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The Elites New Case for Gold

As you may know, the Shanghai Accord is a secret plan created by the G-4 (China, the
U.S., the eurozone and Japan) on the sidelines of the G-20 meeting in Shanghai, China,
on Feb. 26.
The plan is to strengthen the euro and the yen and ease the dollar. With the Chinese
yuan pegged to the dollar, this combination gives China financial ease and a competitive
advantage over its trading partners.
The Shanghai Accord will be an operative reality in global currency markets for the next
several years.
The message is that Japan should not even think about market intervention to weaken
the yen. But the G-20 is a high-level club with no secretariat or staff of its own. Who
does the dirty work when the G-20 wants to send a message? The answer is the IMF.
The International Monetary Fund acts as the eyes and ears of the G-20 and makes sure
all of the members stay in line and live up to their commitments. The IMF has already
threatened Japan publicly (in polite language, of course).
The IMF essentially said, Let the exchange rate move however it wants to. That means
the strong yen trade will continue. Japan has been warned.
Where is the world going under the Shanghai Accord?
To answer that question, I recently attended the IMF Spring Meeting in Washington,
D.C. This was a larger version of the G-20 meeting in Shanghai. It was the first time that
all the five families of the global monetary system had gotten together since a smaller
meeting in Paris on March 22.
One of the most remarkable events I saw in Washington was Christine Lagardes press
conference on April 14. This is where Lagarde put on her Godfather hat and threatened
Japan. Heres the exact transcript of the question and answer:
Question: Secondly, central bank stimulus, is it not preparing the world for
further asset inflation that we have seen? Arguably, you could say that all
the extra debt that we see around the world is evidence of that. If not,
should perhaps Japan or others consider direct monetary financing?
Ms. Lagarde: As far as Japan is concerned, we have fairly robust criteria
under which intervention is legitimate, and that clearly can happen in a case
and only in a case where very disruptive volatility must be avoided. So we
are watching carefully what is happening in the Japanese markets.

The substance and tone here are unmistakable. After the Shanghai Accord, the yen
strengthened materially, with clearly negative implications for Japanese growth and
Japanese stock markets.
There was enormous pressure on the Bank of Japan from the Japanese government to
intervene to weaken the yen (contrary to the Shanghai Accord).
In her press conference remarks quoted above, Lagarde is warning Japan not to
intervene in foreign exchange markets to weaken the yen. She says the only time for
intervention is very disruptive volatility, which is not the case today. (The yen is
strengthening, but in an orderly way.) She then goes on to warn Japan, We are
watching very carefully.
Thats an implied threat that if Japan reneges on the Shanghai Accord, there will be a
price to pay. The IMF has leverage because it is the de facto central bank of the world. It
has leverage to provide dollars or special drawing rights (SDRs) in the event of a
liquidity crunch or market panic in Japan (which may be coming soon).
The IMF has used this kind of muscle on Greece, Cyprus and Ukraine in recent years.
Now the Godfather was making Japan an offer they couldnt refuse stick to the
Shanghai Accord and well be there for you if needed; renege, and youre on your own.
The elites deny the Shanghai Accord even exists. David Lipton, the first deputy
managing director of IMF, for example, said there is no Shanghai Accord. The head of
the Bank of Japan also came out denying its existence.
But theres an old saying from a British journalist: Never believe anything until its
officially denied. I find the fact that the people in the room are denying it is very good
proof that it exists.
For further evidence that the Shanghai Accord is an actual effort to weaken the dollar
and the yuan at Japans expense, I refer you to a Reuters article from last Wednesday. It
was titled, U.S. Wants Japan to Refrain From FX action: PM Abes Aide.
According to one of Abes key economic advisers, U.S. officials made it pretty clear
they dont want Japan taking any steps to weaken the yen.
For Japan, the aide is quoted as saying, it would be a choice of enduring
[unwelcome yen rises] a bit longer or intervene in the market, knowing that doing so
could anger the United States.
U.S. officials havent issued Japan any direct warnings demanding it refrain from
weakening the yen. But tellingly, a U.S. Treasury Department report released this month
added Japan to a list of countries it was monitoring for currency manipulation. Thats
not an accident.

Below, I show you the one way to produce inflation that doesnt require the Shanghai
Accord or destructive currency wars. And the elites are finally starting to talk about it
publicly. Whats their next plan? Read on
The worlds monetary authorities, including the Federal Reserve Policy and the
Treasury, will not rest until they produce inflation.
If debt is growing at 3 to 4% a year, while the economy is only growing at 2% a year,
youre not growing out of your debt. Debt is growing faster than the economy. That puts
us on the path to Greece. Thats going to lead to a crack-up. Thats why monetary elites
are desperate for inflation.
The world has been battling deflation since the 2008 crisis. That deflation is fueled by
three trends, and its not just the unwinding of the housing bubble. One is
demographics, which is a very powerful force. Populations are declining. If you have a
declining or flat population and decreasing productivity, growth will suffer.
One of the reasons the U.S. population is still increasing is not because of its birth rate,
but because of immigration. Meanwhile, populations are declining in places like Russia
and Japan. Chinas population has actually leveled out. These are very serious problems
for the future growth of these economies.
One of the reasons Angela Merkel is letting a lot of Syrian and Turkish immigrants into
Germany is because the German birthrate is low. Its the same reason why the U.S.
essentially opened its borders. Its a big political debate. But to an economist,
immigration can be one of the ways to produce growth.
The second deflationary headwind has been home mortgages and other kinds of debt.
There hasnt seen inflation because velocity isnt increasing. The economists say people
will spend money if you give it to them. But they havent actually spent it. Theyve been
paying down debt.
The third vector in the deflationary story is technology. This is an old story. In the 1870s
and 1880s, there was a sustained period of deflation because of the mechanization of
farm equipment, steam ships, railroads, telephone, telegraph, electricity, and many
other innovations. These were deflationary because of the great productivity they
unleashed. We see it in computer technology today.

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But the U.S. government wont tolerate deflation these days because its highly
destructive to government interests.
One thing thats different today is our government debt-to-GDP ratio is at an all time
high. Its higher than ever, even at the end of World War II. Thats just if you count the
amount of Treasury debt outstanding. That doesnt include contingent liabilities
likeSocial Security, Medicare, Medicaid, veterans benefits, guarantees from Federal
Home Loan Bank Systems, FDIC insurance, student loans, etc.
How many of those guarantees are going to get called? The answer is a lot, particularly
as baby boomers get older and student loan default rate goes up. When you hear a
political candidate talking about upwards of $20 trillion of national debt, thats just
Treasury bonds. When you put all this contingent liabilities, multiply that by ten, thats
the true debt.
How are you going to meet all those promises? The easiest way to do it is with inflation.
The government actually writes the checks, but theyre not worth very much. Itll pay
with inflated dollars. Thats traditionally the way the U.S. government gets out from
under its debt.
Another possible option is outright default, but theres no reason for the United States to
default on its debts. Default is a very unattractive option.
So there are three ways out of debt. One is default, which is not a good option. One is
growth, but its not happening. The third way is inflation. The government has to have
inflation. If it doesnt, theres going to be a crack-up in the national debt.
But were not getting inflation from monetary policy. Theres another option, however.
The ideas been around for a long time, but now its being spoken about publicly by
elites. Thats to have central banks, whether the Fed or the emerging markets, bid up the
price of gold.

A higher gold price will also drive prices in the overall economy higher.
Its possible to devalue every currency in the world against gold at the same time. Gold is
money, but its a different kind of money. Its not central bank money. Gold is the
exception to the currency wars. Gold is the one form of money that every other form of
money can devalue against simultaneously without fighting currency wars. Gold doesnt
fight back in the currency wars. That means a much higher dollar price for gold.
The elites are starting to come out and talk about it openly. This has never happened
before. Here are two very specific examples
In PIMCOs April 2016 monthly commentary, one of their in-house economists named
Harley Bassman talked about the Federal Reserve raising the price of gold:
So in the context of todays paralyzed political-fiscal landscape and a hyperventilated
election process, Bassman wrote, how silly is it to suggest the Fed emulate a past
success by making a public offer to purchase a significantly large quantity of gold bullion
at a substantially greater price than todays free-market level, perhaps $5,000 an
ounce?
Heres one of the chief economists of PIMCO, the largest bond fund in the world talking
up gold. PIMCO is owned by Allianz Asset Management which is part of Allianz, the
biggest insurance companies in the world. When you talk about Allianz and PIMCO,
youre talking about the establishment. This is not some blogger. And theyre talking
about $5,000 gold, publicly.
Another example is economist Ken Rogoff. He was chief economist of the International
Monetary Fund from 2001 to 2003. Hes a full professor at Harvard University and
recipient of the 2011 Deutsche Bank Prize for financial economics. Hes also co-author of
a book about the impact of debt on economic recovery.
Rogoff is a full fledged member of the establishment. Some of my inside sources, who
must remain confidential, have told me that Ken is on the short list to fill one of the
vacancies on the Federal Reserves Board of Governors.
And Rogoff wrote a May 3rd article titled, Emerging Markets Should Go for the Gold.
Heres what he said:
I am just proposing that emerging markets shift a significant share of the trillions of
dollars in foreign-currency reserves that they now hold into gold. Even shifting, say, up
to 10% of their reserves into gold would not bring them anywhere near the many rich
countries that hold 60% to 70% of their admittedly smaller official reserves in gold.
Heres Ken Rogoff suggesting emerging markets put 10% of their reserves into gold. If
that sounds familiar, I dont know how many times Ive told people to allocate 10% of
their liquid assets to gold. And heres our Harvard professor saying that emerging
markets should put 10% of their assets in gold.

Then he talks about the impact on price. Again, Im quoting from the article:
Many countries hold gold at the New York Federal Reserve and over time, the price can
go up. It is for this reason that the system as a whole can never run out of monetary
gold.
Just take that last phrase, The price can go up. It is for this reason that the system as a
whole can never run out of monetary gold.
Ive also been saying this for years. Its one thing when I say it in my books and
speeches. But its another when you see Ken Rogoff former chief economist of the
IMF and potential nominee for a seat in the Federal Reserve Board, saying exactly the
same thing. To me thats highly significant.
Some people might panic if the Federal Reserve engineers higher gold prices, especially
since its done nothing but disparage golds role in monetary affairs. But having the
emerging markets drive gold higher provides the Fed some cover. It distances the Fed
from the process.
To me, the elites are letting the cat out of the bag. Again, this is the top people in the
system. A chief economist at PIMCO and a Harvard professor and former IMF chief
economist who may be in the Federal Reserve Board, both argue that higher gold prices
can produce the inflation the elites seek.
This is a signal telling you its coming.
Regards,
Jim Rickards

The Elites Master Plan for Global Inflation,


Part II
The global monetary elites had a conference in Zurich, Switzerland, last week. Among
the speakers were William Dudley, president of the Federal Reserve Bank of New York,
and Claudio Borio, chief economist of the Bank for International Settlements.
The topic of the conference was the prospect of multiple reserve currencies in the
international monetary system. The speakers generally agreed that a system with more
reserve currencies (such as the Australian dollar, Canadian dollar and possibly certain
emerging markets currencies in addition to the Chinese yuan) would be a desirable one.
Theres only one problem

Its a zero-sum game. All of the reserve currencies in the world add up to 100% of the
reserve currencies. If new currencies have a larger share, then the U.S. dollar must have
a smaller share. Its just basic math.
That means a long-term process of selling dollars and buying the new reserve
currencies. That selling lowers the value of the dollar and imports inflation into the U.S.
It also means a higher dollar price for gold. The elites wont tell you that, but its true.
Case in point: It seems George Soros might be subscribing to Rickards Gold Speculator!
According to Bloomberg: Soros cut his firms investments in U.S. stocks by more than a
third in the first quarter and bought a $264 million stake in the worlds biggest bullion
producer, Barrick Gold Corp.
Soros also disclosed owning call options on 1.05 million shares in the SPDR Gold Trust,
an exchange-traded fund that tracks the price of gold.
These are all signs of a weaker dollar. But its one thing for famous billionaires and
analysts like me to expect a weaker dollar. Its another thing when the guy who prints
dollars also says the dollar will weaken. A moment ago, I mentioned William Dudley,
head of the New York Fed
Well, when the Fed wants to print dollars, its the New York Fed that buys bonds from
Wall Street primary dealers and pays for them with money that comes from thin air.
In a recent interview, Dudley said that energy prices seem to have stabilized and
actually increased a little bit, and the dollar has actually weakened I am reasonably
confident that inflation will get back to our 2% objective over the medium term.
So if the guy who prints dollars is looking at a weaker dollar and more inflation, maybe
you should too.
Yesterday, I explained how the global elite plan to use higher gold prices to unleash
inflation. Below, I show you the second part of their plan, which may already be
underway. Read on
Golds trading at around $1,280 this morning. So, if you buy gold today and it goes to
$5,000 an ounce or $10,000 an ounce, which I do expect, youd probably be extremely
happy.
But that doesnt tell the whole story. Gold will have increased dramatically in nominal
terms. If gold goes from $1,000 an ounce to $5,000 an ounce, most people would say
thats a 400% increase in the price of gold.
But its really an 80% devaluation of the dollar. That 80% dollar devaluation leads to a
world of $5,000 gold. But it also leads to a world of $400 per barrel and $10.00 gas.

Yes, you need to own gold in that situation because youll be protected against inflation.
Youll be in a far better position than those who dont. Theyll be wiped out. But in many
ways youre just keeping up, since everything you buy will be much higher.
The key takeaway is that a higher dollar price for gold is just a lower value for the dollar.
And thats what the elites want.
Its part of their global inflation plan
How do you get all the major economies in the world to create inflation without relying
on destructive currency wars that merely shuffle money around between winners and
losers?
The answer is very interesting. Its a two-part answer, really. And theyre both coming.
You could call it a master plan for global inflation
I explained yesterday how the monetary elites are looking to engineer higher gold prices
to generate inflation since nothing else has worked. Thats the first answer. The evidence
is very strong for that hypothesis.
The second part of the answer goes by the name of helicopter money. Youve probably
heard all about it. Helicopter money is different than QE, quantitative easing. It
conjures up the image of a helicopter dropping money onto the streets below. Everyone
picks up the money, runs down to Walmart and goes on a buying spree. All that extra
spending leads to inflation. Thats not literally how the process works, but the idea is the
same.
Let me explain technically how helicopter money does work. Its a combination of
monetary policy and fiscal policy. The central bank controls money printing, but it cant
control government spending. Thats up to the Congress.

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With helicopter money, the monetary authority and the fiscal authority work together.
When Congress wants to spend a lot more money, it produces larger budget deficits.
And the Treasury has to cover that deficit by issuing more bonds. The Federal Reserve
buys the bonds. And it prints money to buy the bonds.
The answer still comes back to money printing. Quantitative easing, which theyve been
doing for seven years on and off is money printing, but it works differently. With
quantitative easing, the Federal Reserve simply buys bonds from a bank. It pays for the
bonds with printed money, which goes to the bank. What do the banks do with it? In
theory, theyre supposed to lend it to businesses and private citizens.

But people have been reluctant to spend it and banks dont want to lend it. What do the
banks do with that money if theres no lending and spending? They give it back to the
Federal Reserve in the form of excess reserves. After all, the Federal Reserve is a bank.
Its a bankers bank, essentially.
What good does that do anybody? None, really. It just inflates all the balance sheets and
props up the banks. It doesnt do the economy any good.
Helicopter money is different because Congress spends the money. Helicopter money
doesnt give the money directly to people because they might not spend it. But the
government will. The government is very good at spending money.
The Democrats prefer benefit programs, welfare programs, social spending, education,
healthcare, and the like. The Republicans prefer defense, intelligence, corporate
subsidies, and so on.
The way Democrats and Republicans usually compromise on these things is to do both.
Everybody gets something. They can build six new aircraft carriers, offer free tuition,
free healthcare, free housing, etc.
Then the supposed Keynesian multiplier kicks in to increase consumer spending. The
Keynesian multiplier says that if the government spends money to hire people to build a
highway, for example, theyll spend it by going to dinner, the movie theater, buying new
cars, vacations, etc. And those on the receiving end of that money spend it on other
things, in a virtuous cycle.
But the Keynesian multiplier might not be nearly as effective as elites suspect. With an
economy saturated in debt like ours, you reach the point of diminishing returns. (By the
way, if helicopter money fails, plan B is to increase the price of gold, as I explained
yesterday. That works every time).
The leader on this is House Speaker, Paul Ryan. Last December, Sir Paul Ryan passed
Obamas budget and busted the ceiling caps that have been in place since 2011. The
Ryan budget of September 2015 busted the cap. (It also refinanced the IMF, which was
buried in a 2012 bill, but thats a story for another day).
But that budget bill was the tip of the iceberg. The plan now is to have much larger
budget deficits. The point is, if people wont spend, the government will. When the
government spends and deficit finances it, it will eventually produce inflation.
That plan is on the table. Its discussed among the elites. Its being advanced by all the
big brains who work for the big think tanks, run by George Soros and the financial elite.
These people dont walk around with hoods around their heads. We know who they are.
You just have to follow them to see what theyre up to.
But these elites are actually beyond the stage of calling for helicopter money. Thats
already been decided. Theyre now debating what they should spend the helicopter

money on. They looking for the best way to reassure the public meaning lie to the
public about what theyre actually up to.
I wrote recently in these pages about how the recent climate agreement may have really
just been a disguised helicopter money scheme. Spending on emission reduction
programs and infrastructure could total about $6 trillion per year, which would be
carried out by the IMF through the issue of special drawing rights (SDRs).
Thats one way the elites could sell their plans to the public. Its inflation masquerading
as saving the planet, climate justice, or what have you.
The bottom line is that helicopter money is coming. I think inflation is too, either
through helicopter money or increasing the gold price or a combination of both. It
may not happen overnight, but governments will ultimately get it if theyre determined
enough.
Its true, inflation is low right now. The Fed says it wants 2%. But it secretly wants 3%,
which is really not so secret. Troy Evans is the president of the Chicago branch of the
Federal Reserve. And he told me he wouldnt mind seeing 3% to 3.5% inflation. His
theory is that, if the target is 2% and its been running at 1%, you need 3% to average the
two. And mathematically thats right.
But the economy isnt a fine Swiss watch you can tinker with to produce desired
outcomes. Deflation has held the upper hand in many ways since the 2008 crisis. But
once inflation takes hold, it cant easily be put back in the bottle.
Think of the forces of deflation and inflation as two teams battling in a tug of war.
Eventually, one side wins.
If the elites win the tug of war with deflation, they will eventually get more inflation than
they expect. Maybe a lot more. This is one of the shocks that investors have to look out
for.
Now is the time to buy gold.
Regards,
Jim Rickards

Gold: The Ultimate Insurance


In my ZIP code of Darien, Connecticut, its not unusual to bump into a billionaire every
now and then.

When I ask what they own, theyll start to list stocks and bonds of various types. At that
point in the conversation, Ill interrupt and say, You dont own stocks; you own
electrons.
Most wealth today is in digital form recorded on hard drives and transferred through
routers and servers in dispersed locations. What if those servers were hacked and your
electronic wealth were erased? Where would you go to get it back?
If you think this cant happen, guess again.
SWIFT is a secure global messaging network used by banks and other financial
institutions to send payment instructions. Its become a vital part of the global payments
system, serving 11,000 banks. And its been hacked, as has the safest bank in the
world, the New York Federal Reserve.
So the most secure financial message traffic system in the world and the safest bank in
the world were both hacked, and $81 million disappeared into thin air.
If it can happen to them, it can happen to you. The solution is to own physical gold. Its
one asset that cant be hacked, erased or made to disappear.
Thats not to say you should call up your broker and tell him to sell all your stocks. Not
at all. Stocks form an important part of a well-balanced portfolio. And I strongly
recommend select gold stocks right now, as an example.
But you should also have physical gold as insurance.
Below, I show you why gold might be the best form of insurance you can buy.
Your wealth is far more vulnerable than you think. How vulnerable? Read on
I recently returned from Switzerland where I met with the head of the worlds largest
gold refinery. A refinery takes gold in one form, processes it and sells it in a different
form, usually a more pure form.
He told me he has a waiting list of customers. Those customers want to buy more gold
than he can produce. Hes working at three shifts, twenty-four hours a day, to produce
gold and he still has a waiting list for customers.
His problem is he cant find enough gold, whether it comes from miners or existing gold
bars that arent quite the quality the buyers want. And my contact is a very senior
veteran of the gold market whos been in the business for 35 years. My talk with him
showed that the physical shortage of gold is already showing up.
China is certainly contributing to that shortage. Chinas holding $2 trillion of U.S.
Treasurys and other debt. But the dollar has no greater friend China wants a strong

dollar. It wants a strong dollar because its holding $2 trillion worth of securities, and it
doesnt want them to lose value.
But China doesnt trust the United States, and it shouldnt. It knows the United States
historically has devalued the currency through inflation to get out from under the debt.
So China is highly vulnerable to inflation because it owns so many U.S. dollardenominated securities.
Why doesnt China simply dump them? The answer is that it cant dump them. The U.S.
Treasury market is not that deep. Its not very liquid. China cant dump that quantity of
Treasury securities even in the market we have. And the President could actually stop
them if they tried to do it.
So the Chinese are stuck holding that paper. They want a strong dollar but fear that
were going to inflate the dollar. And theyre probably right about that. And since they
cant dump the Treasurys, theyre buying gold as a hedge. If the dollar is steady, the
securities retain their value. The gold may not increase much.
But if we inflate the dollar and it loses value, theyll lose on the paper side. But theyll
make it up on the gold they own. The price of gold is going to soar. So theyre creating a
hedge position. Again, they prefer a strong dollar. But with their gold purchases, theyre
ready for a weak dollar.
My advice to you as an investor is, if its good enough for China, its also good enough for
you.
If you want to understand gold, its fairly simple. If the dollars going to get stronger, you
might not want gold. But if the dollars going to weaken, you definitely want gold. Weve
had a strong dollar since 2011. Its been a drag on the U.S. economy, harmed exports
and imported deflation from around the world. Its defeating the Feds efforts to create
inflation. These are all the consequences of a strong dollar. We couldnt have a strong
dollar for much longer. And it looks like were in for a weaker dollar
The trigger for a weaker dollar took place in late February in Shanghai, China. The
global financial elites devised a plan to weaken the yuan without having China officially
devalue its currency. Surprise devaluations by Beijing rocked global markets last August
and this January. To avoid that outcome, it was decided the dollar had to be weakened.
That lets China maintain its unofficial dollar peg, while also creating a cheaper yuan to
boost its economy.
Essentially, the worlds monetary authorities decided the U.S. and China can devalue
relative to Europe and Japan. This could play out over years.
My outlook going forward is therefore for a weaker dollar, and that means a higher
dollar price of gold. Thats one of the reasons gold has been performing so well this year.
Its the best performing asset class in 2016, and also the best performing asset class in

the 21st century. Since 2000, gold has greatly outperformed every other asset you can
think of, including major stock indexes and bonds.

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So in that sense, gold performs an important insurance function. Its comparable to fire
insurance on a house. Nobody wants their house to burn down. But if it does burn down
and you have fire insurance, having that fire insurance was invaluable.
Its the same with gold
If you have a 10% gold allocation, its like owning fire insurance. If the stock market goes
to new all-time highs, and gold goes nowhere, that 10% allocation wont hurt you. But if
the markets collapse, which I do expect, and the price of gold skyrockets, that 10%
allocation will increase by multiples. That profit will protect you against losses in the
rest of your portfolio. So gold has that insurance function. And that cant be
downplayed.

Theres another reason to own gold, which is actually fairly new. Thats because there
are new threats, especially cyber financial warfare. Vladimir Putin has a 6,000-member
cyber brigade working day and night to hack, destroy, disrupt, and delete digital
systems, whether it be banks, exchanges, payment systems, etc.
In 2010, the FBI and Department of Homeland Security located an attack virus planted
by Russian security services inside the Nasdaq stock market system. There have been
several unexplained stock market outages and flash crashes in recent years. Some of
these events may have been self-inflicted damage by the exchanges themselves in the
course of software upgrades.
But others are highly suspicious and the exact causes have never been disclosed by
exchange officials.
During one financial war game exercise I took part in at the Pentagon, I recommended
that the SEC and New York Stock Exchange buy a warehouse in New York and equip it
with copper wire hardline phones, hand-held battery powered calculators and other preInternet equipment. This facility would serve as a nondigital stock exchange with
trading posts.
The SEC would assign 30 major stocks each to the 20 largest broker-dealers, who would
be designated specialists in those stocks. This would provide market making on the 600
largest stocks, covering over 90% of all trading on a typical day.
Orders would be phoned in on the hardwire analogue phone system and put up for bids
and offers by the specialists to a crowd of live brokers. This is exactly how stocks were
traded until recently. Computerized and algorithmic trading would be banned as
nonessential. Only real investor interest would be represented in this nondigital venue.
In the event of a shutdown of the New York Stock Exchange by digital attack, the
nondigital exchange would be activated.
The U.S. would let China and Russia know this facility existed as a deterrent to a digital
attack in the first place. If our rivals knew we had a robust nondigital Plan B, they might
not bother to conduct a digital attack in the first place.
Bottom line: you may think you have wealth because you own stocks and bonds. But you
really dont. What you have are electrons. Your so-called wealth is actually digital
wealth. And if those stock exchanges and account records are wiped out you have
nothing.
And I wish you luck trying to reestablish it. Much of your wealth, including money in the
bank, is in digital form and the Russians or any decent hacker are perfectly capable
of wiping that out.
One of the things I like about gold is that its physical. Its tangible, so it cant be hacked,
erased or deleted. So if your digital wealth is no different than an email, and Putin hits

the delete button, your email is going to disappear. Your wealth is going to disappear.
Most people dont think it can happen to them.
But recently, the country of Bangladesh, one of the poorest countries in the world, lost
$100 million. $100 million simply disappeared. But it wasnt in a no-name bank in
Bangladesh. That money was on deposit at the Federal Reserve Bank in New York. The
Federal Reserve Bank in New York is arguably the safest bank in the world. Its the main
regional office of the central bank of the United States.
Here is one of the poorest countries in the world, with $100 million on deposit at the
central bank of the United States called the Federal Reserve, and the money disappears.
If they had had that money in gold, theyd still have it. And this type of incident is
happening with increasing regularity. So you cant assume your digital wealth is secure.
Let me repeat what I said earlier: Im not recommending you sell all your stocks. Stocks
are part of a well-diversified portfolio. And I think certain gold stocks are offering you
once-in-a-decade returns right now.
But having 10% of your portfolio in physical gold is the best form of insurance.
Regards,
Jim Rickards