James Rickards, author of Currency Wars: The Making Of The Next Global Crisis, has some great insights into how China is buying massive amounts of gold, completely bypassing London Bullion Market Association and therefore minimizing the market impact of their purchases:

They’re buying mines in Western Australia. They’re having the ore refined right there in Australia at the Perth Mint, and then shipping the gold straight to Shanghai. That’s what you would do if you were trying to buy gold and not run up the price. You would do everything in secret and that’s what’s going on.

On continued Fed money printing:

The Feds are inflating the [stock] bubble as they did in the late-90s, and as they did in the mid-2000s with money printing and monetary easing…[it’s] just money printing. It’s another bubble that will end badly, but the thing with bubbles is they can go on a lot longer than you expect. I mean it could go on well into next year before correcting.

Many Western money managers believe the rising stock market is an indication of economic recovery James notes, “[But] most of them don’t understand what’s going on in the economy. They’re using the wrong models. Everyone is using cyclical models…expecting some kind of robust recovery…they’ve been wrong every single time, [and] the reason is that we’re not in a cyclical recovery…We’re in a depression. We are in a depression for the first time since the 1930s…[So] if you’re curious and you want to know what a depression feels like, it feels like this because we’re in one.”

“The problem with a depression,” James continued, “is that it’s not a business cycle. It’s a different [economic] condition and so cyclical remedies such as monetary easing don’t work…You need a structural remedy and that means changes in tax laws, labor mobility, regulatory policy, fiscal policy etc…I don’t see any resolution of the structural issues on the table and therefore I would expect that this depression will continue indefinitely.”

When the international monetary system collapses and it comes time to rewrite the rules of the game and create a new system…[it’s] going to be [all about] how much gold you have. It’s a very deep game but you can see it playing out and it will come to an end in the next couple years.

Source: Bull Market Thinking

You can listen to the full interview here.

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