Jim Rickards: A Collapse Of The U.S. Dollar Is The Most Likely Outcome

Mr. Rickards believes it is not; we can still avoid it. The key point, however, is that policy makers are not showing signs of understanding the seriousness of the situation and their policy outcomes. They neither show signs of reversing course and solving the underlying structural issues. Going forward, those are the most important signs to force a reversal of the path we are on.

Mr. Rickards adds to it that chaos is not the end of the analysis. In other words, suppose the world will face a collapse it will undoubtedly result in rather draconian executive orders.  We might end up in a form of a gold standard based on a gold backed SDR. A gold standard or an SDR standard are the two most likely outcomes of a collapse; a combination of both is also a realistic possibility.

Gold – Short term outlook

The long term outlook for gold remains positive. Shorter term, however, increased volatility is likely. Both higher and lower prices are in the cards. It  all depends on policy makers, in particular the US Fed. Between August and September there are two FOMC meetings with a press conference: September and December. Suppose the Fed would “taper” their bond purchases they will not announce it in December because it will be right before the new Chairman will take over. September is the most likely month to announce it.

So the September FOMC meeting will be an important one. Basically there are two possible outcomes. Tightening monetary policy is the first one. Doing so in a weak economy will have deflationary consequences. It will lead to higher interest rates and lower precious metals prices. Accommodative monetary policy, by contrast, would be bullish for gold and will lead to higher prices going to the end of the year.

Listen to the interview.

This article is brought to you courtesy of Gold Silver Worlds, who advocates to own physical gold and silver outside the banking system.

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