Australia’s Coming Currency Crisis

Australia’s Coming Currency Crisis

I’ve talked about gold publicly for a decade now.

But, I’ve been trading the precious metal since 2007.

That seems like a long time…but my understanding of gold goes back further than that…

…all the way to the late 90s.

See, I first learnt about what money is over Nescafe coffee and ciggies with my old man.

After we were ready for the day, I’d sit at the bench. My dad would rest himself up against the oven, and we’d chat.

About nothing. No agenda. Just the two of us waffling.

It was part history lesson and part my ideas being tested.

I couldn’t tell you what day it was…or even the season at the time. But it was one of these mornings that I first learned that the coins in my pocket were backed by faith in the government…

and that real money was gold and silver.

Even then I remember being shocked. The money I earnt from my job at Maccas was only worth what the government said it was worth…

Whereas a lump of gold and silver has intrinsic value. Something that is enduring.

Very few people know the difference between currency and money.

And that’s exactly what I’ve set out to change…

Australia’s own currency crisis

All this week I’ve been showing you snippets from my interviews with experts from around the world.

Why?

It’s a project that’s been in the making for 12 months…which is really about bringing decades of knowledge right to your inbox.

However, if you read here, here, and here, you would have noticed that the people I spoke with seem like natural gold bulls.

The sort of people who are already aligned with gold.

But what about someone who isn’t?

It’s for this reason I sought out Australia’s contrarian economist John Adams.

See, he isn’t a gold bull. He doesn’t have an irrational love of all things shiny.

Rather, John became interested in precious metals because he felt that Australia was in danger of having a currency crisis.

After doing the math, he decided that storing his wealth in precious metals was maybe the best way to protect his money from currency destruction.

Non-gold bulls buy…gold AND silver

John and I spent a good hour discussing the problems facing the Australian economy a few months ago.

However as the interview drew to a close, we got down to why John started looking at gold and silver.

One of the things that nobody talks about is Australia potentially having a currency crisis. We think of these things that have happened to emerging markets or Argentina or Turkey as, basically, other people’s problems,’ I asked.

What are the odds that Australia could end up having its own Aussie dollar currency crisis?

See, this is the thing.

Most people think only basket case economies have currency crises. Places like Turkey, Venezuela, and African countries run by dictators…

Nobody thinks that could happen to us. Not here. Not in Australia.

So how did John answer me?

As you’re about to discover, this is why I’ve sought out so many different people to speak with when it comes to precious metals.

Because John is an economist, he comes to precious metals without emotions.

In fact, after going through the data, John not only looked at how precious metals can protect his wealth from the Aussie dollar falling, but also if there was an ‘optimal’ ratio between gold and silver.

Here’s an excerpt from our interview:

John:

I did a couple of YouTube videos recently about the fact that the establishment is intending to damage the dollar. I mean, they are willing to push a whole range of extreme policies to protect the housing bubble, and no one’s talking about the consequences of what that does to the currency, what that does to the foreign debt.

Obviously, this is one of the key points I was trying to make in the debate with Christopher Joye. That if you do quantitative easing, if you do cut interest rates, it comes at a consequence and that consequence has to be acknowledged by the public, by the media and by Parliament.

Shae:

Now, this brings me to my final point. Because as you mentioned, if they’re going to devalue the Aussie dollar, you’re going to take that cash and you’re going to put it into gold and silver.

John:

I already have.

Shae:

So have I. Essentially, you’ve got non-emotional reasons for buying gold and silver.

For a lot of people who do invest in bullion, there’s emotional ties there. But you’re coming at it from a purely data perspective.

This is why, for my final question, I want to focus on why you’ve openly chosen to put more money into silver than into gold.

John:

One of the big reasons is that I’ve looked very closely at the gold to silver ratio.

I’ve done some modelling and I’ve looked at the history of prices, particularly over the last 40 years.

If you think they’re going to mismanage the Australian dollar, but you look at what’s happening around the world, there’s big concerns about the US dollar and a whole bunch of non-Western countries that are holding gold.

If you think that we’re going to have either a global or domestic currency crisis, well, the gold to silver ratio is at a 26-year high.

Basically, silver is extremely cheap.

If you think gold is going to go up, then the history of this ratio says to me that silver will go up by a greater proportion relative to gold and so that’s basically why I’m buying it.

Because historically, the experts like David Morgan would say that it’s about 15 to 1, 12 to 1.

When it’s at 85, 86 to 1, I mean, this is a very large anomaly, and I’m going to take advantage of that by buying a lot of silver.

Now, as I’ve had certain clients, people around the country call me up, one of the things I have said is that if you do want to buy gold, one of the ways you can do it is by buying silver now.

As the ratio collapses, you can transfer either silver into gold, and then you can hold the gold.

If you do that, you actually get more gold in the process, compared to buying gold today.

Again, a lot of people want to buy gold because they’ve got an emotional attachment to it or they think that it’s more solid than silver, but I’ve studied the space.

As you can see, John’s argument for precious metals isn’t because of emotions. Rather, he’s moved into gold and silver as part of a strategic decision to protect his wealth.

And that’s exactly what I plan on showing people.

Keep your eyes on your inbox.

Later today you’ll get the chance to get access to not only my interview with John, but also the interview with Jim Rickards, Rick Rule, and Grant Williams.

Oh, by the way, they aren’t the only people I’ve spoken with. I’ve got over 30 hours of footage in the bag to share with you over the coming months.

The sort of behind the scenes people who can share information you won’t get anywhere else.

And I can’t wait to share it with you.

Until next time,

Shae Russell Signature

Shae Russell,
Editor, The Daily Reckoning Australia