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Gold Prices: Peter Schiff Says This Will Send Gold Totally Through the Roof
IN THIS VIDEO, PETER GIVES A BRILLIANT ANALYSIS OF WHY GOLD HAS FLUCTUATED THE WAY IT HAS.
To begin, yesterday was a wild day in the financial markets to be sure, but very little of the activity was based on rational thinking. As if the world hasn’t learned it’s lesson by now, just as Peter Schiff predicted, the ECB’s bank chief Mario Draghi made the announcement that there would be further interest rate cuts, and more quantitative easing in the 19-country euro-zone. Peter referred to the the analogy of Draghi using the equivalent of a shot from a bazooka on the Eurozone, because now the ECB has actually superseded the Fed in Quantitative Easing.
Now, as you would imagine, that is going to cause rising prices and more inflation, but the big difference between the U.S. and the Eurozone is that the Eurozone can raise interest rates to combat inflation. We’ve seen the effect that raising rates less than .25% had here, so that’s not even an option for the U.S. We’re going to be stuck dealing with runaway inflation when the time comes, and there isn’t a damn thing we can do about it.
AS FOR THE PRICE OF GOLD….
Normally, when country debases their currency like that with Quantitative Easing, the result of that reckless monetary policy is for the value of a hard asset like gold to rise. The reason gold has been slow to rise, is not because it’s not a great time to buy, but simply because the Euro is so weak. By issuing more quantitative easing, the Euro goes down against the Dollar, causing the Dollar to rise. Well, since gold is priced in Dollars, with them easing in value because of the move by the ECB, gold has remained largely unchanged.
Here is what you should be thinking: If you’re more bullish for the U.S. than Europe long term, then based on that belief you’d be a fool to purchase more gold, notwithstanding that you’d have to be a total buffoon to think the U.S. is better off long term than Europe, but that’s another story, If you believe everything people like Peter Schiff, Dr. Jim WIllie, and Michael Snyder have been saying for over a year, and that the U.S. is on the verge of financial Armageddon, then don’t let the temporary weakness of the Euros affect on gold affect your decision to but more gold. Peter explains in further detail below, and then there are two subsequent articles on gold, one by Peter, one tom Activist Post.
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Peter Schiff, a top Libertarian economic forecaster, predicts that the Federal Reserve will go back to zero interest rates before the upcoming presidential elections, which will send the gold price and silver price skyrocketing.
He made the prediction during an interview with Rick Wiles of TRUNEWS on March 7. (Source: “Schiff: Zero rates, QE4 by election, and real estate crash looming,” TRUNEWS, March 7, 2016.)
“I think we’re going to see much higher prices as the year progresses,” the head of Euro Pacific Capital, Peter Schiff, said.
He believes the Fed will go back to zero interest rates and quantitative easing (QE) before the elections, due in November, which will “really push commodity prices up even faster.”
Since the beginning of the year, gold has rallied 17.3% and silver has strengthened 10% because concerns over a serious economic slowdown in China, the world’s second-largest economy, and plummeting crude oil prices have triggered a flight to safety away from riskier alternatives.
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Schiff, who is also a stockbroker, blasted the U.S. central bank for promising several hikes in 2015 and executing only one in December, which he said caused huge damage to the world’s largest economy.
“The [U.S.] stock market was off to its worst start in history,” he mentioned. The three major indices earlier this year fell more than 10% year-to-date before paring these losses.
On Thursday, the European Central Bank (ECB) cut its key lending rate, known as the refi rate, from 0.05% to zero to add stimulus for the Wurozone economy. Japan was the most recent economy to adopt negative interest rates in January.
The one-time Senate candidate slammed the mainstream narrative that hailed last week’s jobs report, which showed that the U.S. added a more-than-expected 242,000 jobs in February, while the unemployment rate held steady at 4.9%.
“Everybody wants to pretend that there was such a great report; it was a terrible report,” said Schiff, adding that 90% of those jobs created were part-time jobs. “People want full-time jobs; they don’t want part-time jobs.”
Furthermore, 80% of these jobs were low-wage or minimum-wage jobs.
Schiff expressed hope that people will rise up and start going to buy silver and gold, forecasting a surge in their prices: “We’re getting close to $1,300 an ounce and I think that’s going to be a key level. Once we get above there, I think it could be a pretty quick shot up to $1,500 to $2,000. The high from 2012 was about $1,900 an ounce. I think we’re going to take that out by next year and I still think $5,000 gold is coming.”
April gold hit a 52-week high of $1,280 an ounce on March 4 and was trading at $1,264 on Thursday.
On the presidential candidates, Schiff said Democratic presidential candidate Bernie Sanders will not win because African-American voters are resoundingly supporting Hillary Clinton, primarily due to President Barack Obama’s link with the African-American community in the U.S.
Sanders would win if African-American voters actually studied and voted for the candidate that actually represented the beliefs they support, Schiff said.
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The gold bull is back. After trending downward for more than four years, gold prices have broken out to the upside with a gain of more than 20% off their December lows.
Gold’s crossing of the 20% threshold even caused the financial media to take notice. “Gold is now in a bull market,” reported CNNMoney (March 7, 2016).
Is the path now clear for gold prices to march on toward new all-time highs? Perhaps.
But gold bulls can be temperamental and unpredictable. Sometimes they disappoint, as was the case with multiple short-lived bull markets in the 1980s and 1990s. Sometimes they keep running and running until they go parabolic.
So far all we’ve seen is a gold rally turn into an “official” bull market by virtue of prices advancing 20%. It’s an encouraging sign of strength; but it’s not in itself confirmation of a larger trend in force. A major bull market is characterized by a series of higher highs and higher lows over a period of months to years.
So far, gold has rallied around 22% from a low over a period of a few weeks. This rate of ascent isn’t sustainable in perpetuity. A healthy bull market ebbs and flows – it takes two steps forward and one step back, as It were.
That’s why a price correction after a 20%+ advance would be normal and healthy. If it’s a major bull market, then prices will go on to make a higher high, followed by a higher low.
Recall that the last big mania in gold took place from mid 1976 to January 1980. Prices surged more than 700% over that time period. Yet there were still corrections along the way – until the final, parabolic blow-off move. Another major gold bull market didn’t return until 2001-2011.
Yet from 1980 to 2001, there were multiple rallies of greater than 20%. For example, from April to September 1980, gold prices rallied more than 40%. But from there, they turned around to make lower lows.
In the summer of 1982, gold prices spiked 65% – from $300 to $500 an ounce. But by 1985 prices had fallen back below $300. The gold market hit rock bottom in 1999 at just above $250. Prices rallied 30% in the second half of 1999 before sliding back down to test those ultimate lows one last time in 2001.
The point is that when it comes to precious metals markets, an official bull market designation doesn’t necessarily mean the larger bear market is over. Investors must consider other technical and fundamental evidence that a major bull market is in force.
Major bull markets typically begin when pessimism reaches an extreme. That seems to have occurred last December when the Federal Reserve moved to raise interest rates. At the time, the Wall Street Journal reported that “a shift to higher rates is expected to hurt gold.” Meanwhile, an enormous speculative short (bearish) position had built up on gold and silver in the futures markets.
Everyone was looking for precious metals to keep falling heading into 2016. The January 4, 2016 issue of Barron’s contained an article titled “Gold Likely to Stay Tarnished.” It quoted an analyst prediction of $800/oz gold and concluded, “Beaten-down gold is unlikely to tempt many investors in 2016.”
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Oh, really?
The financial establishment’s bearish consensus on gold has thus far proven to be dead wrong. Demand for the yellow metal is surging in 2016 along with the spot price. Assets in gold price-tracking exchange-traded funds have swelled so rapidly that one such instrument – the iShares Gold Trust (IAU) – took the unprecedented step of suspending the creation of new shares. The fund’s managers said they were overwhelmed by $1.4 billion in new inflows since the start of the year.
Investors in gold ETFs are left to wonder not only whether their shares are being fully backed by physical gold at all times; but also whether a fund manager might decide to suspend redemptions in the event of a selling surge of similar magnitude as the recent buying surge.
Investors in gold and silver coins are left to wonder whether dealers may run out of inventory of popular products such as American Eagles. The U.S. Mint in recent months has been hit with record demand for Silver Eagles. At current rates of buying, the Mint alone will require more tonnes of silver this year than is mined in the U.S.! And that does not even count the substantial amount of silver rounds and bars that private mints manufacture.
This fact leads us to what ultimately must underpin a major bull market in precious metals: favorable fundamentals of supply and demand. Gold and silver markets can rise or fall by 20% over any given period based purely on technical factors. But if the precious metals are going to launch into a multi-year bull market that takes prices to new record highs, it will be because of strong physical demand coupled with tightness in supply.
The wild card going forward is the monetary backdrop. Never before have central bankers pursued negative interest rate policies en masse. From Europe to Japan and beyond, some $6 trillion in global assets are stuck in negative-yielding bonds. The U.S. could be the next big country to go negative.
Negative interest rates might make physical precious metals (which obviously don’t pay interest) more attractive than ever before as financial assets. But historically what has mattered and what will likely continue to matter most for precious metals is not whether nominal interest rates are falling or rising. It’s what’s happening with real (after inflation) rates on bonds and cash. The more people fear losing to inflation by holding bonds and cash, the more they will seek gold and silver for protection.
TSo far in 2016, silver hasn’t performed as impressively as gold. Silver’s continued under performance is one of the few remaining negatives on which precious metals naysayers can hang their hats. In a major bull market for precious metals, silver should outperform. Gold is analogous to a blue-chip stock in the Dow Jones Industrial. Silver is akin to a small-cap technology stock – more thinly traded, more volatile, more potential for explosive gains.
Silver lagged behind gold in the early stages of the bull market that began in 2001. But silver put the exclamation mark on the sector top that occurred in 2011 with a dramatic spike to nearly $50/oz. The next great precious metals bull market could give us a triple-digit price handle on silver and a doubling (or more) of gold’s former all-time high.
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FOR MORE GREAT MATERIAL FROM JIM WILLIE:
Dr. Jim Willie: US Dollar is Being Surrounded By All Sides; It’s Tragically Comical
Dr. Jim Willie: We’re in the Bottom of the 9th; The US Dollar is Dying (2/28)
Dr. Jim Willie: Economic Collapse is On Our Doorstep
Jim Willie: “The Quickening” is Approaching Global Economic Markets
Jim Willie: When Deutsche Bank Fails, Barclays, Citigroup, and More Will Fall
Dr. Jim Willie and How To Simplify Your Finances To Survive Economic Collapse
Jim Willie: Global Banking Cabal and Their Satanic Rules Are Ready to Strike
Jim Willie: Both Our Allies and the American People Absolutely Hate Our Government
Jim Willie: U.S. Dollar is Now a Matter of National Security Due to Poor Decisions
Jim Willie: Armageddon Coming to U.S. With Trillions Exposed In Derivatives
Jim Willie, The Fed’s Week of Reckoning, and an Isolated United States
Jim Willie: After Banks Fail, Government Seizes IRA’s, 401k’s, and Pensions
Jim Willie, the Crumbling Global Economy, and the Dollar Crisis
Jim Willie: What Do the Oil Black Market, NATO, and ISIS Have in Common?
Jim Willie; One on One -Taking Questions On the Most Pressing Matters of the Day
Jim Willie: The Fed, Yellen, US Dollar, and Negative Interest Are a Joke!
Jim Willie Explains U.S. Nuclear Threats to China & Russia Over Challenging the Dollar
FOR MORE GREAT MATERIAL FROM PETER SCHIFF:
Peter Schiff: Newest Recession Hiding in Plain View; American Dream Is Dead
Peter Schiff: Dollar Collapse Will Be the Single Biggest Event In Human History
Peter Schiff: Federal Reserve Only Delaying Total Financial Collapse of U.S. Economy
Peter Schiff: Obama “Peddling Fiction” As Unemployed Tops 100 Million People
Peter Schiff: Recovery Fantasy Persists Despite Recession Evidence
Peter Schiff: Here Comes the Great, Great, Great, Great Recession!
Peter Schiff: “Whatever Obama Was Calling Recovery… is OVER!”
CNBC Actually Admits Peter Schiff Was Right… Again (Video)
Peter Schiff: Due to the Feds Antics, the Market is Very Dangerous Now
Peter Schiff and “If The Economy Is Fine, Why Are So Many Large Retailers Imploding?”
Peter Schiff: Take a Good Look at the “New” American Dream!
Peter Schiff and Reagan Advisor: Complete Economic Collapse Immediately Ahead
Peter Schiff: Warning! Economic Storm Clouds Ready to Rain
Peter Schiff: Death of the US Dollar Is Imminent; Fed Out of Options
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@Peter Schiff.
I have arranged a one 2 one televised debate with ETF Daily News.
Why Gold and Silver Will Plunge Soon’.
Hope you accept.