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From the IRA (link only valid for about a week):
http://us1.institutionalriskanalytic...ub/IRAMain.asp
Some interesting big-picture observations like...
Rickards: Precisely. But what is interesting is that a couple of days ago, we saw the arrest of this seemingly hapless Russian spy gang. These people were a relic of the Cold War, running around Montclair, New Jersey, and meeting in New York coffee shops. But the one little tidbit that came out of the complaint filed by prosecutors is that the one subject that got a lot of reaction from Moscow was gold. Whatever these people were collecting for the Russians, the information about gold was of great interest. Often times in intelligence you care less about what the field agents are collecting than who is asking and why they are asking. The paper I did is getting written up all over the web. But the fact that the information on gold touched a nerve in Moscow confirms my view about their intentions toward the dollar. The IRA: Well it is so obvious. We interviewed David Kotok of Cumberland Advisers last month, some of which will appear in Chris Whalen's upcoming book. Kotok just published a bullish book on Europe, Invest in Europe Now, and Kotok is even more bullish today. As he puts it, the Greeks gave the Germans a 20% currency devaluation. Kotok thinks that the crisis in Europe will eventually force the EU to fully integrate. But we speak to insiders with precisely the opposite view, who say the Europeans do not have a grip on the financial problems. Does the EU emerge stronger from the crisis? Rickards: I agree with the view that says the EU gets stronger. I keep reminding people that the European Central Bank and the 16 members of the monetary system have over 10,000 tons of gold. They have more gold that the U.S. Treasury. We have just over 8,100 tons ourselves. If the EU were to go to even a partial reserve coverage with gold, say 20% backing, it would put Europe at an enormous advantage. They have enough gold today to set a target and make a two-way market in gold. I think that the first major currency bloc that goes to gold will dominate the financial world because it will become the only currency anybody will want. The first mover will force the other nations to follow.
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Rickards: No, I think it just kicks the game upstairs and down the road. China was a big buyer of these SDR bonds. They diversified with minimal market impact. The IMF took in dollars for their SDR notes and lent the dollars to Hungary, Iceland, etc. Thus the IMF not only levered their balance sheet, but they also created over a hundred billion in new SDRs. The IMF essentially printed money and they spread them all over the world to all of the member nations. I see this as testing the plumbing. Now the IMF is on standby. The next time we are in the situation that existed in 2008, you won't see another $1 trillion stimulus package because we cannot afford it. Instead you'll see a trillion SDRs going out the door suddenly. Remember, when they were first created in the 1970s SDRs were called "paper gold."
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http://us1.institutionalriskanalytic...ub/IRAMain.asp
Some interesting big-picture observations like...
Rickards: Precisely. But what is interesting is that a couple of days ago, we saw the arrest of this seemingly hapless Russian spy gang. These people were a relic of the Cold War, running around Montclair, New Jersey, and meeting in New York coffee shops. But the one little tidbit that came out of the complaint filed by prosecutors is that the one subject that got a lot of reaction from Moscow was gold. Whatever these people were collecting for the Russians, the information about gold was of great interest. Often times in intelligence you care less about what the field agents are collecting than who is asking and why they are asking. The paper I did is getting written up all over the web. But the fact that the information on gold touched a nerve in Moscow confirms my view about their intentions toward the dollar. The IRA: Well it is so obvious. We interviewed David Kotok of Cumberland Advisers last month, some of which will appear in Chris Whalen's upcoming book. Kotok just published a bullish book on Europe, Invest in Europe Now, and Kotok is even more bullish today. As he puts it, the Greeks gave the Germans a 20% currency devaluation. Kotok thinks that the crisis in Europe will eventually force the EU to fully integrate. But we speak to insiders with precisely the opposite view, who say the Europeans do not have a grip on the financial problems. Does the EU emerge stronger from the crisis? Rickards: I agree with the view that says the EU gets stronger. I keep reminding people that the European Central Bank and the 16 members of the monetary system have over 10,000 tons of gold. They have more gold that the U.S. Treasury. We have just over 8,100 tons ourselves. If the EU were to go to even a partial reserve coverage with gold, say 20% backing, it would put Europe at an enormous advantage. They have enough gold today to set a target and make a two-way market in gold. I think that the first major currency bloc that goes to gold will dominate the financial world because it will become the only currency anybody will want. The first mover will force the other nations to follow.
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Rickards: No, I think it just kicks the game upstairs and down the road. China was a big buyer of these SDR bonds. They diversified with minimal market impact. The IMF took in dollars for their SDR notes and lent the dollars to Hungary, Iceland, etc. Thus the IMF not only levered their balance sheet, but they also created over a hundred billion in new SDRs. The IMF essentially printed money and they spread them all over the world to all of the member nations. I see this as testing the plumbing. Now the IMF is on standby. The next time we are in the situation that existed in 2008, you won't see another $1 trillion stimulus package because we cannot afford it. Instead you'll see a trillion SDRs going out the door suddenly. Remember, when they were first created in the 1970s SDRs were called "paper gold."
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