Gold the best way to shield your portfolio from a recession?

'The New Case for Gold' Author James Rickards on Donald Trump's economic predictions and why investors should include gold in their portfolios.

Investing in Gold: You Can't Hack it, Erase it or Delete it

By ETFs

With fears about the U.S. economy looming, “The New Case for Gold” Author James Rickards weighed in on Donald Trump’s comments about a potential recession.

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“There is a lot of social science research that says monkeys do better than economists at predicting because monkeys don’t know what they’re doing; They are 50% right, economists herd and are wrong most of the time. The Fed has never predicted a recession, we’ve had many.  So don’t listen to economists, listen to executives. Trump may or may not be right but I’d rather listen to an executive than an economist,” Rickards told the FOX Business Network’s Maria Bartiromo.

With these concerns about the economic outlook, Rickards explains why gold is particularly important to include in investors’ portfolios.

“I recommend 10% of your investable assets. If I am wrong and gold does nothing you won’t get hurt with 10%, but if I’m right, if everything else crashes, or if Trump is right, gold will go up by multiples. So, that’s your insurance for the rest of your portfolio,” said Rickards.

Rickards also talks about the additional benefits of gold as cyber security becomes a growing risk to personal wealth.

“There are new reasons to have gold, which I talk about in the book, 21st century reasons. [Russian President] Vladimir Putin has a 6,000-member cyber brigade working night and day to erase digital wealth.  So how many billionaires do you say, ‘what do you have, stocks, bonds?’ No you don’t, you have electrons. Putin can wipe those out. The thing about gold, you can’t hack it, you can’t erase it, you can’t delete it. It’s tangible,” Rickards said.

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With many strategies for investing, from ETFs to stocks to physical gold, Rickards discusses the options investors should avoid.

“You don’t want paper gold, you don’t want ETFs, COMEX futures or London Bullion Market Association unallocated gold. The reason is they are all paper contracts. When you most want the gold, they’ll terminate early, close the exchange, the Comdex will say ‘trade for liquidation only,’ you won’t be able to get the physical. They sell 100 times more gold than they have and that’s okay because futures exchanges always have large open interest, “ said Rickards.

On the other hand, Rickards explains why physical gold is the best option for investors.

“One-hundred people show up and there is one bar of gold, one guy is getting the gold, everyone else is shut out. So have physical gold, bullion, coins, American gold eagles, again for a slice, 10%, put it in a safe place, not in the banks, put it in private storage,” Rickards said.

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Rickards then weighed in on how gold has done over recent years.

“Gold is the best performing asset in 2016, best performing asset class in the 21st century. Now from August, 2011 to November, 2015, it went down 45%; That’s a typical retracement in commodities markets.” Rickards continued, “But I don’t day trade gold, I have it for a slice of my portfolio to preserve wealth. It’s a difference between making money and preserving wealth.”

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