Sept. 15 marked the 10-year anniversary of the Lehman Brothers bankruptcy.
Many investors undoubtedly remember that day clearly. But as Jim Rickards pointed out in a recent article at the Daily Reckoning, that day was actually the culmination of a long meltdown. Investors should have seen it coming. In fact, they could have seen it coming had they been paying attention.
So, are we in the midst of a similar slow-motion meltdown today?
Last month, we reported on troubling signs in the corporate bond market. According to Moody’s, the majority of US companies have a “speculative” credit rating. They are considered high risk. As a result, their debt is “high yield” or “junk. When you combine leveraged loans and junk bonds, the total level of “junk” debt in the US marketplace comes in at around 37%.
In a recent article, investment guru and economic analyst Jim Rickards said we may soon face a devastating wave of junk bond defaults.
The next financial collapse, already on our radar screen, will quite possibly come from junk bonds.”
Last week, we explained how economic sanctions on Iran could boost the price of gold as Iranians turn to the yellow metal as a way to skirt restrictions. In a recent article published by the Daily Reckoning, financial expert Jim Rickards put this in a broader context. He described an evolving “axis of gold” as a number of countries, including China, Russia, Turkey and Iran increasingly use physical metal to create an offensive counterweight to the dollar.
This gold-based payments system will dilute and ultimately eliminate the impact of US dollar-based sanctions.”
The classic image of this is the scene from the Christmas-season film It’s a Wonderful Life, with Jimmy Stewart. We’ve all seen it. Now, something similar is happening at the Federal Reserve Bank of New York. What’s different is that the run on the bank involves gold, not cash. The New York Fed will never run out of cash because they can print all they need. But they could run out of gold.”
Jim Rickards called them “A-list of top-tier economists.” Michael Boskin, John Cochrane, John Cogan, George Schultz and John Taylor are all senior fellows at the prestigious Hoover Institute. And they all agree on one thing.
The US is going broke.
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.”
Financial guru Jim Rickards weighed in on the Bitcoin vs. gold debate and came down firmly on the side of the yellow metal. In fact, he’s said there really shouldn’t be a debate. Bitcoin and gold are two totally different things.
Rickards responded to a recent note published by Goldman Sachs declaring that Bitcoin is not the new gold in a column published at the Daily Reckoning. He said he doesn’t really like talking about Bitcoin and doesn’t think there is any real comparison between the cryptocurrency and gold.