James grant and gold standard

[escobar]

Saw this article on yahoo. http://finance.yahoo.com/news/gettin...HRlc3QD;_ylv=3

Has this quote:

In his ideal world, says Grant, he would lay out a three-year program to convert back to the gold standard, probably at around $2,500 per ounce of gold. He adds that he would take great care to avoid the notorious blunder made by Winston Churchill and the British back in 1925, when they went back on the gold standard at too high a price, and imposed brutal deflation on the economy. Alas, he admits, this would need an act of Congress.


Is this the exact opposite what Richards has said? I thought Rickards said that they made the gold price too low back then so it was deflationary. The money supplied had doubled since the the war but they tried to go back to a gold price that was half the money supply.

Anyone have thoughts in this? Is this just a misquote?

[PMBug]

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Is this the exact opposite what Richards has said? I thought Rickards said that they made the gold price too low back then so it was deflationary. ...

You are correct.

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Anyone have thoughts in this? Is this just a misquote?

I'm guessing it's a misquote.

[PMBug]

There appears to be an article on the subject at Grant's website ("The Right Price"), but I'm not a subscriber, so I can't clarify his true position:

http://www.grantspub.com/

[swissaustrian]

The $2500 target probably includes a deflationary period with massive interest rates hikes and bank failures a la Volker 1981

[DCFusor]

While I don't agree with all he says - I really like the way this guy thinks. He comes closer to my definition of "conservative" than any politician - the man just just conservative, careful, thinks things through - maybe doesn't see all, but he works hard with what he does see. He's the kind of guy who will admit it when he's wrong - any other kind I won't listen to at all. Which means I have a fairly short list!

It doesn't hurt that he reminds me a little of an archetypal "Clark Kent".

[ancona]

What DC said...........

[PMBug]

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One Fundamental Mistake by Grant
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However it is a mistake to think one can fix the price of gold. It cannot be done and should not be attempted. The irony is Grant correctly criticizes the Fed for fixing interest rates, then thinks he can correctly divine the correct price of gold at $2,500 an ounce.

Only the free market can determine the price of gold and what gold buys. If the US went to a 100% gold-back dollar, with guaranteed convertibility of paper to ounces of gold, the price of gold would be much higher than $2,500 an ounce.

Grant cites an error in 1925 in which the Bank of England set the price of gold too high. The opposite side of the coin is that if the price is set too low, is market participants will redeem all their paper dollars for gold, hoarding it.

Simply put, the Fed does not know the correct interest rate and Grant does not know the correct price of gold.
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http://globaleconomicanalysis.blogsp...s-pick-to.html

HR 1098 holla!

[escobar]

Yeah I asked rickards on twitter and he responded. Said everyone misspeaks every now and then. So he said it was wrong was too low not too hight.

JamesGRickards Jim Rickards
@somanyroadsinv too low. Sometimes people just misspeak. I've done that myself.
Feb 03, 9:54 AM via Twitterrific

[PMBug]

If you can get his attention, ask Rickards for his thoughts on HR1098 (not the political viability of it - the desirability of it versus a fixed gold standard). I tried a few times, but he never responded.