by Samuel Bryan, Schiff Gold:
Last week, James Rickards explained to CNBC why he is a long-term holder of gold bullion. He pointed to the pattern of financial collapses that threatened the global economy over the past two decades.
In the late ‘90s, Wall Street bailed out a hedge fund. In 2008, the Federal Reserve bailed out Wall Street. But in 2018, it’s the central banks that will need a bailout. And what will happen to the dollar when the Fed loses international credibility?
Scott Nations jumped in to interrogate Rickards and took the opportunity to remind Rickards of his long-running debate with Peter Schiff, who shares Rickards’ long-term prediction of gold reaching $5,000 an ounce or more. Rickards patiently gave Nations a lesson in history, and reminded him that he’s not buying gold as a trading commodity for growing his wealth – he owns gold as one of the best means of wealth preservation.
Don’t think of gold as a commodity. I don’t think of gold as a commodity. I don’t think of gold as an investment. It’s money. But it’ll be a kind of money that people have confidence in. You say you can’t eat gold. Well, take a dollar bill out of your wallet, Scott. Are you going to eat it? You’re not going to eat the dollar. It’s a medium of exchange; it’s a store of value…”
Highlights from the interview:
“What’s driving gold right now is what you were just talking about, which is the dollar. I think of gold by weight – so many ounces, so many kilos. If you have $50 million, then you can get a ton. But a lot of people think in dollars; the dollar price of gold… If you think of it in dollars, the dollar price of gold is just the inverse of the dollar. So weak dollar, higher dollar price for gold. Strong dollar, lower dollar price for gold. So all you have to say, if you want to know what gold is going to do in dollars, ask yourself what’s going to happen to the dollar? It’s going to go a lot lower, so the dollar price of gold is going to go higher. That’s the trend of the next 6 months to a year…
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