Read the Tuesday Afternoon Wrap-Up for 7/23/2013 and the Wednesday Morning Commentary for 7/24/2013
I have never been able to make out Jim Rickards. With his broad corporate and government credentials – and obvious understanding of the monetary system – there is NO WAY he doesn’t understand EXACTLY what I write of each day. Yet, for the past decade, he has swayed back and forth like the wind; not from a “trading” standpoint like the “THE KING OF MAINSTREAM SELLOUTS” – Jim Rogers; but like a teenager flitting from party to party, without any true allegiance. In other words, one day he hangs out with the jocks; and the next day, the nerds.
Clearly, he has major connections in multiple arenas; from government, to the banking system, to major corporations. And thus, one never understands EXACTLY his motivation, pour le moment. To wit, his speech at 2011’s London GATA conference; in which much of what he said clashed with the audience’s pro-gold views. Actually, in hindsight his most controversial statement turned out to be TRUE; i.e., the U.S. government would someday commandeer the gold held in custodianship for foreign Central banks…
USA Federal Reserve steals Germany’s gold – refuses to return it!
However, just like prior “SELLOUTS!” like Bill Gross and Marc Faber, Rickards’ recent comments appear to be 100% genuine; as if he’s suddenly had an epiphany about the true nature of today’s GLOBAL ECONOMIC MELTDOWN. That, is I think he finally “gets it” that a widespread loss of confidencein paper currencies is inevitable; and thus, people should stop trading PAPER PMs in lieu of owning PHYSICAL coins and bars.
Thus, I was tickled to see him write the below, superb article for the always-great Daily Reckoning website. In it, he speaks EXACTLY as “Ranting Andy” would about the reasons for owning gold – equating it to conceiving your own, personal gold standard…
Your Personal Gold Standard
In other words, whether a formal “gold standard” is ever re-introduced – locally or worldwide – matters not; for as long as you trade in your fiat dollars, Euros, and other trash currencies for REAL MONEY, you have essentially converted your own “monetary system” to a gold standard. In this way, you will be PROTECTED from the coming, inevitable onslaught of global MONEY PRINTING – no matter what the government “officially” decrees.
To that end, Rickards staunchly believes – like Jim Sinclair – that gold will never be confiscated by the U.S. government; thus, strengthening his argument in favor of acquiring PHYSICAL gold. Not that it matters either way – per the answer I give to ALL of those that express concern of such a potentiality; that is, under such a scenario, would you rather own…
“PRICELESS PRECIOUS METALS OR WORTHLESS DOLLARS?”
Better yet, he even quantifieswhat gold should trade at in today’s dollars; that is, if the gold standard scenario he anticipates comes to fruition. As you can see below, he utilizes various iterations of the narrow M0 and M1 money supplies to get his estimate of $2,590/oz.-$44,552/oz. – or $6,475/oz.-$8,342/oz. assuming 100% backing, and no participation by China or any other countries…
Of course, he is assuming all 261.5 million ounces (8,134 tonnes) of the U.S. Treasury’s published gold reserves – last audited in 1956 – are still intact. Below are my estimates from last year, based on the broader “monetary base” – assuming 1) 261.5 million ounces of government gold reserves and 2) my “conservative” estimate of just 100 million ounces. In other words, for the most part, Rickards and I are in complete agreement…
Once you understand the “HOLY GRAIL OF THE FINANCIAL WORLD”; i.e., only PHYSICAL gold and silver are REAL MONEY – you’ll understand why you need to trade your dying scrip for PHYSICAL gold and silver; and consequently, start thinking of your “net worth” in terms of ounces, not dollars.
