ArabianMoney

Print this page
Gold_&_Silver_top_banner 728x90
Gold & Silver Sign Up for free Newsletter

Gold going to $7,000 in currency reset says author Jim Rickards

Posted on 25 July 2013 with 6 comments from readers

Gold prices will surpass $7,000 an ounce in an inevitable global currency reset forecast author of the new book ‘Currency Wars: The Making of the Next Global Crisis’ and MD of Tangent Capital, said Jim Richards speaking at the Agora Financial Investment Symposium in Vancouver yesterday.

Mr. Rickards recalled how the global currency system has been reset three times in the past century: 1914, 1939 and 1971. He noted that the dollar standard reigned from 1982 under Paul Volcker’s Fed to 2010.

Dollar in crisis

‘Now we are all at sea. Nobody knows which currency to follow,’ he said. ‘Some economists argue that we should have multiple reserve currencies but that is just too unstable’.

His forecast is that the IMF will issue a new reserve currency know as a Special Depository Receipt which it has actually previously done in crisis situations in 1972, 1983 and 2009.

‘The US dollar could collapse much faster than you might think. A complete collapse of confidence in the dollar is much closer than ever. But nobody knows exactly what the crucial threshold will be.’

In order to reset the monetary system this time Mr. Rickards argues that the gold reserves of the global central banks will be absolutely essential with 20-40 per cent gold backing sufficient.

That will mean a revaluing of bullion to around $7,000 an ounce or otherwise there will not be enough of it to do the job. Central banks will be in a position where they have to do this rather than constantly suppress the gold price to create an illusion of low inflation, he contends.

Timeline?

Where Mr. Rickards and the growing number of savants who argue in favor of a reset are frustrating is that they can provide no timeline. Does this happen this autumn? Or in five years?

At what point do the remaining holders of US treasuries decide that they want out? That’s the point when $70 trillion in derivatives will crush the banking system and the whole financial system will have to be reset.

ArabianMoney investment newsletters will get another version of how this might pan out in our next issue that features a 2,000 word article on the thoughts of gold guru Jim Sinclair about gold and the next global currency (subscribe here).

Posted on 25 July 2013 Categories: Gold & Silver, Investment Gurus

6 Comments posted by readers:

Comment by Andy - 26 July 2013

I think people are done covering this week. Most likely we head down from here. Word on the street here in Asia by many have Gold at just over $900 and to drop from here.

If QE tapers the Dollar gets stronger and the Metals drop while Asian currencies drop. When the USD was weak and the Asian currencies were strong the price of Gold and Silver was high but as the Dollar got stronger and Asian currencies weakened the metals like Gold and Silver went in for a beating.

Right about when the YEN tanked from around 77 to the USD is when Gold tanked as well.

Comment by Woland - 27 July 2013

Backing is useless without the possibility of exercising the right to withdraw “the
thing” providing the backing. Backing is for creating confidence, (which in the
scenario envisioned by Jim Rickards) has just been destroyed. Further, since the
SDR is only for exchange between central banks, it will have no effect on the
confidence of those citizens whose currency has just experienced a hyperinflation.
Why would you use (assuming the $7,000 number was appropriate) 20% or 40%
backing with $7000 gold, instead of full backing (and convertibility) at $35,000
or $17,500 per ounce respectively? What would be the difference? I see none,
from a technical perspective, but a world of difference from a confidence point
of view.

{:

Comment by Woland - 27 July 2013

My prior comment does not address the inherent problem of inflexibility when
a fixed rate of exchange exists between a store of value (the new SDR reserve)
and a modern digital currency in its role as a medium of exchange. This is the
problem of the classic gold standard when the “run on the bank” occurs. Only
by allowing the two elements to float freely against one another can they both
fulfill their separate functions effectively. A fixed anchor will be ( and always
has been) abandoned in a crisis. No anchor, (what we have today), leads to
the eventual collapse of the currency itself. Today, a hundred currencies
“float” daily against one another. Tomorrow, they can all float against real,
physical gold, rather than some nebulous institutional “promise” of backing.

Comment by justin - 30 July 2013

gold at 900? My ass. For all of you GUESSING prices, please keep that bullshit to yourself. When you produce something, your expectation is to MAKE money off of what you make. Well my friends, i could give a rats ass about your wall st. like forecasting. What i do care about is the rising costs of energy. Shale will not save the world from peak oil. In reality peak oil has already happened, in the sense that its taking more and more new oil rigs to produce a surplus. More and more countries are importing oil because they have to. Now moving on to silver/gold, there is something you idiots should learn about before spouting off b.s. about where the price will go **GLARE ANDY**… its called in the mining world “all-in-costs” or “How much does the exploration, mining, and refining cost” This number for gold is 1,100$ and 36$/oz for silver. You then ask me how they are not shutting down, well, they have low operating costs. If worse comes to worse, these guys can afford to shut down production, sit on it, until price of the commodities let them go back into production at a profit. Oh, and with oil rising in price, the anything attached to that will rise. Those re-opened mines you heard about, well theyve got to dig deeper and deeper, which means longer distances between the bottom of the pit to the top, which means more oil used to get to the bottom to the top, which means its more expensive for the company to mine, which means they will have to raise prices of the commodity to cover costs (also bearing in mind that any mine is required to sell 25% of their production to silver wheaton), which means you guys should keep your mouth full Bernake cock shut. Im not going to guess where the price will be a day from now, a year from now, or even 10yrs, what i just did though was state facts that disprove what any idiot, whether an old fart or a young, tells you. Educate yourselves, before listening to the talking heads.

Comment by Jon - 31 July 2013

There are no free markets anymore. No rule of law. When you can push down prices as much as you want with paper in the futures markets. At this point it’s below the cost of getting out of the ground.
When mining companies are going bankrupt, closing, suspending operations. If you trust your government over 5000 years of what real money is, then by all means enjoy your paper money.
More and more people are waking up to the fact that they’re purchasing power is disappearing. They might not have all the pieces to the puzzle, but at some point you realize this pyramid scheme is going to collapse!
If you’re depending on Social Security, 401(k) and pension and they won’t be paid out in paper?
At these prices I’m stacking…

Comment by Linda - 25 January 2014

If you have physical gold how will you be able to use it? Will you be able to walk into a bank and exhange it?

Ed Note: No you would go to a mint or brokerage house.

Add your comment on this article:

Post your comment >

Free e-Newsletter: