‘We are in a currency war,' says Jim Rickards, writer of The Death of Money. In 2011 we saw a weaker dollar, today we see a stronger dollar and Jim Rickards expects that we will see a weaker dollar once again soon enough. His message? Buy gold before it is too late…
Strong economic data from the US makes that many experts believe that the Federal Reserve will raise interest rates strongly this year. Rickards is not on the same page, however, since he believes there is a lot of weakness hidden behind the figures. In an interview with Kitco the man explained that the economy is not crashing, but it is also not growing to its fullest potential. As long as that is the case, the Fed will not raise interest rates in his opinion.
Rickards added that the US economy is fundamentally weak. If the economy becomes even weaker, he would not be surprised if the Fed would start QE4 in 2016. Rickards is curious what will happen with the dollar when the markets realize that the Fed will not yet raise interest rates. He expects a lot of the support for the dollar will fall away.
Gold To $5000
On the subject of gold, Rickards believes that the current price level is a perfect moment to get in. If the price starts moving along to the upside at one point it will become hard to even find gold to buy in his opinion. It is always possible that gold will go back to 1000 dollars first before it leaves the building to greater heights, but in the long term there is no question in his mind: the price of gold will go to 5000-7000 dollars per ounce.
Jim Rogers told Rickards recently, Rickards mentioned, that nothing will reach the top without a correction of 50 percent in between. Gold's highest point was 1900 dollars per ounce in 2011, so 950 would not be unusual. To be clear: he does not expect the gold price to drop further, but it is always possible. What Rickards is more worried about is that when the gold price gets back on track, things could move very quickly. Investors that will decide at that time that they want gold will not be able to find it, says Rickards.
