Readers here know that we have long featured the thoughts and writings of Jim Rickards over the years here on this blog. Jim has a rare ability to take complex subject matter and break it down so that those of us without a background in economics can better understand events and terminology used in that discipline. Jim has been saying and writing for years that our present monetary system is vulnerable to a so called "black swan" trigger event that could become what he calls "the snowflake that sets off the avalanche".
Clearly, in the current situation, many people will want to know what Jim is thinking right now and if we are potentially seeing the start of the kind of major crisis he has long predicted. In this recent new interview with Daniela Cambone of Kitco News, Jim offers his thoughts on what is going on right now. You can watch the interview just below. After that a few added comments.
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My added comment: Jim covers a fairly broad array of topics in this interview ranging from his take on the current crisis to the impact on gold to the potential impact on the upcoming US Presidential election in November. Readers can find his books on Amazon.com and his book that talks about "Ice Nine" (discussed in this interview) was The Road to Ruin which can be found here.
I had thought about seeing if Jim would do a brief Q&A type interview here to update readers on his take on the current situation, but this interview does that very well and saves him some valuable time which is limited. I can say that his books are well worth the investment in time and money for anyone interested in these issues. I can add that over the years Jim has always taken time to reply to questions I may have and offer his take on things based on the info available at the time.
Added notes: This situation is constantly evolving so added notes may be needed. In the interview above Jim talks about how the system can "freeze up" in stages. At first, perhaps a closure of the stock exchange which removes that money as a source of liquidity. Then things like money markets can come under pressure from those who must have liquidity. Today the Fed steps in to try and calm that part of the system. It's very clear that the scenario Jim describes in this interview is absolutely a concern for the Fed and our government officials. You can see this just by observing their actions. It is very important in situations like this to stay alert to ongoing news and have some emergency funds available to tide you over in case, despite all the efforts of the monetary authorities, liquidity dries up and access to cash gets more difficult.
The gold and silver markets - We should note that there is also unusual activity going on in these markets. While the futures prices for commodity contracts for gold and silver have fallen alongside other markets (although far less than stocks for example), there is a different story going on in the physical markets. It would probably not be accurate to say that there is a "shortage" of gold or silver right now since it can be purchased. But those who are selling gold and silver right now are demanding much higher premiums for the coins etc. to let them go to buyers. As an example, the spot price of silver is around $12 per ounce as I write this added note. But I would challenge anyone to find any one ounce silver eagle coins for anything close to $12. I could not find any lower than around $18 (for quantity purchase) and most sites were asking $20 or more per one ounce coin (if they have any in stock). Mints around the world are sold out and in back order for weeks including the US Mint. This is important to understand. This means there is a surge in buyer demand for physical coins due to the crisis and people are paying very high premiums to get coins. It's more anecdotal evidence that while people are surely hoping this crisis will be over sooner rather than later, they are also willing to start hedging their bets to get some insurance against the potential for massive fiat money creation and the risk that may pose to fiat currencies later on. Don't dismiss this kind of anecdotal evidence as meaningless. It is not.
Added notes: This situation is constantly evolving so added notes may be needed. In the interview above Jim talks about how the system can "freeze up" in stages. At first, perhaps a closure of the stock exchange which removes that money as a source of liquidity. Then things like money markets can come under pressure from those who must have liquidity. Today the Fed steps in to try and calm that part of the system. It's very clear that the scenario Jim describes in this interview is absolutely a concern for the Fed and our government officials. You can see this just by observing their actions. It is very important in situations like this to stay alert to ongoing news and have some emergency funds available to tide you over in case, despite all the efforts of the monetary authorities, liquidity dries up and access to cash gets more difficult.
The gold and silver markets - We should note that there is also unusual activity going on in these markets. While the futures prices for commodity contracts for gold and silver have fallen alongside other markets (although far less than stocks for example), there is a different story going on in the physical markets. It would probably not be accurate to say that there is a "shortage" of gold or silver right now since it can be purchased. But those who are selling gold and silver right now are demanding much higher premiums for the coins etc. to let them go to buyers. As an example, the spot price of silver is around $12 per ounce as I write this added note. But I would challenge anyone to find any one ounce silver eagle coins for anything close to $12. I could not find any lower than around $18 (for quantity purchase) and most sites were asking $20 or more per one ounce coin (if they have any in stock). Mints around the world are sold out and in back order for weeks including the US Mint. This is important to understand. This means there is a surge in buyer demand for physical coins due to the crisis and people are paying very high premiums to get coins. It's more anecdotal evidence that while people are surely hoping this crisis will be over sooner rather than later, they are also willing to start hedging their bets to get some insurance against the potential for massive fiat money creation and the risk that may pose to fiat currencies later on. Don't dismiss this kind of anecdotal evidence as meaningless. It is not.
Important News note 3-23-2020: Fed Announces "Asset Purchases with No Limits". This is a huge step by the Fed in an obvious attempt to support the stock market and to try and instill as much calm as possible in all markets.
Please note the comment just above made a few days ago:
"It's more anecdotal evidence that while people are surely hoping this crisis will be over sooner rather than later, they are also willing to start hedging their bets to get some insurance against the potential for massive fiat money creation and the risk that may pose to fiat currencies later on."
Please note the comment just above made a few days ago:
"It's more anecdotal evidence that while people are surely hoping this crisis will be over sooner rather than later, they are also willing to start hedging their bets to get some insurance against the potential for massive fiat money creation and the risk that may pose to fiat currencies later on."
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