Jim Rickards, a legendary gold expert, suggests that YOU MIGHT NOT BE ABLE TO BUY GOLD AT ANY PRICE sometime in the future!!
I reveal the insider information investors NEED to know about Jim Rickards's reasoning on gold and stocks, so you can decide if you should buy gold now or wait for a market crash. I also cover how gold could go to $100k an ounce amidst the rise of the digital dollar.
Jim Rickards is the foremost expert on the price of gold. When he talks, the markets listen, and YOU SHOULD TOO.
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 the conclusion that having enough gold is crucial for financial power, and that a digital dollar could potentially shift the balance of power. He explains this in simple math terms, which can be seen in the chart.
In this Jim Rickards gold price breakdown, 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!!
In this Jim Rickards breakdown, we discuss the gold price and its relation to the stock market, inflation, stocks, and investors.
How experts like Jim Rickards, Brent Johnson, Jeff Snider, and Jim Rogers think the dollar will crash amidst the crisis caused by central banks' actions in the stock market. Silverstein's analysis also supports this prediction.
The math behind Jim Rickards's $10k-$50k gold price remains relevant amidst the fluctuations in the stock market, euro, and yuan. The rate of gold has been affected by these factors, but Rickards's prediction still stands.
Using Jim Rickards's logic, I reveal how the price of gold could actually go to $100k and higher with time, despite the stock market rate and fed policies.
Jim Rickards Prediction #1 – How The Dollar Might Collapse
We're going to go over the dollar collapse. It will eventually happen, and the probability is high that it will happen in our lifetimes.
You've got two schools of thought from some really smart guys on each side of the equation. Time is recommended to be taken into consideration when making decisions in the market.
Brent Johnson, Jeff Snider, and Jim Rogers think that the market will experience a slight increase in the dollar first, while guys like Schiff, Rickards, and Gundlach think the dollar will continue straight down due to the Fed's actions at this time. However, it is important to note that silverstein's analysis may offer a different perspective on the matter.
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, especially during a market crisis. That's well stated. But the argument for the dollar going up first and then crashing is a little less known.
How The Dollar Will Collapse According To Brent Johnson's Milkshake Theory
There's a massive demand for dollars outside the United States amidst the ongoing crisis. And since most sovereign debt is in US dollars—this outside demand artificially props up the price. In most of these markets, the interest rates are lower than in the United States.
Brent Johnson believes US interest rates will attract the world's capital because owning dollars will be safer and have a better return rate. FOMO will only drive up the demand for more dollars. This crackup boom-style feedback loop will be unsustainable, which ultimately causes the dollar to crash in on itself.
Eurodollar Expert Jeff Snider's Point-Of-View On How The Dollar Will End
Jeff Snider is an expert on the Eurodollar system and has a different view.
What is the Eurodollar?
Foreign banks outside the United States are also outside the federal reserve's regulatory umbrella. They can loan dollars into existence like US banks. However, many banks do not have reserve requirements.
To make a long story short, outside dollars got into the market system via the eurodollar system. And because these foreign banks do not have reserve requirements, there is no limit to the amount of dollar-denominated loans that can be created in the market.
Let's say Bank X lends to some corporation, and Bank Y lends to a different corporation. Bank Y can take the loans from these corporations and combine them, as is done with mortgage-backed securities, into derivatives. An investment fund will buy these derivatives from the banks using US dollars in the market. Where did they get the dollars to buy these derivatives? They borrowed the dollars from Bank X, creating them out of thin air in the market.
The Shadow Banking System
There's a system called the Shadow Banking system that exists outside of the United States. Jeff Snider believes this system is so large that the actual world reserve currency is not the US-printed dollar but the Eurodollar.
What is the Shadow Banking System?
And because the federal reserve has dropped interest rates so low and the entire world is starved for yield, they're making more and more of these derivatives to get a return.
The more derivatives they create from dollar funding, the more demand there is for dollars in the market, making the dollar go up. But eventually, all these consequences have to be faced by the market.
Snider believes that this will definitely happen in the market. And this will completely collapse the dollar.
Investigating Jim Rogers' Assertion About the Inevitable Demise of the US Dollar
Jim Rogers has a view that is a little bit more straightforward. He is a market-savvy dollar bear. He thinks it is the most flawed currency in the world today.
He also realizes that in the global market, everyone else outside the United States sees the US dollar as a safe haven.
He believes that the global market economy will face some big problems in the future because of its staggering debt burden.
As Brent Johnson believes, when crashes begin to happen in other markets and economies, Rogers thinks people will pile into the dollar because they see it as a safe haven.
Jim Rogers thinks the dollar will skyrocket before collapsing.
How Jim Rickards Sees The End Of The Dollar
Let's bring it right back to Jim Rickards. When big cracks in the dollar system begin to form, Rickards believes 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.
Special Drawing Rights (SDR) are an international currency. Countries and banks can use them to buy things from each other, like food or military supplies. They are created by the International Monetary Fund (IMF) to help stabilize global currency exchange rates.
SDRs are not like normal currencies, such as dollars or euros; they are international assets backed by a basket of other global currencies. This means that when one country wants to buy something from another, it can use SDRs instead of its own currency, which can help keep exchange rates stable and reduce the risk of currency fluctuations.
Rickards also thinks that the world might not accept SDRs because we just had a fiat crisis in the form of the dollar. So why on earth would people accept another fiat currency like the IMFs SDR?
If that is the case, we would have no choice, and when he says this, he means even central banks and governments have no choice but to default to a base currency that can be trusted. They would have to go back to a gold standard, even though they might not want to. This would restore confidence in the world's monetary system.
Jim Rickards believes that society will no longer trust another fiat currency once the dollar collapses. In order to restore confidence, regulators will need to bring back the gold standard.
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, and it's just a matter of price.
What Took Place During the First World War?
To further understand, let's take a little history lesson. Let's go back to World War I.
During WW1, 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.
Sir Winston Leonard Spencer-Churchill was a British politician, army officer, and writer. He was Prime Minister of the United Kingdom from 1940 to 1945, when he led the country to victory in the Second World War, and again from 1951 to 1955.
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 then John Maynard Keynes steps in and says, “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, “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 deflation.”
Well, Churchill didn't take Keynes's advice at all. And what did we get? We got 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 because you're going to need to understand this to know how we get to a $100K per ounce gold price.
How Jim Rickards Calculates $50,000 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.
He then looks at the ounces of gold these countries own then asks the question, “Well, do we want a 40% gold standard, 70%? Do we want a 100% gold standard?”
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.
First, we 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 to have a 40% gold standard in this 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 George Gammon Arrives at a $100k Per Ounce Gold Price
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 Jeff Snider's work on the Eurodollar. Recall that the Fed and the banking system in the United States DO NOT control the money supply of dollars.
The M1 and M2 numbers obtained from the Federal Reserve's website do not encompass all the other dollars generated outside the system, such as Eurodollars in shadow banking.
Jeff Snider, “There are so many of these Eurodollars created that it's actually the true world reserve currency.”
If Eurodollars are the true world reserve currency, then that would imply that there are at least as many Eurodollars as 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 grasp how huge this system 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.
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.
The powers that be will obviously want to avoid the gold standard like the plague. So if they're going to error on pricing gold, they're going to error on pricing it too high instead of too low.