The Renminbi, U.S. Dollar, and Gold 
JR: On August 10, 2015, the Chinese yuan dropped 3 percent against the U.S. dollar instantaneously. On June 23, 2016, pounds sterling dropped 14 percent against dollars in two hours. Typically foreign exchange markets trade in increments measured to five decimal places. Moves of the type described in the past two years are shocking and show just how unanchored the system is. Gold is not a perfect anchor, but history has proven it to be better than any other. Unless the system finds a new anchor, preferably gold, these shock devaluations will continue to occur to the point of collapse.

EG: In the case that gold reclaims its place at the core of the global economy, when do you think will be the most optimal occasion to purchase gold in order to reap the most of its profitability in the years to come?

JR: The best time to buy gold is now. The price is volatile when measured in dollars, but that’s a reflection of dollar instability, not gold instability. When the systemic collapse comes, which is just a matter of time, gold will soar in stages to $10,000 per ounce or higher. That price target is the implied non-deflationary price of gold based on global money supply and official gold supplies if gold is used as a benchmark in a new monetary system. The problem is that the availability of physical gold is starting to dry up. I’ve spent time with Swiss gold refiners and private secure logistics firms and have made inquiries on the availability of physical gold from Shanghai to New York. The story is the same everywhere. There’s nowhere near enough physical gold to satisfy demand from paper gold contract holders in the event of a gold buying panic. This means that even if you want to buy gold when the price starts to move, you may not be able to find any. The time to acquire physical gold is now, before the panic, while you still can.

EG: Once we secure our assets by turning them into gold, what is the next move? Shall we just let it marinade for a while, or are there upcoming opportunities that we should be on the lookout for?

JR: I recommend that investors allocate 10 percent of their investible assets to physical gold. That leaves 90 percent for other asset classes including cash, fine art, private equity, stocks and bonds. You don’t have to go to the sidelines or live in a cave; a 10 percent allocation to gold will serve you well. Don’t obsess over day-to-day fluctuations in the dollar price. Those fluctuations say more about instability in the dollar than they do about gold. Once you have your gold allocation, just sit tight. There’s nothing else to do until the collapse comes!

EG: Considering the fact that not everyone is involved in trading stocks and ever fewer will invest into gold, how will the fluctuations of the USD and the rise of gold affect the life of the average American?

JR: The end result of instability in the international monetary system will be very high rates of inflation, perhaps hyperinflation. This is the only way to alleviate the high debt burden of sovereign states and corporations around the world in an age of insufficient growth. This will affect everyday citizens in the U.S. even if they have no assets at all. However, the inflation will not come in a straight line. It may even be preceded by deflation due to demographics, technology and deleveraging. Yet, in the end, inflation must prevail because it’s the only way
out of the debt trap that governments have led us into.

EG: Is there a way for businesses to navigate the upcoming turmoil of the economy to result in their favour, while most of the world is headed for the bottom? 

JR: Business can navigate monetary turmoil by creating real value and dealing in real assets. These approaches include creation of intellectual property, possession of natural resources, and investment in human capital. Such assets will retain value even through episodes of extreme inflation or deflation. Companies that are the most vulnerable to financial turmoil are those that rely on high leverage and financial engineering to produce returns. Companies in this latter category including banks may be heading for insolvency in the next financial crisis.

U.S. Sovereign Debt Default
EG: We will likely witness a loss of confidence in the US dollar (if we haven't already) with the decline of the petrodollar system. Will it be sound to retain assets in USD at this time, or is there a more appealing alternative as far as currency goes?

JR: A loss of confidence in the U.S. dollar is already underway as demonstrated by Russian and Chinese efforts to acquire thousands of tons of gold, and the fact that foreign investors have become net sellers of U.S. Treasury securities. This migration away from the dollar is proceeding in an orderly way for the time being, but the momentum is irreversible and will accelerate suddenly and unexpectedly into a full-scale dollar collapse. In the short-run the euro is an attractive alternative to U.S. dollars. The only long-run alternatives to the dollar are gold, silver and the IMF’s special drawing rights, or SDRs.

EG: The US doesn't manufacture like it used to and we witness a consumer society with too many consumers for the amount of producers, trading in debt rather than goods. How does productivity relate to the current issues at hand?

JR: Productivity is arguably the most important economic policy challenge in the world today. Real economic growth is simply a matter of how many people are working and the productivity of those workers. The total number of workers in large economies is not growing due to declining birth rates and disasters such as China’s one-child policy and sex-selective abortions in India and China. Unfortunately productivity is also declining although economists do not agree why. Debt burdens are sustainable if economic growth exceeds the growth of debt. Unfortunately the opposite is happening. Debt burdens continue to grow while economic growth, both real and nominal, has stalled out. Demographics take decades to turn around. Productivity increases are the only way to avoid a global debt crisis. But there are no signs that productivity will increase fast enough to save the day.