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