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Kyle Bass On The The Looming “Run On Cash” & the Resurgence Of Gold

by The Doc, Silver Doctors:

“I think that one of the fears that they have is a run on cash. If they told you and I that they’re going to tax your deposits by a hundred basis points, well it’s better to put it in a safe or under your mattress. And that’s why you see a resurgence in gold. The more they move to negative rates, the more gold is gonna take off because there’s no carrying cost.“

Hayman Capital founder Kyle Bass sat down recently for a conversation with Maria Bartiromo and Gary Kaminsky on Wall Street Week. He covered a variety of topics such as NIRP, income inequality, and the U.S. presidential race. As our regular readers know, Kyle correctly predicted the housing crisis, and is now calling for the yuan to be dramatically devalued.

“I think this is where the academics are kind of clashing with the practitioners. I think on paper negative rates make a lot of sense if you’re running academic models, but in reality they make no sense. Having seven or eight trillion dollars of debt trading at negative rates, having thirty year JGB’s trading at fifty basis points is absolutely ludicrous. This experiment that’s going on we all know will end poorly at some point in time, I just don’t know when that time is.”

I think that one of the fears that they have is a run on cash. If they told you and I that they’re going to tax your deposits by a hundred basis points, well it’s better to put it in a safe or under your mattress. And that’s why you see a resurgence in gold. The more they move to negative rates, the more gold is gonna take off because there’s no carrying cost.

Regarding what’s going on in Asia, he reiterates his call that there’s a giant credit bubble (as we discussed here, here, and here) that’s reached its breaking point and it’s going to burst over the next two or three years. He says that he believes the implosion of the china credit bubble will have a 40-50% chance of causing a recession in the U.S. within the next year.

“From the perspective of what’s going on in Asia, Asia has a giant credit bubble that they’ve been building for the last ten years or longer that has reached its atrophy level, and it’s going to happen over the next two or three years. Whether that causes the U.S. to have a brief, minor recession, I think it’s kind of forty, fifty percent chance in the next year personally.”

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1 comment to Kyle Bass On The The Looming “Run On Cash” & the Resurgence Of Gold

  • GoldTooth999

    Buy plenty of precious metals. The stock market is a waste of time whether Shanghai or Wall Street. Especially derivatives. If there were no bail outs for too big too fail financial institutions, this serial gambler would not have been paid for his ill-gotten gains against subprime loans. Who would pay this parasite then? And au would be at least $5,000 today.

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