Jim Rickards: Thoughts on the US Economy, Section 232 and the Gold Price

TL;DR

Jim Rickards discusses his book on analyzing global capital markets using complexity theory and behavioral psychology, as well as the potential impact of trade wars under President Trump.

Transcript

i'm melissa with the investing news network at the Sprott vancouver natural resource symposium 2017 I'm here with Jim Rickards editor of the financial newsletter strategic intelligence so Records is a lawyer economist investment banker and New York Times bestselling author his latest book is the road to ruin what are some of the key points you disc... Read More

Key Insights

• 😒 Wall Street and other financial institutions use outdated models to analyze global markets, whereas Jim Rickards employs complexity theory and behavioral psychology for a more accurate forecast.
• 🖤 The lack of action on promised fiscal policies by President Trump has caused uncertainty in the stock market and potential overvaluation.
• 💨 The US is likely to engage in a trade war, imposing tariffs and other sanctions, with China and other countries retaliating in various ways.
• 🥺 The Federal Reserve's tightening rate cycle could exacerbate the weakness in the US economy and potentially lead to a recession.
• 👀 Investors should allocate more cash due to the current uncertainty, while considering a 10% gold investment and looking for opportunities in the euro market.
• 😄 Gold prices could reach $1,300 per ounce or higher in the second half of 2017, especially if the Fed eases its monetary policy.

Questions & Answers

Q: What led Jim Rickards to develop new models for forecasting global markets?

Jim Rickards was inspired by his personal experiences during financial crises and observed that the models used by financial institutions were flawed. He decided to develop new models based on complexity theory, network science, and behavioral psychology to better reflect how markets actually work.

Q: What changes have been seen in the US under President Trump in terms of fiscal policy and trade?

While President Trump promised tax cuts, infrastructure spending, and reduced regulation on the campaign trail, these measures have not been implemented yet. The stock market initially rallied based on these promises, but the lack of action has caused uncertainty and potentially overvalued markets.

Q: Will the US engage in a trade war, specifically regarding the tariffs on steel imports?

Jim Rickards predicts that the US will impose trade sanctions, including tariffs on steel and aluminum imports. However, he believes China and other countries will likely retaliate, and the trade war could extend beyond just tariffs to financial and intellectual property sanctions.

Q: How will the tightening rate cycle by the Federal Reserve impact the US economy?

The Federal Reserve has been in tightening mode since 2013, and this could potentially have a negative impact on the US economy. Jim Rickards warns of a potential recession if the Fed continues to raise rates without considering the current weakness in the economy.

Summary & Key Takeaways

• Jim Rickards combines economic history, personal experiences, and scientific analysis to develop new models for forecasting global markets.

• He discusses the potential dangers of the current US economy and the uncertainty surrounding President Trump's fiscal policy and trade stance.

• Rickards also highlights the potential onset of a trade war, particularly regarding tariffs on steel imports, and how this could impact global markets.