$10,000 Gold?

Jim Rickards has been talking $10,000 gold for a while. This seems like an absurd number, but Rickards insists the dynamic exist to push gold to that level – when the world financial system collapses under its own weight.

Rickards has been making the rounds again lately, saying gold is in the midst of its third bull run and has plenty of room to go.

In my view, we’re in the third bull market of my lifetime. The first one was 1971 to 1980. Gold went up over 2,000%. The second one was 1999 to 2011. Gold went up 655%. We’re in a new bull market that started in December 2015. Gold’s up 27% since then. Gold was up in 2016-2017. First back-to-back year of gold gains since 2011-2012. So, 2018 will be a breakout year … we’re actually in the third year of a bull market with a very long way to run.”

Rickards said there are a number of events that could trigger a faster run-up in the price of gold. During an interview with RT, he specifically focused on war with North Korea. Rickards said there are really only three ways forward. Kim Jong-un could be assassinated. He could stand down and abandon his nuclear weapons program, or there could be a hot war with the US. Rickards said the first two options seem pretty unlikely. That leaves war as the most probable outcome.

Rickards said a shooting war with North Korea could set things in motion toward $10,000 gold. Other potential catalysts are a plunge in the dollar,  a trade war with China, or the impeachment of President Trump. But Rickards said he’s more focused on fundamentals, and they are very positive.

I don’t sit around waiting for a war to start because I hope the price of gold is going to go up … I don’t do politics, but every now and then the politics and the macros – the news cycle – impinges on economics … These are big things. You’re talking about a trade war with the biggest economy in the world. A shooting war with a nuclear power,  the impeachment of a president. All of these things – any kind of uncertainty, any kind of a fear factor is going to drive the price of gold higher. But I emphasize, the fundamentals are good, even if none of those things happen.”

Rickards said that his $10,000 gold prediction may seem bold, but he didn’t just pull the number out of thin air.

It’s the result of analysis. I didn’t just pick a number and say throw it out there … That is approximately the non-deflation price of gold in a gold-backed monetary system. So, if you have a liquidity crisis or a financial panic of the kind we had in 2008, or worse, which I expect – you can already see that coming – then the global elites, the IMF, the central bankers, the G-20 heads of state, finance ministers, they’ve got to put Humpty-Dumpty back together again. They’ve got to restore confidence in the international monetary system. How are they going to do it? They don’t necessarily have to go to gold, but they might. If they do – this is the key thing – if they do, you’ve got to get the price right. You’ve got to have that non-deflationary price. Given the money supply and the amount of gold, that price is close to $10,000 an ounce. So, it’s not a made up number. That’s where you’d have to go.”

So, what would a world of $10,000 gold look like?

All gold really does – it preserves your purchasing power. It makes sure you don’t get wiped out. But if gold is $5,000, you know, oil is probably $400, and the price of everything is doubled or tripled.  So, it will preserve your purchasing power. You’re not necessarily ahead of the game, but importantly, you’re not behind the game. And when everyone else is getting wiped out, your wealth is still intact.”

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