The above are edited excerpts from an article* by Peter Cooper (arabianmoney.net) originally entitled $7,000 gold, $400 oil and $100 silver will help beat a coming US deflation explains Jim Rickards.
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Cooper goes on to say in further edited excerpts:
$7,000 Gold[Rickards believes] an executive order raising the gold price to $7,000 will be the only way to break a deflationary downward spiral in the U.S. if money printing reaches its limits and the Fed pulls back, as is happening this year and that the Federal Reserve could make this price stick by conducting open market operations and that “the purpose would not be to enrich gold holders but to reset general price levels… this kind of dollar devaluation against gold would quickly be reflected in higher dollar prices for everything else.
$400 Oil & $100 Silver
‘The world of $7,000 gold is also the world of $400 per barrel oil and $100 per [troy] ounce silver. Deflation’s back can be broken when the dollar is devalued against gold, as occurred in 1933 when the United States revalued gold from $20.67 per [troy] ounce to $35 per [troy] ounce, a 41% dollar devaluation.”
His conclusion is that ‘if the Unites States faces severe deflation again, the antidote of dollar devaluation against gold will be the same because there is no other solution when printing money fails.’
One important thing to note about Jim Rickards is that he’s a respected money manager and not a diehard believer in everything shiny. What he provides is a logical end-game to the times we are living through. Gold guru Jim Sinclair has said the same albeit without this full macro analysis.
Logic also tells you that a money with a fixed supply like gold will be worth more in a world awash with money printing. This explanation just points a path to how it gets there. It takes several leaps forward to achieve this and. [while] timing this is always going to be impossible, events are going to start moving fast.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
*http://www.arabianmoney.net/gold-silver/2014/05/19/7000-gold-400-oil-and-100-silver-will-help-beat-a-coming-us-deflation-explains-jim-rickards-in-his-new-book/ (Copyright Peter Cooper 2012)
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