WEBVTT - Author Rickards on Soros' Gold Bet Amid Global Concerns (Audio)

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<v Speaker 1>desk on Bill Maloney. Charlie Hall, all right, thank you

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<v Speaker 1>very much, Bill, and to hear live breaking news over

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<v Speaker 1>I'm Charlie Peloton. Dat's Bloomberg Business Flash. You're listening to

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<v Speaker 1>Taking Stock with Kathleen Hay and Pim Box on Bloomberg Radio.

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<v Speaker 1>Gold investors piling into gold. It's up more than twenty

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<v Speaker 1>this year. Mining stocks have gained even more. Let's find

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<v Speaker 1>out more from Jim Rickarts. He is the editor of

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<v Speaker 1>Strategic Intelligence Newsletter, and he is also the author of

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<v Speaker 1>the New Case for Gold. Jim Rickarts, thank you very

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<v Speaker 1>much for being with Usim tell us about George Soros,

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<v Speaker 1>the billionaire investor, because in May he disclosed a nineteen

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<v Speaker 1>million share steak in the world's largest gold producer, that's

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<v Speaker 1>Barrack Gold. And also, just to compound it, double lined capitals.

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<v Speaker 1>You know Jeffrey Gondlack, he has called for gold to

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<v Speaker 1>reach fourteen hundred dollars an ounce that currently trades on

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<v Speaker 1>the Comax at undred and seventy. Well, that's right the

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<v Speaker 1>way I think about him. People always talk about the

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<v Speaker 1>dollar price of gold. I actually, you know, when I

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<v Speaker 1>invest in gold, I think of it by way. So

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<v Speaker 1>there's so many else, there's so many kilos. If you're

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<v Speaker 1>Kyle Best or Texas, Uh, you know, a pension fine

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<v Speaker 1>you can buy a few times if you like, for

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<v Speaker 1>a couple hundred million dollars. But a lot of people

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<v Speaker 1>to even in dollars. They quoted in dollars. But so

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<v Speaker 1>in that sense, the dollar price to goal is just

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<v Speaker 1>the inverse of the dollars. So when you have a

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<v Speaker 1>stronger dollar, you would expect a lower dollar price for goal.

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<v Speaker 1>A weaker dollar means a higher dollar price for gold.

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<v Speaker 1>So owning goal right here is basically a bet against

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<v Speaker 1>the dollars, saying the dollar is going to get weaker,

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<v Speaker 1>which it is if it has been tightening for three years. Um,

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<v Speaker 1>they're going into an easy case. The dollar is going

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<v Speaker 1>to weaken against the year in the end, and that

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<v Speaker 1>means a higher price for goal. And I think Sorice

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<v Speaker 1>is onto that. And you know San drooncon Miller and

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<v Speaker 1>and other Hedghow managers are very very successful long turn

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<v Speaker 1>shop records are making the same trade. Well. Of course,

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<v Speaker 1>the tightening has been pretty slight from the FED gym,

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<v Speaker 1>as you well know. And the question is now how

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<v Speaker 1>much of at all they're going to raise rates anymore

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<v Speaker 1>this year? But I want you to weigh in on

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<v Speaker 1>Bill Gross's tweet today about negative interest rates. He says

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<v Speaker 1>global yields lowest and five years have recorded history ten

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<v Speaker 1>trillion dollars of negative rate bonds. This is a super

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<v Speaker 1>nove of the explode one day. And it's interesting because

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<v Speaker 1>I've been see to people lately. Are we all watching

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<v Speaker 1>more and more yields go negative around the world and

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<v Speaker 1>not realizing this is a signal of something bad brewing? Yah?

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<v Speaker 1>I think actually all the rates in the world are

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<v Speaker 1>going to zero or negative. I could see the tenure

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<v Speaker 1>note going down to fifty basis points or seventy basis points.

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<v Speaker 1>You know, a couple of years ago, the Japanese tenure

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<v Speaker 1>j GUB was at seventy basis points, and people said,

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<v Speaker 1>look how low that is. And of course now it's

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<v Speaker 1>negative yield to maturity. So I see treasuries heading the

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<v Speaker 1>same way. By the way, Cathn, I disagree about the

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<v Speaker 1>said tightening. They've been tightening for three years since May

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<v Speaker 1>two thousand thirteen, starting with the taper talk that Brnocchi

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<v Speaker 1>gave that month. Then they actually started the taper in

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<v Speaker 1>December two thousand thirteen. They then remove forward guidance in

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<v Speaker 1>March two thousand and fifteen, spent all two thousands fifteen

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<v Speaker 1>threatening to rays rate. It's finally got around to it. Well,

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<v Speaker 1>they've tightened so much. How come yields are so low

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<v Speaker 1>in the United States, Well, because this is a deflationary Basically,

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<v Speaker 1>they shouldn't be tightening. They should be easy, and they have.

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<v Speaker 1>The economy is probably heading into recession. You don't tighten

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<v Speaker 1>and we us and you should ease in a recession.

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<v Speaker 1>The time to tighten, By the way, it's two thousand

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<v Speaker 1>and ten. They blew that. Now they're making two wrongs.

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<v Speaker 1>Don't make it right, but they're they're I mean they're

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<v Speaker 1>talking about tightening, but they basically because they've been tightening

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<v Speaker 1>for three years, mostly with jaw bonning and playing with expectations,

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<v Speaker 1>they've created a dollar shortage around the world and so

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<v Speaker 1>it is deflationary. That's why yields are going down um

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<v Speaker 1>and now. So the question is how do you get

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<v Speaker 1>out of it that? Where do we go from here?

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<v Speaker 1>What the way you get out of it is with

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<v Speaker 1>a weaker dollar? This is just currency wars ONNEO one.

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<v Speaker 1>So all the other channels are broken. There's there's no

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<v Speaker 1>physical stimulus because there's no political consensus. They can't make

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<v Speaker 1>structural reforms for the same reason. Monetary policy is pretty

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<v Speaker 1>much out of gas, and so the currency wars are

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<v Speaker 1>basically the only way to create similar because it doesn't

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<v Speaker 1>do anything for the world. It can help a particular

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<v Speaker 1>economy or country briefly until it flips the other way.

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<v Speaker 1>It's not doing anything for world growth. But right now

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<v Speaker 1>US and China are trying to get a little lift

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<v Speaker 1>with a weaker currency, and that means a stronger dollar,

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<v Speaker 1>stronger hero, and stronger goal. I'm pretty stronger, yeah, I

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<v Speaker 1>bespoke a stronger ye and stronger euro and stronger vot Jim.

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<v Speaker 1>If people follow this strategy, what are the tactics? Tell

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<v Speaker 1>us should you invest in Newmont Mining, Freeport mcmaran, the

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<v Speaker 1>Spider Gold Trust, the Direction Daily Gold Miners Index, bull shares?

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<v Speaker 1>What what should you invest in? My preference is physical goal,

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<v Speaker 1>but I don't like so called paper goal, whether it's comics,

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<v Speaker 1>futures et s or London Bullion Market Association on account

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<v Speaker 1>allocated forwards because when the price of gold super spikes,

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<v Speaker 1>when it really goes up, when you really want your goal,

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<v Speaker 1>all those contracts are going to be terminated. They we'll

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<v Speaker 1>give you a check for your profits as a closed

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<v Speaker 1>business yesterday, but you won't participate in the rally going forward. However,

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<v Speaker 1>if you do want mining shares, they recommend some of

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<v Speaker 1>the smaller miners because their takeover candidates a company like Barrack.

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<v Speaker 1>With the price of goal going up, it's easier for

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<v Speaker 1>them to buy a junior miner than it is to

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<v Speaker 1>go out and do a development study and explore completely

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<v Speaker 1>new fields. I mean they'll do both, but a lot

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<v Speaker 1>of these um UH six cecil the junior miners are

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<v Speaker 1>very good takeover candidates right now. So you're getting a

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<v Speaker 1>pop on gold and you're getting another pop on the

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<v Speaker 1>takeover premium. Alright, Jim McCords, thank you so very much

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<v Speaker 1>for joining us to talk about how gold is a

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<v Speaker 1>winner in a world where bonds are rallying more and more,

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<v Speaker 1>yields are turning negative and as he says, the ft

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<v Speaker 1>has been tightening in many ways, says as could it

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<v Speaker 1>a dollar shortage, that too is good for gold. We

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<v Speaker 1>thank you Records, editor of Strategic Intelligence Newsletter, author of

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<v Speaker 1>the New Case for Gold. I'm Kathleen Hayes along with

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<v Speaker 1>Pim Fox, and this is taking Stock on Bloomberg Radio Bloomberg.

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