Hathaway, Rickards Agree Fed Rate Hikes Spell Disaster for Economy

ValueWalk  ( Original )
APR 30, 2018

The following are bullet-point summations of the views of John Hathaway, Chairman of Toqueville Management Corporation, and Daily Reckoning’s James Rickards, as taken from the minutes of the recent Advisory Board Meeting of the Incrementum Inflation Diversifier Fund.

John Hathaway:

  • The Fed will abandon its path of steady rate increases
  • We need to see a bear market in bonds and stocks before gold takes off
  • 20% of income tax receipts comes from capital gains, so a weak stock market is a big fiscal risk
  • I believe we are at a turning point for sovereign risk
  • Short-term rates might become unruly, which could topple asset valuations
  • In the short-term we might have to go through another dip in the gold price before it starts rising longer term
  • We need to get above the $1,370 resistance level, and then gold will move higher

James Rickards:

  • We are in a new bull market for gold that can last 6-7 years; we have a long way to go
  • Gold is currently not driven by inflation, but by a weaker dollar
  • I believe we will see disinflation over the next 12 months, then a sustained period of inflation
  • The Fed is grossly underestimating the impact of QT, they are tightening into a weakening economy
  • North Korea is still a big risk; but the situation has currently paused
  • Iran is front and center, the US is putting extreme financial pressure on Iran

ORIGINAL SOURCE: John Hathaway: The Market Is Grossly Underestimating The Impact Of Quantitative Tightening And Inflation at ValueWalk on 4/27/18