Jim Rickards: Gold to $4,000 if Deflation Wins

Jim RickardsTangent Capital’s Jim Rickards was on CNBC’s Fast Money today, discussing gold in the wake of the recent smash to $1320.
Rickards called the smash a transition from weak hands at the COMEX to strong hands in China and Russia (& physical buyers across the world).
Rickards stated that the trend is up from here, although gold is likely to trade sideways for a majority of the year before climbing in Q4.
Rickards informed the CNBC shills that gold does well in periods of either inflation or deflation, and that The Fed will do everything they can. When they can’t win the battle against deflation, they devalue the currency against gold ’cause gold’s the only thing that can’t fight back.
The Currency Wars author states that If the Fed wins we’ll get inflation and gold will go up.  If deflation prevails, we’ll wake up one morning and gold will be (revalued to) $4,000/oz.
Rickards’  MUST WATCH thoughts on gold are below:

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  1. Rickards expects gold to go sideways the rest of the year.  That must mean he sees no COMEX default in the immediate future.

    I think he dyed his comb over, too.

    • Even if Comex defaults…
      Let’s say Shanghai takes over the price setting, as the market ignores London hereonward.
      Shanghai/Hongkong have better stock that COMEX the past years I presume. If they wanted, they could smash gold more if they wanted. As long as they manage to BUY more than they SELL.
      They can also play the cash settlement game. Yuan is the new dollar. 

      COMEX and LBMA should not be allowed to rig prices. A new system is needed. Futures to set prices was always a bad idea. Price will move, but not naturally on supply/demand. The margin side of it makes it even sicker, market regulators become market makers.

    • Asian Countries are all starting to do direct currency swaps now, and once Asian commodity markets adjust to the Yuan being the most stable peg for commodities the supply and demand in the ‘Eastern’ part of the world will have to start reflecting the fundamentals of physical delivery and realistic replenishment from industrial sources. Gold & Silver will be the first to be completely removed from any interference from the London and NYC fantasy numbering system.
      The fact is NYC and London will simply cease to carry as much volume trading as Asian markets through atrophy and they will still not adjust their markets … because they can’t, the perception of a status quo (positivity) is all that is keeping the USD afloat … the big joke of a Virtual Monopoly Game in NYC & London will be aired for all to see…. it will simply be a joke if it doesn’t look that way already. People will look over at the Atlantic and shake their heads in disbelief at the men in suits who are playing Russian Roulette with 6-in-the-chamber.
      NYC and London are committing suicide in plain sight. It’s like the emperors new clothes, and everybody just worked out it was ok to say the emperor is naked, but he’s still strutting about in the nude thinking his subjects still think he’s the coolest guy in town … they will start laughing real soon, I know I am :P what a joke. What a complete joke. It’s embarrassing to watch. When it all collapses they’ll all call Jim Rickards back and ask him what his next prediction is, and he will tell the other stuffed suits at the shiny Chinese made glass media table in the studio that it matters not because they will all be out of a job before the next interview… the power will cut out mid interview, and some police sirens and explosions will be heard in the background as the city descends into a chaos scenario of cannibalism :P :P :P I know, a little extreme…..or is it? :P
      In the world to come I hope we all change the business dress all together and dump the stupid square suits and ties in order to not associate ourselves with that embarrassing ostentatious failed experiment in window dressed PROFESSIONAL BS talking monkeys …. not just any monkeys, professional squarely business suit clad monkeys. Did I mention they were professionals? Anybody want to buy a futures contract for Bananas? It’s as good as a real banana … I promise.

  2. I wouldn’t put much stock on time line, that will catch a lot of people flat footed!

  3. If we have a trigger default anywhere in the banking system or the euro fails we will see it spike sooner

  4. May 7-8 could be a huge event.  There is a little conference going on in Turkey called Global Finance in Transition.  
    On May 7-8, 2013, Istanbul (Turkey) will host the Global Finance in Transition conference. The event is organized by the Central Bank of the Republic of Turkey jointly with the Reinventing Bretton Woods Committee and the Russian Ministry of Finance.

    Representatives of G20 finance ministries and central banks, international organizations, research institutions and businesses will take part in the conference. Head of Turkey’s Central Bank Erdem Basci, Deputy Minister of Finance of Russia Sergei Storchak and Executive Director for the Reinventing Bretton Woods Committee Marc Uzan will give the opening remarks at the conference.
    Five panel discussions are planned as part of the event. They will cover the international financial architecture, in particular, changes in the flow of global investments, local bond markets and growth in emerging economies, incentives and determinants of investment and other issues.
    But putting that aside, the BRICs in particular are not happy with the existing arrangement which has been slowly falling apart for some time as the Federal Reserve imposes its domestic needs and policy on what is intended to be the rest of the world’s currency. It finds itself in much the same position as is Germany in the EU.
    Just a heads up.  Could be another wash out in the metals during this conference.   The West will not like this at all.  I don’t think we have seen the bottom yet in the metals.  I hope I’m wrong but you can’t have the metals go up much when this conference is talking about bringing back Bretton Woods and looking for a alternative to the dollar.

    • There is little reason for the BRICS countries to be happy with the current US dollar system.  If any of us were being paid in a rapidly depreciating asset of some kind, we would not much like it either.  A lot of the inflation that Bernanke isn’t seeing has been exported to foreign countries via massive US dollar amounts plus large amounts in UST bonds.  If that ever comes back home to roost, we will see a LOT of inflation here… in spite of Bernanke’s desire not to see it.  It might or might not reach “hyper” inflation but even if it does not it will be bad nonetheless.
      “I don’t think we have seen the bottom yet in the metals.”
      What price levels would you think reasonable for a metals bottom for 2013?

    • Price levels?  Well you are asking a guy that bought silver at 47 bucks.  I don’t have much credibility to pick a top or bottom.  These nut jobs can take the price to whatever they want.  I just follow these kinds of news stories because they are talking about reshaping the global economy.  That sounds pretty important.  If I was a central bank in the West, I would be all in especially after the recent smash down.  Why not?  No legal authorities will prosecute you for a crime.  I have unlimited funds to play with.  Raise margin requirements to 100%.  Opps that just happened. http://www.zerohedge.com/news/2013-05-02/next-escalation-gold-goes-100-initial-margin  And if all else fails, smash the price down and pay the people off for the current smash down spot price.  If there is going to be a default, it will happen when the prices get hammered.  What incentive do the banks have if the price is high and then default?  I didn’t believe a default would happen anytime soon.  Now, I’m changing my position.  Gold is flying out of the comex.  Another 6 tons today per Harvey Organ.  Amazing the speed the metal is coming out of these vaults lately.  I just feel like stories like this conference, which is in Turkey (remember what Willie said about Turkey.  They are like a swing state in the elections.  The world could turn in the direction that Turkey chooses to do business with.  Is it the West or the East?  I think we got our answer with this convention in Istanbul) could force the central banks to hammer the metals on these type of days.  They need to try to keep the perception of the dollar to be strong.  It will fail eventually but that is the main reason why I think they will continue to smash prices down.  IMO, they really have no option left.  I think the bottom of the metals could go down another 10-15%.  That is a total guess but the physical demand will be crazy.  Short term, I really don’t care.  The metals are for the next system.  Hopefully, these countries will find a honest approach of monetary policy in this conference.  Bretton Woods is a good place to start.

  5. Given Rickard’s CFR membership, I am suspicious of his predictions. However, he might be correct on a possible devaluation. What is Rickard’s track record on past predictions?

    • I don’t follow Rickard’s comments all that often but he does say some things that sound reasonable to me.  The theme of his Currency Wars book seems to be playing out about as he describes it.
      As for devaluation, yeah, that IS on the agenda these days and it is likely that various countries will be doing that.  Argentina, Venezuela, and Japan already have and may do more of it.  Other countries will likely respond with some form of devaluation of their own.  Probably will not be as blatant as the others have done, though.
      I am thinking that a lot of the currency manipulation that we see is basically countries jockeying for position at the table when we all come together to discuss the fate of the world and, eventually, a single trade currency.  Countries would then have the option of using their own currencies internally but a standard currency when trading with other countries.  My guess is that any such trade currency would be based on a basket of currencies and perhaps some commodities as well.  In this way, no one country could print the trade currency so much that it loses value and harms the creditor nations.  The creditor nations would likely want to limit the amount of currency in the basket from each nation in some way, so that massive printing of any national currency would not have much effect on the trade currency itself.
      We do, indeed, live in interesting times.

    • I don’t follow his predictions closely either, but I do know he has been consistent with his “sideways then Q4 move” prediction for at least a few months now. I think he is keying in on the USD and sees it trading sideways until the end of the year, hence his gold prediction. Additionally there are some indications out of the US stock market that higher inflation is on the way. The recent, inexorable rise of equities can possibly be explained by the stock market pricing in much higher inflation 3-6 months out. This also coincides with his Q4 prediction.
      Price predicitions aside, Rickards has been spot on with his currency war prediction and the situation is evolving in very much the same way he laid out in his book. If you haven’t read it yet–you definitely should.

  6. His Curency War book is worth reading. He is way ahead of the curve.

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