Rickards: Don’t Expect a Grexit, Fed Rate Hike, or Strong Dollar in Next Year (Video)

It’s been a while since we heard from Jim Rickards, one of the leading contrarian economists. In a new interview with Kitco, Jim shared his opinions on a wide range of topics. He talked about the current relationship between the United States dollar and the Chinese yuan, as well as what he expects to happen in Greece. He shares Peter Schiff’s opinion that politics will prevent Greece from leaving the euro. He also agrees that the Federal Reserve is not going to raise interest rates until 2016, or maybe even as late as 2017. On top of all that, he sees the dollar losing value in the coming year and price of gold rising.

Highlights from the interview:

“They’re going to add the Chinese yuan to the [IMF’s Special Drawing Rights] basket [of currencies]. The immediate short-term ramification is that we have sort of a peg between the dollar and the yuan. The currency wars are still being fought around the world in Europe and Japan and elsewhere, but there’s sort of a lull in the fighting between China and the US right now. The US has veto power at the IMF. So we’re saying to the IMF, ‘Hey, if China wants to get the yuan [into the basket], the Chinese have to be on their best behavior. We define the best behaviors – not cheapening the yuan.’ … They’re not doing that right now. The short-term ramification is the dollar-yuan peg will hold throughout the year…

“[This will affect gold,] because when you have that kind of stability between the dollar and the yuan – See, I think of gold as a currency. When I hear the price of gold is down, I think the dollar’s stronger. When the price of gold is up, that means the dollar is weaker. Right now, we’re in a strong dollar period and the Chinese are not undercutting us, so the dollar may maintain that value…

“Where is the gold market? Is it in London or in China? For the time being, it’s still in London. But because of the Shanghai Gold Exchange, because of the new standard – the old, 400-ounce bar is kind of obsolete… The old saying, ‘follow the money’ – well, follow the gold. The gold is going to China. Yes, China has set up a rival for the London Gold Fix. But at the same time, China is trying to make nice. They just joined the London Gold Fix. They have a foot in both camps…

“What I’ve said all along, going all the way back to 2010 [is] Greece is not leaving the euro. There will be no Grexit. Nobody is getting kicked out, nobody is quitting. That doesn’t mean everything is fine in Greece. You could have bail-ins, you could have bank nationalizations, you could have bond defaults. There could be a lot of economic disruption around Greece. But none of that is the same as Greece leaving the euro…

“This is not primarily an economic issue. It is a political issue… There’s a political will to keep Greece in the euro. The Greek people overwhelmingly favor the euro. They don’t like the austerity that goes with it, but the Greek people favor the euro…

“I think the Fed will not be able to raise rates in 2016. Of course, I said that in 2014. Here we are, almost July and I’m sticking with that forecast. The data just doesn’t support it. The data is too weak. I see the Fed not raising rates this year… That means a weaker dollar, which would mean stronger gold…

“Gold is in a range, but if the dollar is at the high end of the range, and the dollar starts to come down, then the dollar price of gold should start to go up. I think of gold-dollar as a cross rate. So a strong dollar, weaker price for gold. Weak dollar, higher dollar price for gold. I am expecting the dollar to weaken, so I’m expecting the dollar price of gold to go up…”

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