Jim RickardsJames G. Rickards, author of “Currency Wars: The Making of the Next Global Crisis” sat down w/ Kitco News’ Daniela Cambone to discuss his work and the evolving “currency wars”. Rickards discusses the national security risk posed by clandestine gold purchases by China, hidden agendas of sovereign wealth funds, and how the escalating currency crisis threatens to throw the world into WWIII!

Rickards full interview is below:

 

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  1. A couple of major criticisms of Jim Rickards’ views:
     
    * The major monetary metal in history is Silver, not Gold.  Ironically, Gold was made the only money by the same bankers who de-monetized Silver.  Central banks the world over still hold Gold only as money.  Because they control most of the Gold, they want Gold only to be money (so they can remain in power).  Silver is in the hands of the people.  When Silver is money again, the wealth (and thus power) of the people will increase based upon the historical ratio, from the present 50:1 to at least 15:1 relative to the price of Gold.  The people will thus gain both greater wealth and greater power, and therefore greater independence and freedom.
     
    * If he is so certain that the price of Gold will go much higher because of fiat currency debasement and devaluation by national governments, why hold only 20% in Gold and let the remaining 80% in paper assets sink into oblivion?  Such an outcome could net zero gains.  Like Eric Sprott has said before, it is much wiser to find out what the right holding should be, and be nearly all fully invested in it, to maximize the protection.  Someone with $1,000,000 can afford to invest just 20% in Gold and Silver, but it seems right that the average person who has $50,000 in savings should have at least 75% saved in Gold and Silver, and keep the remaining cash as spending money to pay bills, etc.
     
    Also, it would benefit the audience if Jim Rickards explained more where money comes from, and expound on the real reasons behind why there is currently a currency war going on (ie, the demise of debt-based fiat paper money).  In order to understand why there is a global monetary crisis going on, it is important to understand the concept of money and the history behind what money is and how it came into being.

    • ” If he is so certain that the price of Gold will go much higher because of fiat currency debasement and devaluation by national governments, why hold only 20% in Gold and let the remaining 80% in paper assets sink into oblivion?”

       
      Ah, but that’s just it.  He is not certain that the US dollar will fall and cause gold to zoom.  He believes that this will happen but a wise investor operates in a realm where certainty is very elusive and where mistakes are quite possible.  He therefore plays the odds such that he cannot be wiped out if he makes a mistake or a completely unforeseen event comes out of left field and completely changes the game.  There are thousands of variables in play at any given time in this calculation and no human and no computer can accurately track them all because they all affect each other.  A quantum computer might be able to do it but so far no other computer has been able to do so.
       
      As a successful investor myself, I recognize exactly where Rickards is coming from on this.  The future is unknown and unknowable.  It isn’t so much that we don’t know it but that we can’t know it.  Because of this, hedging is in order no matter how strongly one believes in any particular investment.  Experience teaches us this and usually with financially painful lessons.
       
      “Like Eric Sprott has said before, it is much wiser to find out what the right holding should be, and be nearly all fully invested in it, to maximize the protection.”
       
      Yes, that is a laudable goal but it is also one that is very difficult to manage.  If he is wrong for any reason, however, he could be financially decimated by his own error in judgement.  This reminds me of people who ask me to manage their money for them.  They usually start out with, “Now, I only want to buy stocks that go up”.  Well, no kidding!  We all would like that but the real world is almost always less than cooperative in such an effort.
       

  2. Let’s talk about Sequestration. More taxation and spending of Fiat money. The short and long term affect on Gold and Silver because of the Tax and Spend Congress. Until people realize that the dollar will no longer go as far in the purchase of goods and services, Gold and Silver will not move into higher highs. Statistics now show that U S incomes are lower now than 20 years ago. People are living off of savings that they have and won’t last long, The money that is spent by the average American family is mostly used for food and utilities, gasoline and mortgages, where will the dollars come from to buy Silver and Gold when the people are broke? Is Sequestration good or bad? Really makes no difference at all, because unemployment will continue to rise and the economy will continue to rot.
    All The Guru’s that post articles on The Doc, cannot accurately predict anything. Yes, Gold and Silver is a risk asset and those of us who stack have taken the risk that Gold and Silver will become more valuable. After all the world changes rapidly on a daily basis and we are either sitting on future wealth or a stack of metals. What will replace the dollar if and when it fails? If the Central Banks of the world are buying up Gold and possibly Silver, what currency would become dominate backed by the metals?  There are 196 countries in the world. If trade is to be backed by Gold and Silver, what would the smaller countries do that have no Gold? Go figure. Would they starve or become slave countries of the larger countries with precious metals? Do you think that The IMF would step in and dole out an even amount of Gold after demanding that all the Gold held in the world be confiscated and turned over to them for economic world balance in amounts equating to a country’s GDP?
    Otherwise how would we spend our Gold and Silver if not a world currency backed by Gold and Silver?

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