THE NEW CASE FOR GOLD by James Rickards

Author: James Richards is an investment advisor, lawyer and economist. He has held senior positions at Citi, Long Term Capital Management and Caxton Associates. Book: In this book, Mr. Rickards defends gold as an irreplaceable store of value and as a standard of money. He starts responding to the main critics of gold; “It is a barbarous relic”, “there’s not enough gold to support the economy”, “Gold caused the Great Depression”, “Gold has no yield” and “gold has no intrinsic value”. He claims that the next financial collapse will be greater than the previous one. There have been three international monetary system collapses in the previous century (1914, 1939 & 1971), and the next one will mean that major financial powers will sit down around a table and change the “rules of the game”. In the re-making of this new monetary system, the gold-to-GDP ratio will play a key role. It doesn’t mean that we’ll be back to a gold standard. It means that gold each nation’s voice in the negotiations will be a function of their gold hoardings. He also warns about the difference of paper gold & physical gold, the increasing fragility of the banking system and central bankers’ manipulation of the metal. Finally, he explains the best ways to invest in gold. Opinion: As Ray Dalio said, if you don’t own gold, there is no sensible reason other than you don’t know history or you don’t know the economics of it. Right now I think of gold (and especially junior miners) as a bet with limited downside and huge skew to the right. For me, the main point of the case for gold, which Richards mentions but does not elaborate too much, is the possibility of a collapse in the futures/ETF markets if investors start to ask for physical delivery of the metal. Think of the possible consequences in line (but opposite) of what happened with oil recently. I think it could mean a ten bagger for junior miners considering their operation leverage & the seven-year process that requires on average to create and operate a mine.

Key Stats: •Pages: 170 •Level: Beginner/Intermediate •Mark: 9/10