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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

Commentary Of The Month
December 14, 2016
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By Egon von Greyerz

Since the creation of the Fed in 1913, all major currencies have declined 97-99% against gold. The U.S. has not had a real budget surplus since 1960 so the trend is very clear and unlikely to be reversed any time soon. It took the U.S. 232 years to go from zero debt to $10 trillion and Obama managed to double it in just 8 short years. What an achievement! Neither Clinton nor Trump had any intention of breaking the trend of massive debt expansion. Trump’s proposed tax reductions and major infrastructure investments will add over $5 trillion to the debt.

But it is likely to get a lot worse. Rising interest rates, higher unemployment, stress in the debt markets and major problems in the global financial system are likely to lead to substantially higher debt as well as massive money printing. The 35-year rate cycle has now turned and rates are likely to go back to at least the 16% we saw in 1980 but probably a lot higher as the biggest bond bubble in history bursts. Due to the massive size of this bubble on a global scale, the increase in rates could happen very quickly. This will not just affect debt markets and the ability of governments to pay the interest but also the derivatives market. The $1.5 quadrillion of global derivatives are extremely sensitive to interest rate increases and that market will not survive much higher interest rates. And if we look around the world, the risks are unprecedented. Japan is totally bankrupt; China has a major debt problem and the European banking system is unlikely to survive in its present form.

As the world enters a period with risk exponentially greater than in 2006, the reasons for holding physical gold as insurance and wealth protection are more compelling than ever. The continued debasement of the currencies will guarantee a higher gold price. During Obama’s eight years, gold went up by 36% only whilst debt doubled and Trump is likely to grow debt exponentially. In addition, the failure of the paper gold market could happen at any time. When this happens there will be no physical gold available at any price until there is equilibrium in the physical market. At what price that will take place is impossible to forecast but it is certain to be multiples of the current price.