In this video interview Jim Rickards comments on Roubini's Recent Comments on Gold.
Jim takes down Roubini's comments point by point and very well. I thought he was a bit easy on Roubini, but he may have missed the mark on interest rates.
I think the 10 year rate is completely inappropriate in deriving real interest rates against short term inflation. And the official and even 'market-based' measures of inflation are distorted in ways that can be easily demonstrated by John Williams for example. So I thought that was a bit disingenuous on James Rickard's part. Short term rates are very negative and this is an easily observed phenomenon and result of QE. They are merely expanding that effect along the yield curve.
Gold is not correlated to inflation per se. It is correlated to negative interest rates and expectations of inflation, two concepts which are related. Negative rates are the result of expansive monetary policy.
And most importantly, in the final analysis gold is correlated to the perception of all monetary risks as a negative effect on wealth, whether that be from inflation, or any other forms of the use of money and the terms of the financial system as a means of expropriation of wealth.
This is so fundamental that I cannot believe that economists do not realize it. Or why they just ignore it. It is written across the history of the past four thousand years.
The bad money drives out the good, and good money is sound money that is not easily taken away or reduced by the entanglements of fraud or official debasement.
Think about it. Inflation, negative interest rates, floating Money Market Funds, bail-ins, non-quantifiable counterparty risks, seizure of illiquid and non-transportable real assets, and even systemic fraud are all risk effects on individual wealth.
People seek safe havens in time like this. And those who are expropriating wealth, for whatever reason, have a disdain for gold and silver equal to their disdain for the rights of individuals to preserve themselves from their own exploitation.
The financiers have not only completely 'screwed things up' in their greed, but they seek to take the losses out of the wealth of the innocent whom they had an obligation to inform and protect in the first place. This is deceitful, low, and truly despicable.
Luckily, and this is most definitely not out of spirit of altruism, there are large and powerful entities out there in the form of sovereign countries and organizations and people outside the Anglo-American system, who are also going to resist the demands of expropriation and exploitation of their own sovereign wealth.
Thankfully there is not a 'one world government' although the collusion of nationless oligarchs is troubling.
Corrupt and desperate people have been down this road many times before, in trying to make other people pay the price for their own malfeasance and illicit gains. That they seek to do so by perverting justice and the fundamental protections of government is nothing new either. This is the continuing threat of which the people have been warned since the very founding of the American republic.
The system must be reformed from the financialized control fraud which it has become over the past twenty years. And to do that, the country must face some hard truths about the real source of the problems which we are facing, the corruption and concentration of power, the corrosive effect which money has had on political discourse and governance, and what must be done to restore a balance to the real economy and the general welfare of the entire nation, and not just for a fortunate and powerful few.