Jessica Fung, Commodities Analyst for BMO Nesbitt Burns, explained her firm’s belief that gold has always been and will always be a safe-haven investment. Fung sticks to the mainstream perspective that the Federal Reserve is still planning to raise interest rates in 2015, though she does admit that BMO now predicts the Fed is going to push back that rate hike. It’s interesting to watch a major financial firm dance around the increasingly confused market sentiment and convoluted messages from the Fed.
Investors should take note that major financial players are starting to publicly admit that gold is an essential investment regardless of the supposed strength of the US economy or dollar – exactly what Peter Schiff has been saying for years.
Peter Schiff appeared on RT last night to discuss Janet Yellen’s testimony, the Federal Reserve’s schedule for raising interest rates, the direction of the US economy, and stock buy backs that indicate a bubble in the stock market.
After her testimony to Congress this week, the mainstream media reported that Janet Yellen has put the Federal Reserve on the path to raising interest rates. However, Peter Schiff digs into Yellen’s official testimony from this week, showing beyond a shadow of a doubt that the Fed hasn’t even begun to think about a rate hike. It’s all right there in Yellen’s official prepared remarks. Peter also addresses the ridiculous popular notion that inflation is necessary for economic growth.
James Grant, Founder of Grant’s Interest Rate Observer, spoke with Kitco about his disappointment in the current price of gold. He places most of the blame on central banking, and the market’s inability to understand the long-term consequences of monetary manipulation. However, Grant believes it won’t be long before the world wakes up to the realities of this manipulation and returns to gold as a safe-haven investment.
The gold price, is to me, the reciprocal of the world’s faith in the words, deeds of these central bankers… The lower the confidence [in central banking], the higher the gold price.
“I, for one, can’t imagine why anyone would have confidence in the doctrines of central banking, predicated as they are on the manipulation of prices. Interest rates are prices. Central banks are in the business now, more than ever, of manipulating interest rates. They are inflating asset markets. It seems to me that the world will eventually see that these policies are non-starters.”
Eric Sprott, the well-known billionaire asset manager, believes that investors need to buy gold and silver to protect themselves from the increasingly volatile currency markets. Last year, 84% of the world’s population would have made money owning gold. Sprott puts his money where his mouth is, claiming that 80% of his assets are in precious metals.
Since this January interview, the gold price has fallen in US dollars. However, Sprott is focused on the long-term picture of how the radical monetary policies of global central banks will damage the global economy. With banking policies like negative interest rates and massive money printing, the world is experiencing a completely new financial landscape. When paired with the fact that gold demand seems to be exceeding supply, he expects to see gold-backed currencies within the next decade.
Wal-Mart announced yesterday that it is going to raise its minimum wage to $9 an hour, which will affect a half-million employees. Many are praising the company and saying this will improve the lives of low-wage workers, while also providing a boost to the American economy. However, Peter Schiff isn’t so optimistic. He explained to Yahoo! Finance why Wal-Mart’s minimum wage increase isn’t necessarily a net positive for the economy.
The wage increase will cost Wal-Mart about $1 billion this year. Who knows if Wal-Mart will pass along the cost of higher wages to its customers by raising prices? More importantly, Wal-Mart will probably cut back on hiring, which means low-income Americans will have that much more difficulty finding a job.
Jim Rickards, author of Currency Wars, describes a game he plays with audiences when he speaks about gold and paper money. He presents to them US dollars, Monopoly money, and a gold coin. Then he asks, “Which of these is not like the other?”
Ivy League professors nearly always rationalize that the dollars are different, because they are a store of value while the other two cannot serve as real money. However, Rickards reminds us that the US dollar has lost 95% of its purchasing power since 1913.
Five-year-olds, on the other hand, instantly recognize that the gold coin is different. They probably don’t understand that gold has been a form of money for thousands of years, with a relatively stable value that entire time. Nevertheless, you have to wonder about the state of our basic economic knowledge when the instincts young children are more accurate than the reasoning of elite academics.
Gold surged more than 10% in January, but lost a lot of ground on news of continued strong jobs growth. Peter argues that Obamacare is skewing the employment data. To avoid the additional costs of full-time employees, businesses are cutting workers to part-time hours while hiring additional staff. But “job sharing” is a double-edged sword that will mean even bigger lay-offs when the market retrenches.
RT asked Marc Faber why he invests in physical gold. Faber emphasized that nobody should put all of their assets into physical precious metals. However, if investors want to protect themselves from the volatile bubbles created by the Federal Reserve since the late 1990s, then gold and silver are essential assets. Precious metals are Faber’s “iron reserves,” and he doesn’t worry about short-term price fluctuations.
USAWatchdog’s Greg Hunter spoke with Peter Schiff this week. They discussed the intricate problems of Europe and Greece, the phony economic recovery in the United States, and how investors can protect themselves when wars break out. Peter also responded to the ongoing negative sentiment of gold bears who continue to predict a lower gold price despite evidence to the contrary.