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POSTED ON January 17, 2017  - POSTED IN Key Gold Headlines

The geopolitical uncertainty of Brexit and Trump’s approaching inauguration are sending precious metals on an early rally for the year.

Britain’s Prime Minister Theresa May is clarifying her plans to ensure the UK makes a clean break from the EU’s single market, expressing the desire to remain a “good friend and neighbor in every way,” according to Bloomberg. However, her diplomatic tone is also backed by warnings about any attempts to punish the UK for its decision to leave the European bloc.

POSTED ON January 16, 2017  - POSTED IN Videos

Peter Schiff appeared on MSNBC’S “Up with Chris Hayes” with a panel of other experts and pundits to debate the Fed’s role in the housing bubble, Republican views on the economy, and the effects of inflation on prices.

Peter had a spirited exchanged with Karl Smith, Economics Professor from the University of Carolina, on the causes of the housing crisis. Smith took the typical stance of blaming complicated investment instruments for creating confusion in the market. Peter countered with the primary cause stemming from a combination of artificially low interest rates and Fannie and Freddie’s role in making cheap mortgages available to too many people who couldn’t afford them.

None of the panel, save Peter, expressed worry about the impact the national debt is having on the ability to raise interest rates, and what low interest rates are doing to the economy. Peter pressed the point that raising interest rates would be a bitter, but necessary, pill to keep us from falling off the fiscal cliff.

“The real fiscal cliff is not this phony one that we’re talking about at the end of the year when the budget deficit might actually come down a little bit. The fiscal cliff is when interest rates skyrocket and the government can’t afford to pay the interest on the enormity of the debt that’s been accumulated the last few years,” Peter said.

Smith lobbed a last shot at Peter asking, “When are we going to have inflation?” For Smith and other ivory tower academics, the impact and existence of real inflation may seem mythical, but for Americans trying to make ends meet, it’s an all too real aspect of their daily lives, something Peter defended in his response: “Have you been to a supermarket lately?” It seems the only inflation liberal economists believe in is the kind expanding their own egos.

Highlights from the show:
“You don’t create economic growth or jobs by printing money, what you do is create bubbles and inflation. You have to remember it was the artificially low interest rates that were the principal cause of the housing bubble, and, therefore, the Fed is to blame for the financial crisis that ensued. Right now we don’t need more cheap money. That is preventing the economy for restructuring along the lines that would actually give us lasting economic growth. We need much higher interest rates. Of course, that’s going to bring on some short-term pain, but unfortunately, we need that to get the long-term gain.”

“There’s more misery if we don’t bite the bullet and we didn’t follow Andrew Carnegie’s advice during the 1920s. Hoover ignored it; he did what Obama’s doing. He did what Roosevelt was doing. That’s why the depression lasted through the end of the Second World War.”

“The real fiscal cliff is not this phony one that we’re talking about at the end of the year when the budget deficit might actually come down a little bit. The fiscal cliff is when interest rates skyrocket and the government can’t afford to pay the interest on the enormity of the debt that’s been accumulated the last few years.”

“Most Republicans don’t understand how bad it’s going to get when the Fed does the right thing after having done the wrong thing for so long. When they finally let interest rates go up, it’s going to be very problematic for a country that is so over-leveraged. Banks are going to fail. The government is going to have to default on a lot of its obligations.”

“I don’t think that people understand the Fed’s role, how instrumental it has been to creating all the macroeconomic problems that are plaguing us right now. By keeping interest rates too low for too long it has screwed up the economy. We don’t save enough. We don’t produce enough. We have too many people working in the service sector, in government, in banking, in retail, and in healthcare and education. Meanwhile, we can produce the things that we need to consume. We have 50 billion dollar a month trade deficits because this economy doesn’t work anymore because all the resources are misallocated. It’s going to be painful to put them back together. But if we don’t do it, we’re going to have a real crash in this country that’s going to make 2008 look like prosperity.”

“Inflation is going to run out of control. It’s going to devastate the economy. The Fed has no tools now to contain it. If they have to raise interest rates in order to fight the inflation Genie that they’ve let out of the bottle, the US government is going to have to default on its bonds. We’re going to have failures in the banking system without any ballot. It’s going to be a much bigger collapse than what happened in ’08.”

“Inflation is going to run out of control. It’s going to devastate the economy. The Fed has no tools now to contain it. If they have to raise interest rates in order to fight the inflation Genie that they’ve let out of the bottle, the US government is going to have to default on its bonds. We’re going to have failures in the banking system without any ballot. It’s going to be a much bigger collapse than what happened in ’08.”

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POSTED ON January 13, 2017  - POSTED IN Key Gold Headlines

Fed Up Friday: Gold Still Strong Investment, Regardless of FOMC Direction

This week marked the full release of the 2011 FOMC transcripts, revealing troubling details from the meeting notes. As the Federal Reserve looks to see a big shakeup in 2017, gold is looking at a win-win situation. Learn more in this week’s Fed Up Friday.

Three Elements that will Stir Up the Fed in 2017

Trump’s administration represents a changing of the guard in Washington, and the Fed is not immune. Out of everything expected, a few key changes will really shake things up for the FOMC. First, in 2017 we’ll be getting 3 new voting members. Their records seem to lean more dovish than the counterparts they’ll be replacing, which may influence the number of rate hikes for 2017.

Second, the Fed’s plan shows that they don’t feel the need for fiscal policy to achieve their monetary goals. From their perspective, the nation has reached peak employment – (regardless of how many are actually underemployed) – and fewer barriers are in their way to increase inflation.

Finally, Trump will be selecting new members to fill two vacant slots on the Fed Reserve Board. That and Yellen’s term expiring in early 2018 should be the big moves for building a new monetary regime.

Fed Up Friday

POSTED ON January 12, 2017  - POSTED IN Key Gold Headlines

While many small business owners are celebrating Barak Obama’s exit as Commander-In-Chief, Peter Schiff is skeptical about Trump repealing enough Federal regulations to help return us to a free market. Small business owners face many more problems finding financing and handling business regulations than corporations.

POSTED ON January 11, 2017  - POSTED IN Key Gold Headlines

Donald Trump’s press conference gave gold a rollercoaster ride on Wednesday as prices hit a 6-week low ahead of the president-elect’s speech, only to rally back to its highest point in 7 weeks. Spot gold moved from $1,176.94 to $1,198.40, the highest since late November.

donald trump looking into the camera

Investors made a move into the yellow metal after the dollar took a tumble, according to Reuters. Stocks saw a negative move as well. Pharmaceutical stocks lead an overall decline in the market after Trump made comments about drug companies “getting away with murder” by price gouging their customers.

POSTED ON January 10, 2017  - POSTED IN Key Gold Headlines

In his weekly radio address to his citizens, Venezuela’s post-Hugo Chavez leader, President Nicolas Maduro, announced he would raise the minimum wage for the fifth time over the last year. The bump puts the minimum salary at 40,683 bolivars or $60 per month, according to Reuters.

The new minimum wage represents a 322% cumulative increase since February 2016 and is an attempt to protect citizens’ wages from “mafia attacks,” according to Maduro. The President attributed his country’s woes to anti-socialist political opponents and capitalists who have created an “economic war” to foment disorder and unrest.

teeth with a bolivar

POSTED ON January 9, 2017  - POSTED IN Key Gold Headlines

In his latest podcast, Peter Schiff illustrates the important differences between cryptocurrencies like Bitcoin and a gold transaction account like Goldmoney when it comes to convenience and preserving wealth. Essentially, it comes down to the technological risks and the price volatility of the underlying currencies. Here’s a breakdown of Peter’s major points:

gold hand coming out of a computer

Convenience

One advantage cryptocurrencies have over physical precious metals is the ease of transaction, but it comes at a cost. Bitcoin is a completely digital currency, so you can spend or transfer it just like cash. However, with a Goldmoney account, gold owners can now enjoy the same convenience, whether they’re depositing, sending or receiving transfers through an app or paying with a Goldmoney MasterCard.

“It’s not about Goldmoney being the substituted for Bitcoin,” Peter explains. “It’s gold itself. Gold is what you want to own, not Bitcoin. Goldmoney makes gold as convenient to use as Bitcoin. In fact, I think more convenient to use when it comes to commerce because you can deposit some of your gold in your Goldmoney account and now it takes all of those liquid characteristics that so many people like about Bitcoin.”

POSTED ON January 6, 2017  - POSTED IN Key Gold Headlines

This week, the national debt edged closer to $20 trillion, double what it was at the beginning of Obama’s presidency. The FOMC minutes were also released from their latest meeting. As it turns out, the Federal Reserve just doesn’t know how Trump’s incoming presidency will affect the economy.

Trump is Stumping the Federal Reserve

Some are calling it a “climate of uncertainty” for the economy this year, and the Fed doesn’t seem to know what to expect from Trump when he takes office in a few weeks. FOMC expectations are high that the president-elect’s tax cuts and fiscal spending will goad inflation to rise, increasing the need for interest rate increases. At this point, some Fed members can’t decide if Trump’s going to grow the economy or balloon inflation. Given the abundance of uncertainty in European politics and policies at home, the Fed’s path to three rate increases this year will be a rocky one.

Fed Up Friday

POSTED ON January 5, 2017  - POSTED IN Original Analysis

dan_kurzDan Kurz is a CFA with over two decades experience working in Zurich, Switzerland as a thematic strategist for Credit Suisse CIO Office. Dan’s site, DK Analytics, offers deep and broad analysis at the macro and micro level.

 

Gold per troy ounce (toz or oz) in $ terms has slumped by a whopping 11% since the November 8, 2016 election. The dollar’s trade-weighted value, meanwhile, has risen by 4% over the same period, while the value of the 10-year Treasury has fallen by a considerable 6% and the S&P 500 has rallied by 6%. What happened? In a nutshell, perception changed. Traders bet on more fiscal stimulus-based growth, lower corporate taxes, higher federal deficits, higher nominal interest rates, and higher inflation, so stocks went up, bonds went down, and the buck went up.

POSTED ON January 4, 2017  - POSTED IN Key Gold Headlines

Oil prices rose and the dollar weakened Wednesday as gold futures maintained a three-week high even as the release of FOMC minutes seemed to suggest a more aggressive rate hike schedule was being considered, according to MarketWatch.

After its vote last month to raise the Federal funds rate 25 basis points, the Fed estimated three quarter-point rate increases for 2017. However, the FOMC minutes suggested there were a “number of risks” that would necessitate a “different path of policy” than they expected. One of those “risks” was clearly Trump’s stimulus plan, and the “uncertainty regarding fiscal and other economic policies.”

gold laid out to make a road