James Rickards believes we are experiencing a world wide currency war and that gold will trade in the $3,000 and $10,000 range. Rickards, senior managing director of Tangent Capital Partners, sees an impending global monetary collapse as well, due to the fiscal policies of major governments….
The world already has entered a currency war that began in 2010 on the heels of the Federal Reserve’s massive easing program, he tells Wall Street Journal Digital Network. Since then, plenty of nations have joined in, including Brazil, Switzerland and Japan, says Rickards, author of “Currency Wars: The Making of the Next Global Crises.”
“All major central banks are easing,” he says. “Eventually so much money will be printed that this will lead to inflation. The endgame is collapse of the international monetary system — sometime sooner than later.”
In both the United States and Japan, the central banks are trying to “import inflation” to get their economies going, rather than trying to boost exports, through a weaker currency, Rickards says. “They’re scared to death of deflation. They’ve cut rates, and the last resort is to cheapen their currencies.”
The European Central Bank is actually doing the right thing, easing for liquidity reasons rather than to depress its currency, Rickards notes. The euro has risen to a 14-month high against the dollar as a result, and he thinks it can keep ascending.
His currency view makes Rickards a huge bull on gold. His long-term price estimate is $7,000 an ounce, more than four times the current price of $1,677. Gold could trade in a range between $3,000 and $10,000, Rickards says. “We’re not going to get there all at once.”
One major factor is that China is “in a scramble to acquire gold,” he explains. With about 1,000 to 3,000 tons, compared with 8,000 tons for the United States, China doesn’t have enough of the precious metal.
When the international monetary system collapses, major financial powers will convene to plan the aftermath, he says. When that happens, each nation must have enough gold relative to its gross domestic product.
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