Jim Rickards: “The System Is Highly Unstable—If [Confidence] Is Lost, It Can Melt Down Very Quickly”

04-Sep (Sprott) — During a time of increasing uncertainty in global financial markets, Jim Rickards, best-selling author and advisor to US Department of Defense and Intelligence Communities, was kind enough to share a few comments.

When asked about People’s Bank of China’s recently announced gold reserve holdings numbers, Jim noted that, “I’ve been [to] China and [spoke] to secure logistics people, that [told me] gold is being brought in completely off the books…over land using People’s Liberation Army assets…coming in from Kazakhstan, maybe Russia.”

“[So] I’m not saying the People’s Bank of China is lying about their gold [holdings]…But whether to ignore how much gold [affiliates hold] off the books is the question…I think it’s reasonable to estimate at least 3000 tons…[but] there’s reason to think it could be [much] more.”

Jim also shared a recent conversation with former Federal Reserve Chairman Paul Volcker, in which Mr. Volker explained he “was one of the people in the room [at Camp David]” when the decision was made to close the gold window.

“What Nixon actually said—and Paul Volcker confirmed this when I spoke to him—is that they didn’t think they were going off the gold standard…[It] was a temporary suspension until the major global powers could get together…rewrite the system and…get back to a gold standard…at a different [much higher] gold price.”

Since the closing of the gold window there has been confidence in the system. “But if you push one wrong button, the whole thing melts down catastrophically,” Jim added. “You create a chain reaction…[where] I see gold going to $5000, $7000, [even] $10,000 an oz.”

[If] you have a global financial panic and need to restore confidence,” Jim concluded, “that’s the price of gold you would need…And that’s not a complicated equation. That’s the kind of eighth grade math anyone can do.”

…China is out to help China. They’re not out to help you. They’re not out to help me. They’re not out to help gold. They’re out to help themselves.

What that means is they have to acquire a lot of physical gold. And what’s interesting about that, as we all know, is there’s not that much physical gold around. So I personally like to buy physical gold. I think when the system breaks down (which I do expect) and the price of gold begins to skyrocket, people will say, “Oh, I will go out and get my gold then.” Guess what. You may not be able to find it. The time to get your gold is now.

[source]

PG View: Rickards is a sober, critical thinker with gobs of experience that gives him particularly good insight into global financial affairs. When he speaks, people listen . . . or they certainly should.

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