Gold Is Ready to Break-Out in Global Currencies (Audio)

In his latest podcast, Peter Schiff reviews the most recent negative US economic data and the turmoil in the currency markets. He spends some time looking at the price of gold in other currencies, and what a break-out in these currencies could mean for gold’s long-term price. He also talks about the most dangerous bubble in the global economy: the faith and confidence in fiat currencies and central banking.

Highlights from Peter’s podcast:

“We got a lot of economic news that come out on Wednesday and Friday. Almost all of it bad, which again is part for the course. We get bad economic news, and then nobody seems to care. We got the initial jobless claims that came out on Wednesday… Initial jobless claims rose a greater-than-expected 17,000. 298,000 is where they stand, just below 300,000. But what’s more significant to me is that if you look at a trend, we have had falling unemployment claims now going back for several years. That trend, to me, seems to be over if you look at the chart. We’re back at levels that we had 6, 7 months ago on claims. We are no longer falling… I think you are going to see a substantial pick-up in unemployment claims in 2015…

“On Friday, we had the trifecta. We had three reports, three of them were bad. All three. First, we got December PMI, the manufacturing index, dropping for the fourth consecutive month to 53.9. That was the lowest level since January 2014…

“Construction spending for November unexpectedly – again, there’s that word – fell 0.3%. It’s the first monthly drop since June. Analysts had been anticipating a 0.5% gain, but instead they got a 0.3% decrease.

“Probably the weakest number of them all was the December ISM. That index fell to 55.5. It was supposed to fall a little, instead it fell a lot. This was the lowest level since June, and it was the biggest miss of expectations since January…

“All the coverage that I’m hearing on the news about the economic numbers coming in weak, is all ‘the glass is half full.’ People are saying, ‘Well, yes, the numbers are lower than we expected, but the economy is still growing. Yes, it’s growing a little more slowly than we thought, but it’s still growing.’ If we’re going to go from growth to contract, we have to slow down first. Yet everybody is assuming that these trends that are now entrenched are not going to continue. If you see this sharp deceleration in growth, how do you know that it is not a prelude to an actual contraction? But everybody is just jumping to the opinion that it’s not…

“One significant development over the last couple of trading days is the gold market. The price of gold was relatively firm. Gold stocks, in particular, the last trading day of 2014, and the first trading day of 2015 – gold stocks were up. In fact, gold stocks were probably the best performing stocks during those couple of days…

“Think about the year for gold. Because gold in 2014 was basically flat. It might have been down slightly, not even 1% against the dollar. It was pretty much a flat year for gold in dollar terms… But if you remember, all of the forecasts that were being made by the supposed experts at Goldman Sachs and Societe Generale, they were looking for gold to be $1,050, $1,000, $900-and-something. Everybody was looking for a terrible year for gold. Instead, it hung in there. In fact, if you compare gold to other assets, it did quite well…

“You were better off buying gold than stocks and bonds in just about every other country on the planet. The gold market outperformed all the European stock markets. Most of the major stock markets did not beat gold, hardly any of them did. Also, the currencies. Gold is not a currency, gold is money. But if it were a currency, I think it was maybe the second strongest currency of 2014, behind the US dollar. People in any country, if they put their money in gold, are much better off than if they left their money in their bank account or if they invested their money locally in the stock market or the bond market…

“We’re very close to significant break-outs in some key currencies, like the euro and the Swiss franc… If we break out of those levels, I think that is very, very significant. I don’t think you’re going to have gold in major bull markets in every currency and it not include the US dollar. So if we do get a big break-out in gold in terms of these other currencies… I think this is going to be very, very bullish for gold…

“The real bubble is in confidence. It’s all one big con game, and people just have this incredible confidence in central bankers and in fiat currency and in governments and their abilities to micro-manage and stimulate the economy. That is the bubble that needs to prick, where people completely lose faith and confidence in these institutions and in the fiat money that they generate… When this bubble bursts, there are no more rabbits they can pull out of the hat…”