Model Portfolio From Jim Rickards To Survive The Monetary Collapse

In the interview embedded below, Jim Rickards, author of the book “The Death Of Money“, explains several key concepts of his book. His book is written in a very accessible way and offers pragmatic insights and tips related to the coming collapse of the monetary system. One way of those insights is a model portfolio which Rickards describes in great detail in his book. In one of the following paragraphs, he shares a preview.

In what follows, Jim Rickards discusses four key concepts about “The Death Of Money.” Courtesy of FutureMoneyTrends (click for free newsletter).

Expect economic warfare between the US and emerging countries like Russia and China:

The US is engaging in economic sanctions with Russia which is simply a form of economic warfare. The US has announced sanctions against Putin’s most important adviser. This is another sign of the escalation spiral between both countries. The US needs to find a way to de-escalate, or Russia will strike back. Eventually, Russia could unleash their hackers and close the NY stock exchange, which is where the situation could (not necessarily will) end up if the US does not de-escalate. For investors, it means they should understand that dangers are present now which go beyond normal volatility.

China’s credit bubble will not result in a flight to the US Dollar:

A credit driven crisis in China is likely, sooner rather than later, because it has been built upon unpayable debt. The Chinese have built their economic growth upon infrastructure, which is fine if it is productive infrastructure but they built wasted infrastructure. They have built ghost cities, multi billion train infrastructure where there is no traffic, etc. In the short run is driving real GDP; when you are done, you need to write it off. The assets need to be repaid and they are not creating any revenue. Millions of Chinese have been locked in by wealth management programmes. These are comparable with the CDO’s in the US which are more like a Ponzi scheme which will once collapse. China has probably the resources to bail out their banking system, but it means they need to sell Treasuries which will lead their interest rates will go up. This will create spill over effects. As far as the US Dollar is concerned, there might be some flight to the Dollar. However, remember the Chinese are not buying Dollars, they are buying Euros. One of the things you might see that the Euro goes to 1.60 so the Dollar would go down in such an environment. Gold is poised to do well because of the uncertainty. I am not saying that the US Dollar will disappear right away, I am saying that there are strong forces from China, Russia, Saudi Arabia, etc to undermine the Dollar as a world reserve currency.

Expect a sudden international monetary collapse:

The things I am talking about are not ten year forecasts; they are more three to five year forecasts. When this collapse happens it will happen very quickly. That is not a guess but the conclusion you reach when you understand the dynamics. These capital markets and economies are complex systems. I talk about complexity theory in my book “The Death Of Money.” The problem today is that central planners are not using complexity theory; they are using stochastic equilibrium models. Those models do not reflect reality. They are based on a theory which says that an economy always going back to equilibrium; a disequilibrium can be treated by central interventions. That is not how the real world works. In the real world, we have complex and dynamic systems. When those systems go through a phase transition, or a tipping point, they spin off into unexpected directions; they morphe in very unexpected shapes. You end up in a very different place where you started. When I talk about the collapse of the monetary system, I base that premise on the fact that the international monetary system has collapsed already three times in the past 100 years. Each time it collapses, it does not mean we go live in a cage of wood. It does mean that the economic powers sit together and rework the rules of the game, like they did with Bretton Woods. In my book I explain what people can monitor to recognize that moment. I also explain how the future world could look like and what investors need to do in order to be prepared.

A model portfolio to survive the monetary collapse:

Savings are always important, so I can recommend young people to save, in particular in times like today when there are big risks looming which can shift wealth very sudden. Then the question is where do you put your savings in? In the last chapter of my book, I spend 30 pages on very concrete recommendations. I recommend 10% in physical gold (not ETF’s or futures or other paper contracts), land or fine art could be part of your portfolio, and cash. Some people are surprised I recommend cash, but you need to look at it from an opportunity point of view: with the changes I see coming, you would need cash to jump on new opportunities that will arise. Also, cash offers protection against deflation.

 

 Listen to the full interview:

 

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