Rickards: Next Financial Panic Will Be the Biggest of All, with Only One Place to Turn… (Podcast)

Saturday, January 20, 2018
By Paul Martin

JANUARY 20, 2018

Coming up we’ll hear another amazing interview with Jim Rickards. Jim examines what the next financial crisis will look like and how it will be different from previous panics, gives us his outlook for gold and the key drivers for the yellow metal in part one of a tremendous two-part interview. Don’t miss my conversation with Jim Rickards, coming up after this week’s market update.

As the White House and Congressional leaders scramble to avert a government shutdown, investors are bracing for possible market gyrations. Historically, government shutdowns have tended to produce only minor selling in the stock market – in part because no essential functions of government ever actually shut down.

It’s a wonder more taxpayers don’t question why non-essential government programs exist in the first place. In any event, there’s no serious talk in Congress of cutting spending. The political theater currently playing out is all about which side will get more of the funding they’re demanding for their respective programs.

Well, at least taxpayers can enjoy a little more take-home pay this year as tax cuts go into effect and many large corporations pay bonuses and hike wages and salaries to employees. This week Apple announced it would repatriate tens of billions of overseas dollars back to the U.S. in response to more favorable tax treatment here.

For the first time in many years, stimulus that had been mainly inflating equity values is hitting the real economy. Also for the first time in many years, wage inflation and broader inflationary pressures are hitting the real economy. Cash infusions into the hands of consumers are great while prices for food, energy, and consumer goods remain cheap. But more dollars in consumers hands chasing limited quantities of stuff will translate into higher prices down the road.

Crude oil and other key commodities have been quietly marching higher over the last few months. Precious metals markets have yet to break out of their 2017 trading ranges, but recent strength in gold has prices approaching a potential breakout level at $1,350 per ounce although, it did pull back some on Thursday.

Gold currently checks in at $1,327 after slight decline of 0.9% as of this Thursday evening recording. Gold entered 2018 with some stealth buying momentum. Gold exchange traded fund holdings rose 8.4% in 2017, their best showing since 2009.

Turning to silver, prices are down 1.8% for the week as of Thursday’s close to trade at $16.97 an ounce.

Bitcoin prices swung wildly this week on fears over new European Union regulations and hard questions being raised about whether its bubble is bursting. The crypto-currency plummeted from above $14,000 to below $10,000 mid week before recovering

You won’t see this kind of volatility in gold – except possibly toward the end of a mania phase. The last true gold mania took place nearly four decades ago. In fact, gold prices reached their peak of $850 an ounce on January 21, 1980 – almost exactly 38 years ago to this day.

Of course, the yellow metal posted a more recent high of over $1,900 back in 2011. But that move never reached manic levels. Yes, prices greatly exceeded the 1980 peak in nominal terms. But in real terms by various measures, gold never got back to 1980 levels.

Certainly not when measured against the Dow Jones Industrials. At the 1980 peak, gold reached a 1 to 1 ratio with the Dow. In 2011, it only got up to one-sixth of the level the Dow was trading at. Today gold trades at just one-nineteenth of the Dow, which sits at a whopping 26,000.

The potential of gold to trade at $26,000 an ounce may seem remote…or even far-fetched. But in the next financial crisis, it’s quite likely that gold prices will dramatically close their existing gap with the stock market. Many top analysts, including our special guest this week Jim Rickards, see $10,000 gold as plausible…or even likely. A significant retreat in the Dow from its current heights is also likely at some point in the future.

In a true mania phase for precious metals, gold and silver will be all over the news much like Bitcoin is today. Trend chasing speculators will drive huge daily price moves in metals. Demand for coins will be so hot that we will probably have difficulty keeping any products in stock. We will probably have to pass along the much higher premiums throughout the supply chain to our customers.

The Rest…HERE

Leave a Reply

Join the revolution in 2018. Revolution Radio is 100% volunteer ran. Any contributions are greatly appreciated. God bless!

Follow us on Twitter