Jim Rickards presents his new book, ‘The New Case for Gold’ – and asks him what, in fact IS the new case for gold?
Rickards explains that it’s a play on an older title, ‘The Case for Gold’ written by one of Nixon’s advisers in the early 1970s. In the 21st century, he says there are new factors that make gold more valuable, such as cyber financial warfare, which could wipe out the digital numbers in your portfolio with a keystroke. He cites the case of the country of Bangladesh, one of the poorest countries in the world, who deposited $100M with the Federal Reserve Bank of New York. Their account was hacked and their money is now simply gone. Had their deposit been in something physical, like gold, this would not have been possible.
Rickards doesn’t recommend that anyone hold more than 10% of their net worth in gold. It should be used as a way to preserve wealth, in case of a total global financial meltdown – he does not recommend that one be over-allocated in gold, such that they could get hurt by its viscissitudes, vis à vis fiat currency (in case the financial world doesn’t melt down).
He explains why gold continues to be the basis for money:
“Where did the Treasury get their gold? They took it from the Federal Reserve in the 1930s. Where did the Federal Reserve get their gold? They took it from the commercial banks, after 1913. Where did the banks get their gold? They took it from depositors, who put in coins. They melted down those coins into 400 oz. bars…in other words, we’ve seen a progression over the past 120 years, where they had gold coins, then they had bars in a vault, then the bars were taken over by the Fed, then the bars were taken over by the Treasury, then we abolished the Gold Standard completely, and then we got paper money, and now we’ve have digital money, and we’re like pigs. You, know, before they slaughter the pigs, you’ve got to heard them all up into a slaughterhouse, into a pen.
“Savers and investors are are now being rounded up into a digital slaughterhouse, run by the big banks, where they can now be fleeced, with negative interest rates, account freezes – re-programming the ATMs in a crisis, you know…these things are not made up. Talk to people in Cyprus, talk to people in Greece, talk to your grandparents about what happened 1933, when the banks were closed…
“So the Treasury took the Fed’s gold and they gave the Fed a certificate. The Fed is privately-owned, the Treasury is the Government – and the Government is not allowed, under the 5th Amendment to take private property without “just compensation”. What they did was give the Fed a Gold Certificate, which is carried on the Fed’s balance sheet.
“Now, here’s the interesting part. I took a look at that certificate and they valued the gold at $42 an ounce. Today, that means, a little over $1,200 an ounce. It fluctuates…but take the value on the balance sheet and divide by $42 and that will tell you how many ounces they have and then convert the ounces into tons – it turns out that the certificates are worth 8,000 tons [which is roughly what the Treasury has].
“Now, in 1950, the Treasury had almost 20,000 tons. In 1970, we were down to 9,000 tons. There was a run on Fort Knox… President Nixon shut the window on gold. in the 1980s, the Treasury dumped another 1,000 tons on the market, to suppress the price of gold – which failed, because then gold went up to a record $800 an ounce – so, from $35 an ounce in 1971 to $800 an ounce, over a period of 9 years.
“Then the Treasury threw in the towel and stopped doing that and in 1980 it had 8,000 tons. It still has 8,000 tons. Why did it stop dumping gold on the market at 8,000 tons?…we’ve been getting all of these other countries to dump their gold…I’m curious about why the US never sold anymore of their gold after 1980?
“Could it be that they needed that 8,000 to back up that Gold Certificate, over at the Fed, which also equates to 8,000 tons? Sure looks that way. So the gold is the real support for the Federal Reserve…
“Does anybody talk about this? No. Do they mislead us? Yes.
“I just look at numbers, I look at the laws, I look at the facts and I see plainly that the Fed is propped up, not by the money supply but by the gold.”
Listen to this interview, if you want to find out why Rickards thinks gold will go from its current value today to $10,000 per ounce during an imminent global monetary collapse and re-set – a monetary collapse, which is also being predicted by many of the world’s leaders in finance, such as the IMF and other countries’ governments. My own guess is that it would mostly be because the dollar would be hyperinflated.