Step One: Get Gold

06 Apr

Step One: Get Gold

The Panic is Just the Beginning

Gold expert and the author of the best-seller Currency Wars, Jim Rickards, has written a detailed piece for The Daily Reckoning about recessions and financial crises.  They are not, he points out, the same thing.

“Recessions have much in common but financial crises tend to be idiosyncratic and unpredictable,” he says.  

“Existential financial crises really are rare; only two in the past fifty years,” says Rickards, while the combination of the two, recessions and a real financial crisis are extremely rare.

So where are we today?

Citing “powerful” evidence including contracting trade, declining industrial output, and rising interest rates, Rickards says that we are already in a recession.  

As for the existential financial crisis, Rickards looks to Silicon Valley Bank, Silvergate, Credit Suisse, and others, a total of 5 bank failures in 11 days.  “Is the crisis over? Has the Fed done enough to reassure depositors that the system is sound? Has the panic subsided?”

“The answer is, no. The panic is just getting started.”

We agree.   Rising interest rates have slammed the value of bond portfolios at banks, insurance companies, and elsewhere.  But that is not all.  The cost of higher interest rates on US government debt is already showing up, as this chart makes clear.

We think Rickards piece on recessions and serious financial panics, at the above link, is well worth the read.  He concludes that “we may not be able to prevent the crisis, but we can see it coming and prepare accordingly to preserve wealth. Step One is to get gold. That will see you through the storm.”

See us at Republic Monetary Exchange about Step One.