A Conversation with Jim Rickards’

A Conversation with Jim Rickards’

We have something a little different for you today.

Yesterday, a long-time colleague of ours in the States, a geologist called Byron King, had a phone call with Jim Rickards.

Bryon was kind enough to send through his notes on the conversation.

I thought it was a fascinating read, and reflective, too, so I thought we’d share it.

Enjoy.

My wife and I have a farm in Vermont,’ said Jim. ‘It’s been way colder than normal, with much more snow so early in the year.’

We were speaking on the telephone.

Global warming,’ we joked. Jim laughed.

Vermont is cold and, per Jim’s observation, getting colder.

I mentioned to Jim that my mining acquaintances in Yukon and Northwest Territories tell me that glaciers are actually expanding in some parts of Canada.

That is, annual snowfall in some areas is not melting over the summer.

By definition, it’s too cold to melt, even in summer, and that’s how you build up ice.

Jim and I both agree that, to use a common phrase, ‘the climate is changing.’

But we also share a certain scepticism that climate is ‘changing’ in the way and manner that quite a few globally-oriented forces are depicting.

Doubtless, there’s more carbon dioxide in the atmosphere.

That’s a fact of analytic chemistry. Then again, the world is a collection of microclimates.

Some places are warmer, some colder, some wetter, some dryer.

Whatever the issues are in any particular niche, and whatever is the fundamental cause, the world won’t solve its problems just because power-seeking politicians want to tax everyone.

Stated another way, the climate issue has been hijacked by certain nefarious forces of big government and globalism.

‘The climate’ has become a tool by which governments are working to suck immense sums of money out of the pockets of working people across the globe.

At its root, it’s a means to raise revenue in a last-ditch effort to service unpayable levels of debt.

Government bondholders simply will not be denied, or so they think.

This line of discussion led to Jim’s observations on the recent riots in France, where so-called ‘Yellow Jackets’ marched, fought with police, burnt cars and much more, all to protest tax hikes on fuel.

Jim pointed out that the protesters appear to be working-class people conducting street-level pushback against a ‘global’ form of taxation.

That is, France is imposing a tax on carbon, and the Yellow Jackets are rebelling.

They’re protesting what’s basically a global tax,’ said Jim. ‘In effect, they’re protesting globalism.’

French riots are a manifestation of a world-wide fight between two fundamental philosophies, globalism versus nationalism.

Nationalism might have a bad name in polite circles,’ said Jim. ‘But nationalism has been winning pretty much everywhere.

Look at Trump in the US or in South America, we just saw a nationalist come to power in Brazil.

We see nationalism rising in Italy, in Austria and Eastern Europe.

Or think what you want about Putin, but he represents Russian nationalism. And China? About as nationalist as you can get.’

Jim continued.

In the West, we fooled ourselves about China stepping back from traditional, China-centred nationalism and becoming part of a globalist world trading system.

The idea was that China would somehow join the world and fit in just fine.

Here in the US, we actually pretended that China would come into the global system and play by our rules.

But China has been free-riding off the globalist system for 30 years.’

The China discussion prompted a digression into the funeral for the late President George H.W. Bush held on Wednesday in Washington, D.C.

From the mid-1970s to the early 1990s, President Bush had much to do with opening up China to the West.

Of course, no one can truly predict the future; and President Bush of 1992 could not have known where events would lead 26 years later.

Jim and I both watched the funeral for Bush 41 on television.

After all, it’s not often that we have a state funeral in the US.

The Bush 41 event was the first presidential funeral since that of President Ford back in 2006.

Thus, the ceremony was an uncommon yet important and telling national event.

In many respects, the funeral was a measure of the position and trajectory of American culture at this point in time.

Or as the Los Angeles Times characterised it:

For 2 and a half hours Wednesday, America’s five living presidents, hundreds of dignitaries and elected leaders were able to set aside their differences, if sometimes a bit awkwardly, and gathered in Washington’s National Cathedral to honour the late President George Herbert Walker Bush.

The LA Times continued:

The service’s mix of centuries-old White House tradition, religious ritual and a son’s raw grief over his father’s death momentarily suspended the acrimony we’ve all come to expect from anything out of Washington and replaced it with a show of mutual respect for a family who’d lost their patriarch.’

The Bush 41 funeral was more than that, though.

State funerals are governed not so much by the ‘White House’ as by strict, historic, national-level rules of protocol.

Typically, there’s an abundance of military pomp and ceremony. The fundamental intent is to display the power of the state, as embodied in the passing of a key person.

With state funerals in the US — as in much of the rest of the West and many other parts of the world — there are deep undertones of religion as well.

In a sense, an American state funeral is descended from ancient rites and distant times, when kings were commonly thought to derive power from God.

On Wednesday, with Bush 41, we saw a US state funeral at its finest. There were legions of military brass, honour guards, bands and more.

All very crisp. All very impressive.

Honouring Bush 41 wasn’t solely a US effort, either.

In fact, as the funeral procession moved from the Capitol Building to the National Cathedral, the long line of vehicles drove down Pennsylvania Avenue and passed the Embassy of Canada.

There, in front of that elegant and stately building — the only foreign embassy on Pennsylvania Avenue, by the way — stood a Canadian honour guard at full attention, in dress uniform and saluting. It was all quite fitting.

The idea behind a state funeral is to honour a person who has served a critical role in the life of the nation — late presidents typically fit that bill.

Of course, Bush 41 was a character straight out of central casting in that regard. He was a World War II combat aviator. And a blue-blood representative of old, ‘mainline’ American governance.

Over the course of a long career, the curriculum vitae of G.H.W. Bush was not just long, but very long.

Per the LA Times again, the Bush 41 funeral represented ‘The end of an era when leaders governed with integrity. The chance for a divided country to unite. The death of the elite WASP establishment. The Greatest Generation meets Make America Great Again.’

Not a bad summary, I suppose, but not complete either.

Jim and I discussed how the death of President Bush — and the pomp of his state funeral — truly bookends an era.

That is, Bush 41 embodied and represented many decades of America’s historic shift and transformation.

The country’s move from pre-war isolationism and internal focus towards post-war engagement that transformed, over time, into the current level of globalism.

Don’t take this the wrong way. Bush 41 certainly earned and deserved his honours.

He was a front-line World War II combat pilot.

As the eulogies mentioned, he almost died during the Pacific war; and then after surviving the war he went on in life and lived to become the oldest former US president.

The post-war world was very much Bush’s world.

Fighting in World War II certainly and doubtlessly influenced him forever. He saw the carnage and loss, and spent his life working to avoid repeating it. That’s absolutely a sense about the man that I picked up in my one personal meeting with President Bush in 1992.

Later, as vice president and then as president, Bush 41 helped to build and manage a particular kind of America-oriented, post-war order that has lasted to this day.

In 1992, he was there as the Cold War came to an end as well. In that sense, President Bush pushed the launch button as the US of 1992 moved towards a ‘globalist’ orbit.

And today, we live in a globalist-oriented world, to be sure.

Just walk down the aisles at Walmart or Target (or indeed Kmart, for our friends in Australia). Or drive through the abandoned old mill towns of Middle America.

Empty mill towns and bursting box-stores tell quite a tale.

But for how much longer?

Were those bands that performed at the Bush 41 funeral also playing a funeral dirge for current globalism, if not for the Deep State?

Good question.

Globalists are in denial,’ said Jim, as we talked yesterday.

They don’t accept what’s happening; not with nationalism and not with how the entire globalist effort has been funded by debt that will never be repaid.’

The post-war, US-dominated world — the world that reflects a good deal of the politics of Bush 41 — is being deconstructed, at home and abroad, by many a competing force.

It all comes full circle, with geopolitics affecting economics and ultimately financial markets and our investments.

Lastly, during our call, Jim and I focused on the situation with gold.

Gold looks good under multiple scenarios,’ said Jim.

First,’ said Jim, ‘with looming inflation, bonds are going down and gold? It’s primed to go to the moon.’

Second,’ per Jim, ‘if the economy slows — and it will slow down — the Fed will ease fast — throw in the towel — if we see a major stock market collapse.’

In that falling markets scenario, gold could indeed quickly become the proverbial ‘haven.’

According to Jim, there’s no real market momentum anymore.

For every couple of days that the market goes up, it soon heads back down, and with really big swings, in terms of the size of moves.

People are quick to the draw when it comes to selling. Sell losers fast. Sell winners just to take the money back off the table.

Jim sees pain in the hedge fund side of the market.

Hedge funds can’t make money anymore under the current way things are happening. It’s different than everything the managers know. It’s not like the last 50 years.’

‘We’re late in the cycle,’ said Jim.

The Fed is over-tightening. I see gold as a haven because of coming inflation, general economic fears and basic supply-demand issues.


And with that, we leave you and wish you a good weekend.

Thank you for subscribing and reading!

Until next time,

Jim Rickards Signature

James Woodburn,
Publisher, The Daily Reckoning Australia