Sunday, 15 March 2020

Gold, Deflation Spiral, Depression And Inflation. Jim Rickards: "How FED Can Create Inflation In 15 Minutes."

We have a lot of scared people these days. And rightfully so. It is always better to be safe than sorry and overprepared than reckless. A lot of very smart people will explain to you now why you should be worried and take all precautions possible to be safe. But recent investment trend going all in and accumulating toilet paper tells me that I have to share another couple of ideas with my fellow travellers. 

We have discussed already that "Markets Are NOT Going To ZERO". What is next best left if we are too late to enter the TP Market? This is where it is very important to determine the type of investment landscape we are entering in to. Is it going to be a Deflation with Death by the Thousand Cuts spiralling down into another Great Depression? Or FED and all other Central Banks will throw everything they can against the wall in order to avoid it? 

As I have suggested for years, the best helicopter money operation should be started directly with my garden - I have heliport ready for years. The virus is a huge unknown and external shock - economic stop factor as Mohammed El- Erian calls it. So, please, treat all my bold ideas as a brave scientific thesis as usual and do your own research.

I agree with Peter Shiff and Jim Rickards that we are entering the Inflation "There Is No Tomorrow" stage. And Jim Rickard provides a brilliant example of how inflation can be always achieved by the expanding monetary base as per its definition. And, as a reminder, the Great Depression was caused by restricting credit. 

"The Fed can cause massive inflation in 15 minutes. They can call a board meeting, vote on a new policy, walk outside and announce to the world that effective immediately, the price of gold is $5,000 per ounce. 
The Fed can make that new price stick by using the Treasury’s gold in Fort Knox and the major U.S. bank gold dealers to conduct “open market operations” in gold. They will be a buyer if the price hits $4,950 per ounce or less and a seller if the price hits $5,050 per ounce or higher. 
They will print money when they buy and reduce the money supply when they sell via the banks. This is exactly what the Fed does today in the bond market when they pursue QE. The Fed would simply substitute gold for bonds in their dealings. The Fed would target the gold price rather than interest rates. 
Of course, the point of $5,000 gold is not to reward gold investors. The point is to cause a generalized increase in the price level. A rise in the price of gold from $1,000 per ounce to $5,000 per ounce is really an 80% devaluation of the dollar when measured in the quantity of gold that one dollar can buy. 
This 80% devaluation of the dollar against gold will cause all other dollar prices to rise also. Oil would be $400 per barrel, gas would be $10.00 per gallon at the pump and so on. There it is — massive inflation in 15 minutes: the time it takes to vote on the new policy. James Rickards"

It is not only my wishful thinking anymore. POTUS is doing second best to buying Gold now and buying Oil. Trillions of dollars are being printed in all types of QE and bailouts and will do the magic to prove all of us very fast that inflation is here and more than alive. Your bills will remind you daily about it. And hopefully, the price of Gold as well.

All those people who survived the Black Monday 2020 Crash and the following week will be looking for value now. Otavio Costa provides us with his brilliant charts to work further on our brave investment thesis: Gold Is The Ultimate Hedge and The Best Gold Companies Will Be The Generators Of Wealth.

Smart money knows what real investment means. It means owning the business by owning the shares of the Company. Invest like Warren Buffett, who is proven to be right and sober again with his huge cash position. Nobody knows the future. I can only share with you what I am doing. 

I am going "Warren Buffett" in Gold. Buying a business and building it. No Margin. I will be back monitoring The Big Picture For Gold and TNR Gold place in this generational opportunity. Join us. Follow TNR Gold.

"...The upside is clear. Indeed, Novagold sees it well enough, since it retains a significant stake in TNR, and former Novagold director Greg Johnson now sits on the TNR board. How long it will take the rest of the market to wake up remains to be seen. 
Nonetheless Klip is confident that this is a company that’s going places. 
“We are not dreamers,” he says. “We did it with the copper. We did it with the lithium. I would like to make it even bigger with the gold. I would like to do better, to keep a 25% stake.” 
It’s a vision for growth that makes a lot of sense. In tough markets, where capital is scarce, this kind of approach may well end up being a model that others choose to follow too."

Please always read legal disclaimer. There is NO investment advice on any Kirill Klip feeds and blog. Always consult a qualified financial adviser before any investment decisions. 
Do Your Own Research.

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