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Just Like The Fed, Rickards Recommends Patience

By Daniela Cambone and Sarah Benali of Kitco News
Friday December 19, 2014 11:20 AM

(Kitco News) - Last year, we gave the experts $10,000 to play with but this year, we bumped it to $100,000. Of course, we also asked them which investments they absolutely would avoid in 2015 and their New Year’s resolution.

Part I Peter Schiff tells Kitco News where he will be putting his money in 2015.

Expert: James G. Rickards

Claim to Fame: Bestselling author of Currency Wars and The Death of Money, and Senior Global Strategist at West Shore Funds.

James G. Rickards

Rickards on Investing

“Number one, it’s really, really important to be diversified,” Jim Rickards starts off. However, the best-selling author explains that being diversified doesn’t mean owning fifty stocks, “that’s not diversification, that’s one asset class.”

Rickards says to invest in completely different classes. “[T]he biggest challenge facing investors today is that we have inflation and deflation fighting each other at the same time and you don’t know which way it’s going to tip, and you need to be prepared for both.”

On How He Would Invest $100,000 in 2015

I would have some inflation hedges and some deflation hedges, says Rickards.

  • $30,000 in cash. “That’s a big allocation to cash but it’s a reflection that cash is a good deflation hedge. Number two, it has great optionality - as visibility improves and you see other opportunities, you’re not stuck in something you don’t like. You’re the person who can pivot and invest quickly.”
  • $20,000 in gold.  “Normally, I’d recommend lower maybe 10%, but I like this entry point. I think this is a good place you can maybe pick up a little.”
  • $20,000 in ETFs that are inverse to the junk bond market. “So basically, if the junk bond market goes down, you’ll make money on these particular ETFs.”
  • $10,000 in 10-year treasury notes. Rickards notes that although nominal interest rates are close to all-time lows, “real rates are nowhere near all-time lows, and if deflation persists, you could see a huge rally in treasury notes.”\
  • $20,000 in alternative investments, says Rickards, including global macro hedge funds, venture capital and fine art.

On What He Would Avoid in 2015

US equities, he says. “It just feels like a bubble to me. I’m not saying it couldn’t go up, they may go up more but when they come down, they’ll come down hard and fast, and I don’t want to be around when that happens.”

On His New Year’s Strategy

“You can’t get whipped around by the day-to-day, so I recommend patience,” says Rickards.

By Daniela Cambone and Sarah Benali of Kitco News dcambone@kitco.com and sbenali@kitco.com
Follow Daniela Cambone on Twitter @DanielaCambone and Sarah Benali @SdBenali



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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