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Gold Will Explode In Value Higher Well Beyond What Jim Rickards Forecasts

By the SRSrocco Report,

While Jim Rickards explains many reasons why it is important to own gold, he leaves out the most important factor. Jim has become one of the more prominent names in the precious metals community due to his strong opinion on owning gold even though he worked on Wall Street (the anti-gold financial establishment) for 35 years.

Jim Rickards has written several best-selling books such as, Currency Wars, The Death Of Money and more recently, The New Case For Gold. Rickards is a big believer in owning gold to protect against the collapse of the highly leveraged derivatives based financial industry.

Rickards has gone on record in stating that his technical target for the price of gold posted in the article, Gold “Chart of the Decade” – Math Suggests $10,000 Per Ounce Says Rickards:

“I have a technical level for gold, it is $10,000 U.S. per ounce. That amount gets bigger over time because it’s a ratio of physical gold to printed money. The amount of physical gold doesn’t go up very much, but printed money goes up a lot, so the dollar target goes up more over time because of all the money printing.

$10,000 U.S. per ounce is the implied non-deflationary price for gold. If you have to go back to a gold standard, or anything like it to restore confidence, that is the number you must have to avoid deflation.

So $10,000 per ounce is mathematically derived and is not a guess.”

Rickards as well as legendary gold trader, Jim Sinclair both believe the value of gold will rise due to backing all the outstanding U.S. Dollars with physical gold. Thus, Rickards mathematical formula for arriving at that $10,000 per ounce figure is based upon the outstanding fiat currency in the system. Rickards believes for the U.S. Dollar to continue to function as a currency after the coming financial collapse, it will have to be backed by gold.

While I applaud Rickards for coming out against the anti-gold Wall Street financial establishment, he fails to mention the most important reason to own gold going forward. Furthermore, Rickards suggests a 10% ownership in gold as “INSURANCE” in the case of a financial and economic collapse.

Rickards explains about gold insurance in his article, Gold: The Ultimate Insurance:

If you have a 10% gold allocation, it’s like owning fire insurance. If the stock market goes to new all-time highs, and gold goes nowhere, that 10% allocation won’t hurt you. But if the markets collapse, which I do expect, and the price of gold skyrockets, that 10% allocation will increase by multiples. That profit will protect you against losses in the rest of your portfolio. So gold has that insurance function. And that can’t be downplayed.

As Rickards suggests, gold will act as insurance protecting your wealth during an economic and financial collapse. His rational here is that even if your portfolio suffers from huge declines during a stock market crash, the individual’s gold holdings will multiplying in value, offsetting loses in stocks and even bonds.

Before I get into the most important factor that Rickards fails to consider in owning gold, I’d like to mention that I respect the work he is doing. If only 2% more of investors in the world decided to allocate 10% of their portfolio to gold, the price of gold would skyrocket on that MOVE alone. So, by Rickards going out and publicly stating investors should own gold through...