Jim Rickards ‘New Case For Gold’ At the Foreign Correspondents Club of Japan

from Jesse’s Café Américain

It is true that money provides no interest payments if it is truly money. If you hold US dollars as cash, for example, you obtain no interest or dividends on them. If you did, it would interfere with their neutrality as a medium of exchange, as people would tend to save them.

You get the interest from money by ‘loaning’ it to someone else, and accepting a form of obligation with risk, thereby obtaining interest payments as compensation for that risk. This is what a bank deposit has been traditionally, at least before the days of confiscatory negative interest and the gross and purposeful mispricing of risk.

The same is true of government bonds, which are not money but loans with risk compensation as interest payments.

However gold is natural money, and not ‘official money’ because it is recognized as such by few governments, and must be exchanged for the official currency in payment of taxes for example.

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