I May Never See Another Rate Hike

“Bernanke’s not a trader, so he doesn't think like a trader, he has no exit plan. There’s a good possibility I may never see another rate hike in my lifetime”

- Jim Rickards, author of Currency Wars.

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We Are in a Depression

“We don’t have to worry about a recession — we are in a depression,” says James Rickards.

“If you take the classic definition of a sustained, long-term downturn with economic growth below trend, then we are in the midst of a depression,” says the senior managing director of Tangent Capital and author of “Currency Wars.”

- Source, NYPost:

http://www.nypost.com/p/news/business/fed_up_with_ben_vzuSPEjRIZYd96jbfwa8aJ

The Wealth of Millions Could Be Decimated

James Rickards, a top adviser for the Pentagon and CIA, is sounding the alarm that America is on the brink of a global “financial war.”

“Rival nations and terrorist organizations are developing capabilities in unconventional warfare,” Rickards commented in a Newsmax interview. “Things like cyber warfare, biological or chemical warfare, and now, financial weapons of mass destruction.”

And this “financial war” is a battle America isn't prepared to win.

Rickards believes that as this conflict escalates, it will “cause oil to sky rocket above $190 a barrel, gold to surge to $3,000 an ounce, and, in its aftermath, it could completely decimate the wealth of millions.”

- Source, MoneyNews.com:

http://www.moneynews.com/MKTNews/Currency-Wars-James-Rickards/2013/01/25/id/473012

Forty Six Million Americans Survive on Food Stamps

"The Fed has released details grudgingly and some disclosures were forced by the Dodd-Frank legislation. Gradually the bailouts have been revealed as if a veil were slowly being drawn to display a densely formed mosaic. The bailouts have enriched stockholders, bondholders and CEO’s while unemployment remains at depression levels and forty-six million Americans survive on food stamps."

- Jim Rickards

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The Yen Has Lost 40% of It's Value

“Each country is degrading its currency in the hopes of spurring growth,” Rickards says. “Look at Japan. The yen has lost 40 percent of its value against the dollar in a very short period of time.”

- Source, NyPost:

http://www.nypost.com/p/news/business/fed_up_with_ben_vzuSPEjRIZYd96jbfwa8aJ

The FED's Goals

"The Fed’s goals are to maintain nominal interest rates in the range of zero to 2% while seeking inflation in the range of 4%. The result will be negative real rates that encourage borrowing and an inflation scare that stimulates spending. The combination of lending and spending should increase velocity which, when combined with the already ample money supply, should expand nominal GDP in such a way as to ease the real burden of government debt and reduce the government debt-to-GDP ratio. This policy of slow, gradual inflation and negative real interest rates pursued over a ten to fifteen year period is considered an effective way to erase the burden of government debt without hyperinflation or default."

- Excerpt from Jim Rickards submitted testimony as a witness in the Senate Banking Committee’s Subcommittee

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Future of the International Monetary System

"Jim Rickards on the future of the international monetary system, speaking at the Sovereign Man: Offshore Tactics Workshop in Santiago, Chile."

- Source:

http://www.sovereignman.com/why-gold-will-hit-6993/

Central Banks Fear Deflation

"The problem is when central banks fear deflation more than anything, they try everything to defeat it, so, you know, currency wars, money printing, zero-interest-rate policy, forward guidance, twist. They do everything they can. When they can't win the battle against deflation, they devalue the currency against gold because gold is the only thing that can't fight back.
If deflation prevails … they'll wake up one day and say gold's $4,000 an ounce, we're a buyer at $3,995."

- Jim Rickards via a recent CNBC interview:

http://www.cnbc.com

Gold at $4,000 an Ounce?

"To me, what's going on is there's a transition from weak hands to strong hands," he said, adding that sellers have included "Comex traders who have margin calls and stops, hedge funds that have non-permanent capital" and gold exchange-traded fund GLD. "They're all wrung out now."

How To Trade In A World Of Currency Wars And Potential Collapse

"Jim Rickards of JAC Capital Advisors and Currency Wars fame gave a presentation last week at Jim Grant's Spring 2013 conference titled Easing at the Zero Bound: Beyond QE & the 'Foolproof Way'.

Rickards is a prominent gold bull and has been tweeting a lot about the difference between physical and paper gold in light of the precious metal's recent price collapse.

The presentation discusses Federal Reserve monetary policy and the future of the international monetary system.

Rickards lays out four options for the future – a world with multiple reserve currencies, a system based on IMF Special Drawing Rights, a new gold standard, or total collapse.

He also gives some trade ideas to play the uncertainty surrounding the future of the system."

Click here to see the presentation >

- Source, Business Insider:

http://www.businessinsider.com/james-rickards-presentation-2013-4

The FED Pays IOUs

"The Fed earns huge profits every year on the interest received on Treasury bonds the Fed owns. The Fed normally pays these profits back to the Treasury. Behind closed doors, the Fed and Treasury agreed that the Fed could suspend the repayments and keep the cash. The amount the Fed would usually pay to the Treasury would be set up as an IOU."

- Jim Rickards

The Difference Between Paper and Physical Gold

Gold ownership is now divided between strong hands and weak hands. The strong hands are Russia, China, some of the other central banks, and anybody else who is buying gold for cash in physical form, without leverage.

The weak hands are retail jumping into GLD, at a top, using margin, futures players, and people who don't really understand gold. There are a lot of trend followers out there who started following gold on a trend basis, but didn't really understand anything about gold, or how it works, etc.

The hedge funds turn out to be weak hands, not strong hands. The reason is they've got redemptions. Hedge funds don't have permanent capital. They may have monthly redemptions, or quarterly redemptions, or one-year lockups, or whatever it is, but it's not permanent capital.

When they get the drawdowns, and they start getting redemption notices, guess what? They have to sell to get cash to meet the redemptions. And that feeds on the selling.

So, there is a lot of dynamic that is not unique to gold, because it would be true of any over-leveraged situation, there are a lot of new players who don't understand gold, and then there were a couple of very specific events that started the unwinds.

But it looks like it's found its level. The last weak guy puked, and now we'll go from here.

- Source, Business Insider, read the full article here:

http://www.businessinsider.com/jim-rickards-explains-paper-versus-physical-gold-2013-4

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