see the August 1.3% as a low, then you can say the 1.4% readings for September and October were progress toward the Fed’s 2% target. It’s a thin reed, but Yellen could use this to justify her view that the year-long weakness in PCE Core is “transitory.”

On the other hand, these 0.1% moves month-to-month are really statistical noise and may even be due to rounding. The bigger picture is that PCE Core is weak and nowhere near the Fed’s target. Another rate hike in December could be a huge blunder if it slows the economy further and leads to more weakness in PCE Core.

On balance, the PCE Core number is probably just enough (barely) to justify a rate hike. I’ve raised my probability of a December rate hike from 30% to 55%. That’s what good Bayesians do; they update forecasts continually based on new data.

Of course, the market has been pricing in at a 100% probability for a few weeks. That’s fine, markets have been wildly wrong in the past. I’d rather stick with a good model and update continually than swing from one extreme to the other based on crowd behavior. My Bayesian statistical models (along with other scientific tools) have served me well for a long time and I’m sticking with them.

As John Maynard Keynes said, “When the facts change, I change my mind. What do you do, sir?” (Actually Keynes never said that, but it’s a wonderful quote attributed to him. Keynes would certainly agree).

What about the remaining two hurdles for our track-star Janet Yellen?

The tax bill vote is scheduled for Friday. If it passes the Senate, it will almost certainly become law in the next few weeks after the House and Senate versions are reconciled.

The stock market has already priced in a tax cut. Markets won’t go up much more if the bill passes because they already expect it to pass. But if the bill fails markets could plunge on the bad news.

That’s important. If it does not pass, the disappointment factor will be huge and could send the stock market tumbling. Something like that happened in 2008 when the TARP legislation failed. The Dow fell over 700 points in one day. (Congress got the message and passed TARP a few days later). The response would be much larger today, perhaps 1,000 Dow points or more, because the market is starting from a much higher level.

The fact is no one knows what will happen in the Senate; at least eight Senators are waiting for a “Manager’s Amendment” (basically a re-write of the entire bill) to make up their minds.

Call it 50/50; a coin toss. “Heads” the Senate passes the tax bill, “tails” they don’t. But if the tax cut fails and the market tumbles, the Fed will not raise rates.

Finally there’s the government shutdown if Republicans and Democrats cannot agree on spending. These are mostly for show; most of the government remains open and the shutdowns are usually resolved within a week or so.

That means finding some compromise on a long list of hot button issues including funding for Trump’s wall with Mexico, deportation of illegal immigrants brought to the U.S. as children (the “Dreamer Act” also referred to as “DACA”), funding for Planned Parenthood, funding for Obamacare (called “SCHIP”), and more.

We’ll see.

Still, it’s difficult to imagine the Fed hiking rates on December 13 if the government shuts down on December 8 and remains shut on the date of the FOMC meeting.

There’s not much middle ground between Democrats and Republicans on spending policy issues like immigration, Trump’s Wall, Obamacare bailouts, and a host of other hot button issues.

This looks like another 50/50 call. “Heads” the government stays open, “tails” the government shuts down.

The problem with two coin tosses is that the odds of getting “tails” at least once are 75%.

So, Yellen still has a long way to go before she crosses the finish line.

My trading recommendation is unchanged. The euro, yen, gold and Treasury notes are all fully priced for rate hike. If it happens, those instruments won’t change much because the event is priced. If there’s no rate hike, euros, gold, yen and Treasury notes will all soar.

So, there’s an asymmetry in the probable outcomes. If you go long euros, gold, yen and Treasury notes, you won’t lose much if the Fed hikes (assuming no geopolitical shocks), but you could win big if they don’t.

That’s the kind of coin toss I like. Heads I win, tails I don’t lose.

- Source, James Rickards via the Daily Reckoning

James Rickards: Bubble Dynamics and Market Crashes

To paraphrase one of the great gems of Wall Street wisdom, “Nothing infuriates a man more than the sight of other people making money.”

That’s a pretty good description of what happens during the late stage of a stock market bubble. The bubble participants are making money (at least on a mark-to-market basis) every day.

Meanwhile, the more patient, prudent investor is stuck on the sidelines — allocated to cash or low-risk investments while watching everyone else have fun. This is especially true today when the bubble is not confined to the stock market but includes exotic sideshows like crypto-currencies and Chinese real estate.

It gets even worse when investors are taunted by headlines like the one in a recent article, “Investors Can Either Buy Bubbles or Be Left Far Behind.” The article is a case study in the “Bubblicious Portfolio.” Infuriating indeed. Actually it should not be.

On a risk-adjusted basis, the prudent investor is not missing much.

When markets go up 10%, 20% or more in short periods, market participants think of their gains as money in the bank. Yet, that’s not true unless you sell and cash out of the market. Few do this because they’re afraid to “miss out” on continued gains.

The problem comes when the bubble bursts and losses of 30%, 40% or more pile up quickly. Investors tell themselves they’ll be smart enough to get out in time, but that’s not true either.

Typically investors don’t believe the tape. They “buy the dips,” (which keep dipping lower), then they refuse to sell until they “get back to even,” which can take ten years. These are predictable behaviors of real investors caught up in real bubbles.

It’s better just to diversity, build up a cash reserve, have some gold for catastrophe insurance, and then wait out the bubble crowd. When the crash comes, which it always does, you’ll be well positioned to shop for high-quality bargains amid the rubble. Then you’ll participate in the next long upswing without today’s risks of a sudden meltdown.

OK, so I just argued that the stock market (and other markets) are in bubbles. But where’s the actual proof for this?

Actually, it’s everywhere.

The Shiller CAPE ratio (a good indicator of how expensive stocks are) is at levels only seen at the 1929 crash that started the Great Depression, and the 2000 dot.com bubble. Likewise, the market capitalization-to-GDP ratio is above the level of the 2008 panic and comparable to the 1929 crash.

The list goes on, including historically low volatility and unprecedented complacency on the part of investors.

For almost a year, one of the most profitable trading strategies has been to sell volatility. That’s about to change…

Since the election of Donald Trump stocks have been a one-way bet. They almost always go up, and have hit record highs day after day. The strategy of selling volatility has been so profitable that promoters tout it to investors as a source of “steady, low-risk income.”

Nothing could be further from the truth.

Yes, sellers of volatility have made steady profits the past year. But the strategy is extremely risky and you could lose all of your profits in a single bad day.

Think of this strategy as betting your life’s savings on red at a roulette table. If the wheel comes up red, you double your money. But if you keep playing eventually the wheel will come up black and you’ll lose everything.

That’s what it’s like to sell volatility. It feels good for a while, but eventually a black swan appears like the black number on the roulette wheel, and the sellers get wiped out. I focus on the shocks and unexpected events that others don’t see.

In short, we have been on a volatility holiday. Volatility is historically low and has remained so for an unusually long period of time. The sellers of volatility have been collecting “steady income,” yet this is really just a winning streak at the volatility casino.

I expect the wheel of fortune to turn and for luck to run out for the sellers.

But it’s time to add another warning sign to the list. Certain high-yield (or “junk bond”) indices have fallen below their 200-day moving average. This can be indicative of a stock market correction.

Junk bonds are riskier than equity. When they get in trouble, it’s a sign that the corporate issuers are having trouble meeting their obligations. That in turn is indicative of reduced revenues or profits, tight financial conditions, and lower earnings.

Panics in October 1987 and December 1994 were preceded by distress in bonds about six months earlier. While there is no deterministic relationship, bonds are a good leading indicator of stocks because they are higher in the capital table and feel distress sooner. The October 1987 one-day 22% decline in stocks, and the December 1994 Tequila Crisis in Mexican debt were ugly for investors. The bond market gave a six-month early warning both times.

It may be doing so again.

But what the Fed? Is it setting markets up for a fall?

It’s true that the Fed has been raising interest rates since 2015, and had engaged in tapering for two years before that. Yet, these actions hardly constitute tight money. The tightness or ease of monetary policy needs to be judged relative to financial and economic conditions.

You can have “easy money” at a 10% interest rate if inflation is running at 15% (something like the conditions of the late 1970s). In that world, the real interest rate is negative 5.0%, (10% – 15% = -5%).

In effect, the bank pays you to borrow. That’s easy money.

By most models including the famous Taylor Rule, rates in the U.S. today should be about 2.5% instead of 1.0%. We have easy money today and have had since 2006. This comes on top of the “too low, for too long” policy of Alan Greenspan from 2002-04, which led directly to the housing bubble and collapse in 2007.

The U.S. really has not had a hard money period since the mid-1990s. That’s true of most of the developed economies also.

What’s going to happen when central banks start to normalize interest rates and balance sheets and return to a true tight money policy in preparation for the next recession?

We’re about to find out.

Central banks all over the world including the Fed, ECB, and the People’s Bank of China are in the early stages of ending their decade-long (or longer) easy money policies. This tightening trend has little to do with inflation (there isn’t any) and more to do with deflating asset bubbles and getting ready for a new downturn.

But, in following this policy, central bankers may actually pop the bubbles and cause the downturn they are getting ready to cure. This is one more reason, in addition to those described above, why the stock market bubble is about to implode.

It’s important to realize that market crashes often happen not when everyone is worried about them, but when no one is worried about them.

Complacency and overconfidence are good leading indicators of an overvalued market set for a correction or worse.

- Source, James Rickards via the Daily Reckoning

Gold, Interest Rates and Super Cycles

When the Fed raised interest rates last December, many believed gold would plunge. But it didn’t happen.

Gold bottomed the day after the rate hike, but then started moving higher again.

Incidentally, the same thing happened after the Fed tightened in December 2015. Gold had one of its best quarters in 20 years in the first quarter of 2016. So it was very interesting to see gold going up despite headwinds from the Fed.

Meanwhile, gold has more than held its own this year.

Normally when rates go up, the dollar strengthens and gold weakens. They usually move in opposite directions. So how could gold have gone up when the Fed was tightening and the dollar was strong?

That tells me that there’s more to the story, that there’s more going on behind the scenes that’s been driving the gold price higher.

It means you can’t just look at the dollar. The dollar’s an important driver of the gold price, no doubt. But so are basic fundamentals like supply and demand in the physical gold market.

I travel constantly, and I was in Shanghai meeting with the largest gold dealers in China. I was also in Switzerland not too long ago, meeting with gold refiners and gold dealers.

I’ve heard the same stories from Switzerland to Shanghai and everywhere in between, that there are physical gold shortages popping up, and that refiners are having trouble sourcing gold. Refiners have waiting lists of buyers, and they can’t find the gold they need to maintain their refining operations.

And new gold discoveries are few and far between, so demand is outstripping supply. That’s why some of the opportunities we’ve uncovered in gold miners are so attractive right now. One good find can make investors fortunes.

My point is that physical shortages have become an issue. That is an important driver of gold prices.

There’s another reason to believe that gold could be in a long-term trend right now.

To understand why, let’s first look at the long decline in gold prices from 2011 to 2015. The best explanation I’ve heard came from legendary commodities investor Jim Rogers. He personally believes that gold will end up in the $10,000 per ounce range, which I have also predicted.

This means the 50% retracement is behind us and gold is set for new all-time highs in the years ahead.

But Rogers makes the point that no commodity ever goes from a secular bottom to top without a 50% retracement along the way.

Gold bottomed at $255 per ounce in August 1999. From there, it turned decisively higher and rose 650% until it peaked near $1,900 in September 2011.

So gold rose $1,643 per ounce from August 1999 to September 2011.

A 50% retracement of that rally would take $821 per ounce off the price, putting gold at $1,077 when the retracement finished. That’s almost exactly where gold ended up on Nov. 27, 2015 ($1,058 per ounce).

This means the 50% retracement is behind us and gold is set for new all-time highs in the years ahead.

Why should investors believe gold won’t just get slammed again?

The answer is that there’s an important distinction between the 2011–15 price action and what’s going on now.

The four-year decline exhibited a pattern called “lower highs and lower lows.” While gold rallied and fell back, each peak was lower than the one before and each valley was lower than the one before also...

- Source, James Rickards via The Daily Reckoning, Read More Here

Investing Overseas, and Why You Should Buy Gold

Business Insider executive editor Sara Silverstein talks about the iPhone X, the release of which many people thought would trigger a so-called upgrade supercycle. She breaks down a recent UBS report arguing that this isn't true, citing data showing that iPhone sales will remain flat from a year ago. UBS says that people are still most concerned about price and battery life, not the newly announced functions that Apple has been advertising so heavily. UBS still has a buy rating on the stock, despite the firm's reservations over the upgrade cycle.

Silverstein sits down with Jim Rickards, the editor of Strategic Intelligence and the author of Currency Wars: The Making of the Next Global Crisis. He breaks down his $10,000/oz price target for gold, saying that some central banks may have to resort to the gold standard to restore confidence in the markets. Rickards says that $10,000 is the perfect pricing in order to to avoid a disaster scenario. He says what reflects reality is "complexity theory," which has been successful in other fields, and for which he's been a pioneer for bringing to financial markets. Rickards shares his thoughts on the Fed, and questions why the central bank is unwinding its balance sheet while economic growth is slow. He says it's because the Fed is already preparing for the next recession.

In the Fidelity Insight of the week, Silverstein speaks to Bill Bower, a portfolio manager at the firm. He'd just returned from a visit to Japan, and tells Silverstein that when he invests there, he likes to look at individual stocks. Bower says that he's looking at secular growth ideas in factory automation, as well as more value-based names in the financial sector. He says that he's taken a recent liking to financials in European, where he sees opportunities due to earnings growth. In general, when Bower invests internationally, he's more interested in secular ideas than cyclical ones. He's specifically intrigued by China, which he says will transition from a centrally-planned economy to a consumer, and notes that technology and the internet caters to that space.

- Source, Business Insider

James Rickards: Predicting the Fed's Next Move

Everyone is wondering what the FED will do next? How will 2018 unfold, and can any profit be made from it, or are we simply staring down the barrel of a complete and utter collapse?

The FED is sending warning singles to anyone who cares to listen, and rates could move in a massive way throughout 2018. Jim Rickards breaks this down and much, much more with Albert Lu of The Power and Market Report.

- Source

James Rickards Final Warning for 2018

James Rickards has been screaming to the rafters, to anyone who will listen. A crisis is coming and 2018 is going to be an ugly year. The geopolitical instabilities that we are witnessing have never been higher, and the pot is about to boil over. Don't say you haven't been warned.

- Video Source

Thanks to the FED: A Major Gold Rally is Coming in 2018

For more than a month gold prices have been unable to break above the $1,300 level but one expert is not too concerned, noting that $10,000 gold may be on the horizon. Speaking with Kitco News, best-selling author Jim Rickards said the Federal Reserve could “catalyze a major gold rally.” Markets are pricing in a nearly 100% chance the Fed will hike rates in December and if they don’t, Rickards said the metal may skyrocket. After that, he wouldn’t be surprised to see prices jump even further up. “My intermediate target is $10,000 an ounce.”

- Source, Kitco News

Jim Rickards on Bitcoin, Gold, and Fed Printing Money

James Rickards and Alex Stanczyk break down the current markets that we live in. How does gold play a role in these turbulent times and what can you do to protect yourself against the coming collapse?

Can the FED stop it, or will their uncontrolled money printing be the end of us all?

- Video Source

Enough About Bitcoin, Gold Is Headed to $10,000

The Federal Reserve could provide the ammo that blasts gold into its next major rally - a rally that could push prices up as high as $10,000 an ounce, according to one famed investor.

On the sidelines of the Silver and Gold Summit, best-selling author Jim Rickards told Kitco News that he is not convinced the Fed will raise rates next month at its monetary policy meeting, despite markets pricing in a nearly 100% chance.

The reason for his contrarian view is based on inflation, which will be in the spotlight this week with Thursday's release of the October core Personal Consumption Expenditures (PCE) Index. Core PCE is the central bank's preferred inflation measure as it strips out volatile energy and food prices.

"The Fed has a dual mandate: job creation and price stability. Job creation was mission accomplished a long time ago; that is not even a concern. Disinflation is a real concern," he said. "PCE core has gone down to flat nine months in a row from 1.9% to 1.3%, moving away from the Fed's target."

Rickards said that he expects the report to show PCE annual inflation growth of 1.3% or lower, adding that if this happens, there is no way the central bank will raise rates at its December meeting.

Because expectations are so high for a rate hike, Rickards said markets will take a "180-degree turn" if the Fed doesn't pull the trigger, which will drive gold prices higher.

"The euro will rally, the dollar will come down, [bond] yields will come down. That will catalyze a rally in gold," he said.

Rickards isn't the only one raising concerns over weak inflation pressures. Last week, the central bank showed ongoing concern of falling price pressures, as seen in its latest monetary policy meeting minutes.

"With core inflation readings continuing to surprise on the downside, however, many participants observed that there was some likelihood that inflation might remain below 2 percent for longer than they currently expected," the central bank said in the minutes. "A few other participants thought that additional policy firming should be deferred until incoming information confirmed that inflation was clearly on a path toward the Committee's symmetric 2 percent objective. A few participants cautioned that further increases in the target range for the federal funds rate while inflation remained persistently below 2 percent could unduly depress inflation expectations."

Since the release of the dovish minutes, gold has managed to push into striking distance of $1,300 an ounce. December gold futures last traded at $1,295 an ounce, up 0.60% on the day.

For Rickards, gold's struggle around $1,300 an ounce is a minor resistance point in what he sees as a much larger rally. In his latest interview, he maintained his view that gold prices could reach $10,000 an ounce.

"It's not a made-up number; I don't do it to get headlines," he said. "It is the price gold would have to be to avoid deflation."

- Source, The Street