GOLD Prices WILL QUICKLY Hit The FRENZY Stage - Jim Rickards

GOLD Prices WILL QUICKLY Hit The FRENZY Stage – Jim Rickards

The single most consequential line on the Federal Reserve’s balance sheet is the first one. It is called a gold certificate, and Jim Rickards spent much of Friday explaining why it still reads $42 an ounce. The history is short. In 1934 Franklin Roosevelt moved the nation’s gold from the Federal Reserve to the Treasury. Because the Fed is privately owned and the Fifth Amendment forbids taking private property without compensation, the Treasury handed the Fed a certificate in exchange. That certificate remains the first asset line on the Fed’s published balance sheet, carried at a 1934-era price. Rickards’ observation is what the certificate quietly implies:

• Divide its book value by $42 and the implied quantity of gold comes to roughly 8,133 metric tonnes — almost exactly what the Treasury holds • His inference: the US has not sold an ounce since about 1980 because the gold is collateral for that piece of paper

• Marking the certificate near market requires no legislation and no auction — on his description it is one phone call from the Treasury Secretary to the Fed chair, and an accounting entry

• That entry deposits roughly $1 trillion into the Treasury General Account — money the government can spend without issuing a single new bond

• He connects it directly to the financial campaign against Iran, and to the Treasury Secretary’s own line that the department “has as many weapons as the Pentagon” On the debt itself, now past $40 trillion, he was asked whether Washington should sell gold to pay some of it down. His answer went the other way: issue bills, buy gold with the proceeds, and keep the metal. His price call is unchanged and deliberately undated. $10,000 an ounce, possibly before year-end, and if it takes until mid-2027 the distinction does not interest him — “it’s coming soon, it’s not a five-year forecast.” Gold drew down from $5,400 to a low of $3,900 before recovering toward $4,700. Central banks remain net buyers, mine output is flat, and for holders worried about sanctions the metal remains the alternative to Treasuries. Rickards also confirmed he holds “at least” $1 million of his own money in physical gold — a minimum, he stressed, not a maximum. The complication is the new Fed chair. Kevin Warsh’s first Jackson Hole address was hawkish. He reaffirmed a 2% target on PCE, conceded the Fed has missed it for over five years, and described unemployment near 4% as unconcerning. Rickards reads the omissions rather than the text: rates rise, but not in September, and not before 3 November. On the political point he was blunt — the claim that the Fed is not political is, in his word, nonsense. Two things in that speech matter for metals. One is on page nine, where Warsh writes that unconventional policies “should otherwise be used sparingly if at all”. Rickards reads that as the end of quantitative easing without the phrase being used. The other is the market’s response: pricing a November hike immediately, and marking gold down by only about 1% on the day. For Rickards, a hawkish central bank that moves gold barely at all is the more informative signal.