I reveal the insider information YOU NEED to understand Jim Rickards reasoning and determine if you should buy gold now or wait.
And how gold could go to 100k an ounce!! Jim Rickards is the foremost expert on the price of gold when he talks, the markets listen and YOU SHOULD TOO.
If you've followed his work you know Jim Rickards is one of the premier macro thinkers in the world.
If you don't know who Jim Rickards is, you need to discover his ideas RIGHT NOW.
Understanding and listening to Jim Rickards now could save and make you a lot of money in the future.
He is a heavy hitter in the world of macroeconomics and gold. He's revered as one of the top thinkers in the country and he's made some huge calls on the price of gold saying it can easily go to $10,000 to $50,000 an ounce.
Jim Rickards comes to that conclusion in a very scientific manner. It's really just about math.
In this Jim Rickards article and video, I explain how he comes to those conclusions and then go on to reveal how the price of gold could actually go to $100,000 an ounce!!
As shocking as it sounds it's realistic, but you've got to watch the video to discover the details.
In this Jim Rickards article and video, I discuss the following:
- How experts like Jim Rickards, Peter Schiff, and Jim Rogers think the dollar will crash.
- You'll discover the actual math behind how Jim Rickards comes to his 10k-50k gold price.
- I reveal how, using Jim Rickards's logic, the gold price could actually go to 100k and higher!
Jim Rickards thinks gold is going to $10K to $50K an ounce. I think it might even go higher than that up to $100K an ounce. I'm going to tell you why right now in three simple, fast steps, starting with step number one.
The Dollar Collapse
We're going to go over the dollar collapse. You've got two schools of thought. You got some really smart guys on each side of the equation.
Guys like Brent Johnson, Jeff Snider, and Jim Rogers think that the dollar is going to go up first and guys like Schiff, Rickards, and Gundlach think that the dollar is going to go straight down.
But one thing that they all agree on is that the end game for the United States dollar is a collapse.
We all know the argument for the dollar going straight down. That's well stated. But the argument for the dollar going up first and then crashing is a little less known.
Brent Johnson's milkshake theory
So I want to review that quickly. Brent Johnson's milkshake theory is that we've got the United States here, and all these other countries outside of the United States have a lot of dollar-denominated debt. So that means that they borrowed in dollars.
Not only countries but entities and corporations. So there's all this demand outside of the United States for dollars. That artificially props up the price.
Also in most of these markets, the interest rates are lower than the United States.
I know that sounds hard to believe, but it's actually true especially as of about six months ago before Powell started lowering rates.
So Brent Johnson believes that our interest rates will bring all this capital into the United States because it can get a better return; therefore, a lot more demand for dollars.
That's why he sees the dollar going up first and then crashing.
Eurodollar Expert Jeff Snider's point-of-view
Jeff Snider has a view that's a little bit different. He is an expert on a system called the Eurodollar.
What is the Eurodollar?
Basically what this is, is most economists and most professionals believe that the United States controls all of the creation of dollars and they manage it within their regulation, with our banks and the federal reserve. This is not true.
If any of you think that the United States is actually in control of the production or the creation of the United States dollar, you've got another think coming. You're sadly mistaken. And I'll show you why.
Outside of the United States, you have all these foreign banks that are outside of the regulatory umbrella of the federal reserve.
A lot of these banks don't have reserve requirements. So to make a long story short, they get dollars into the system, whether that was 40, 50, 60 years ago. And because they don't have reserve requirements, and because banks create money outside of a fractional reserve system, there is no limit to the amount of dollar-denominated loans that they can create.
So you've got bank X and bank Y. Bank X lends to some corporation and Bank Y lends to some corporation. And bank X and Y will lend dollars back and forth to each other.
Bank Y will take the loans from these corporations and they will combine them, as we do here with those good old mortgage-backed securities, into derivatives.
A fund, an investment fund will buy these derivatives from the banks in dollars. Well, where did they get the dollars to buy these derivatives? They borrow the dollars from bank X who creates them out of thin air.
The Shadow Banking System
So there's this whole system, whether you want to call it Shadow Banking or Eurodollars that exists outside of the United States.
What is the Shadow Banking System?
And Snider believes that this system is so large that the actual world reserve currency is not the dollar. It's actually the Eurodollar.
And because the federal reserve has dropped interest rates so low and the whole entire world is starved for yield, they're making more and more and more of these derivatives in order to get a return.
The more derivatives that they create out of dollar funding, the more demand there is for dollars. That makes the dollar go up. But at some point in time, all of these chickens have got to come home to roost.
Snider believes that this will definitely happen. And this will completely collapse the dollar.
Jim Rogers's point of view
Jim Rogers has a view that is a little bit more straightforward. He is a dollar bear. He thinks it is the most flawed currency in the world today.
But he also realizes that everyone else outside the United States, and inside the United States, sees the US dollar as a safe-haven.
So he believes that the world economy is going to go through some big, big problems in the future because of all of its debt.
So when those crashes start to happen in other economies and in the United States, he thinks people are going to pile into the dollar because, again, they see it as a safe-haven.
That's why Jim Rogers thinks that the dollar is going to go up before it collapses.
Jim Rickards's Point of View
Let's bring it right back to Jim Rickards. When this occurs, Rickards thinks that the IMF is going to come in and try to save the monetary system with SDRs, Special Drawing Rights, which is basically the fiat currency of the IMF, International Monetary Fund.
But he also thinks that the world might not accept this because we just had a fiat crisis in the form of the dollar. So why on earth would people accept another fiat currency?
In that case, we would have no choice. And when he says we would have no choice, he means even the central banks and the governments have no choice.
They'd have to go back to a gold standard. Even though they wouldn't want to, they'd have to restore confidence in the world monetary system.
A lot of people say, “Well, that's impossible. There's not enough gold.” And Rickards makes a great point here. There is enough gold, it's just a matter of the price.
What Happened During World War I
To understand this further let's take a little history lesson. Let's go back to World War I.
During this time, England went off of the gold standard so they could increase the money supply to pay for the war.
Prior to this, gold was $20 an ounce.
Moving on to 1925, after the war, Churchill came in.
He says, “You know what? That gold standard was a good idea. Let's go back to that.”
The gold standard before was $20 an ounce, so now we'll just make it $20 an ounce again.
And Keynes came in and said, “Whoa, Whoa, Whoa. Time out.”
He goes, “What are you doing? That's insane.” And he was actually really pissed.
He said, “You can't take it to $20 an ounce because you've doubled the money supply. If you leave it at this price, you're going to shrink the money supply overnight. And it's going to create massive deflation.”
Keynes said, “What you should do is you should increase the price of gold, denominate it in the currency to $40 per ounce. And since that matches up with the money supply, you won't get this deflation.”
Well, Churchill didn't take his advice at all. And what did we get?
Deflation that contributed to the Great Depression.
As you guys know, I'm not a huge fan of Keynes in economics, but in this case, Keynes was right. You got to give credit where credit is due.
And I really want you guys to pay attention to this because at the end of the video, you're going to need to understand this, to know how we get to this number of $100K per ounce.
How Jim Rickards Determines $50k per Ounce
To make this really clear I'm going to show you how a gold standard is set up. And then we're going to use very small numbers until we get to the really big ones.
And I think he might use the yuan, but I'm not sure so I put a question mark here.
What he then does is looks at the number of ounces of gold that these countries have at their disposal or the number of ounces that they own.
He then asked the question, “Well, do we want a 40% gold standard, 70%? Do we want a 100% gold standard?”
And then it's just simple eighth-grade math, or what he calls eighth-grade math. It's probably a little easier than that.
Let's assume in this example that there is $100 worth of M1 or M2, and there are only 20 ounces of gold, and we want a 40% gold standard.
The first thing we do is take 40% of 100, which gives us 40. We take the number of ounces, that's 20. And we divide 40 by 20, which gives us $2.
So in order to have a 40% gold standard in this very simple example, gold would have to be priced at $2 an ounce.
Now let's go ahead and use some real numbers with just the USD.
M1 currently is right around $4 trillion. We've got 8,000 tons of gold, which equals 256 million ounces.
For this example, we use a 100% gold standard.
Dividing 4 trillion by 256 million gives us a gold price, a per ounce gold price of $15,265.
If we move that to M2, which is a much bigger money supply, that's about 15 trillion right now. The per-ounce price of gold would need to be $58,593.
Let's remember that Rickards in his math, is using gold to M2, with multiple currencies and a 40% gold standard, which is why these numbers differ slightly from the 10K to 50K that he gives us.
How I arrive at $100k Per Ounce
How do I get to a per ounce gold price of $100K?
And you may be saying to yourself, “George, that is absolutely impossible. That's crazy talk.”
All right, let me explain this to you and we'll see if you still have that same opinion when I'm done.
Let's remember Jeffrey Snider's work on the Eurodollar. That's the fed and the banking system in the United States thinking that they control the money supply of dollars, but we know that's not true.
So the M1 numbers and the M2 numbers that we get on the Federal Reserve's website, doesn't include all of the other dollars that are created outside of the system, all these Eurodollars in shadow banking.
And Jeff Snider says, “There are so many of these Eurodollars created that it's actually the true world reserve currency.”
Well, if it's the true world reserve currency, then that would imply that there are at least as many Eurodollars as there are US dollars in the system that the fed knows about.
If we double M2, we've got to double the price of gold to maintain that gold standard. That's what takes us from $50K an ounce to $100K an ounce.
Oh, but wait, there is more. It's not just dollars that are created outside of the system. It's yen that is created outside of Japan and Euros that are created outside of the Eurozone.
So not only do we have Eurodollars, we have Euroyen, and we have Euro euros. The money supply has grown exponentially since we have been off the gold standard since 1971.
I know this is just blowing your mind right now, but to get a grasp on how huge this system actually is and how large the world money supply is outside of what we know, let's look at the derivatives market, which is over one quadrillion.
Editor, pull that up right now, let's go to the visual capitalist and you guys can get an idea of how massive this money supply actually is.
But coming back here, we look at this $100K per ounce price, and you could very easily see how this could be way, way too low, especially when we remember the mistake that Churchill made in 1925, where he mispriced gold too low and it was one of the catalysts of the Great Depression.
Obviously the powers that be will want to avoid that like the plague. So if they're going to err on pricing gold, they're going to err on pricing it too high, as opposed to too low.