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The mainstream financial media is like a stopped clock. Every once in a while, it stumbles into being right.
Last week, we had a veteran trader on CNBC Futures Now telling everybody to buy gold as long as central banks continue their expansionary monetary policy, all the while swearing he isn’t a “gold-bug.”
This week, we have analysis appearing on Yahoo Finance showing that the Federal Reserve has created a stock market bubble.
Of course, Peter Schiff has been saying this for months. In an interview on CNBC World Now last January, Peter explained how Fed monetary policy inflated a stock market bubble and engineered a fake wealth effect. He went on to argue that the December rate hike, small though it was, pricked the balloon, causing the volatility we continue to see today:
No matter how much data you point to showing the health of the US economy isn’t as good as advertised, you will inevitably hear the refrain, “But look at the jobs numbers!”
Just the other day, Peter Schiff appeared on Fox Business and said the US economy is likely already in recession. Peter repeated his prediction that the Fed wasn’t going to raise rates again, but would instead drop them to zero. National Alliance Securities Global strategist Andy Brenner was having none of that. He insisted the Fed would raise rates at least two more times this year because the economy is doing OK. And what was his proof? You guessed it – jobs!
Peter made mincemeat out of Brenner’s argument, pointing out that most of the new jobs in the February report were part-time and low paying.
Eighty percent of these jobs are service-sector jobs, many of them are minimum wage jobs. You can’t raise a family on these jobs. Many kids can’t even move out of their parents’ houses because they can’t get a job.”
Peter Schiff locked horns with National Alliance Securities Global strategist Andy Brenner on Fox Business yesterday.
Brenner said he believed the Fed would raise interest rates at least twice this year, citing strong employment numbers as a sign the economy is doing OK.
But Peter countered, saying the US economy is already in a recession, and the Fed will have to cut rates back to zero. Peter obliterated the notion the jobs market is healthy, and pointed out that Trump and Sanders phenomenon proves the American people aren’t buying the government spin. They are not confident in the economy:
These are lousy jobs. These are low-paying jobs. These are Trump voters. These are Sanders voters. That’s why they’re there – because they have a part-time job and it’s lousy, and the pay is lousy. Eighty percent of these jobs are service-sector jobs, many of them are minimum wage jobs. You can’t raise a family on these jobs. Many kids can’t even move out of their parents’ houses because they can’t get a job.”
Shaky economic news, negative interest rates, and stock market turmoil have helped drive the recent gold rally, but an even more fundamental principle underlies the yellow metal’s surge – simple supply and demand.
As a recent CNBC report put it:
Consumers are lapping up gold at a time supply is declining, helping underpin a rally in the precious metal.”
While China’s central bank continues to buy gold, adding another 0.6% to its holdings in February, the Chinese people are also pulling money out of stocks and investing it in gold, according to Padraig Seif, chief executive of Hong Kong-based trading firm, Finemetal Asia.
Over the last several weeks, we’ve been building the case that negative interest rates are good for gold, and mainstream analysts have echoed our thoughts.
Last week, Britain’s largest bank, HSBC, issued a statement saying the longer the world’s central banks continue to experiment with negative interest rates, the better the outlook for gold. James Steel, HSBC’s chief precious-metals analyst, cited a Bank of International Settlements report to bolster his case:
How does this play out for gold? Positively we think. The imposition of negative rates is a sign of distress, which is gold-bullish. Furthermore, the uncertainty surrounding the long run impact of negative rates as outlined in the BIS report is also supportive of gold. The BIS report seems to say that negative rates have brought uncertainty, especially as regards their impact on financial intermediaries, but have not delivered hoped for gains for households and businesses. This is to gold’s benefit.”
The Silver Institute has released its latest issue of Silver News. This edition spotlights a growing silver market deficit that is expected to widen further in 2016 due to increased demand and shrinking supply.
The silver market deficit (total supply less total demand) is expected to widen in 2016, drawing down on above-ground stocks. The larger deficit is expected to be driven by a contraction in supply.”
In what would represent the first reduction in global silver mine production since 2002, mining output is projected to fall by as much as 5% year-on-year in 2016. Scrap supply is also expected to weaken further in 2016. It has been on the decline for the last several years.
This article was submitted by Addison Quale, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
Many people have been talking recently about the “war on cash.” With policymakers seriously talking about eliminating cash, it can be worrisome. But there is a way to avoid the consequences of the “war on cash. You just need to pick the right strategy.
With the endless lowering of interest rates and the possibility that they could turn negative, there is more incentive than ever for people to pull their dollar savings from banks and just hold on to the paper cash at home. After all, why risk your dollars in a bank that yields zero return or even charges you to hold your money? As a result, people are buying up safes, pulling their dollars out of the bank, and storing them at home.
They are kind of missing the point though. As this article points out, if interest rates are making you want to hold your money outside the banking system, why not just get REAL money and hold it outside of the banking system? Why not just buy physical gold and silver coins and bars? If you are going to buy a safe, THAT’S what you should be storing in it.
Veteran trader Dennis Gartman appeared on CNBC Futures Now yesterday and he made it clear right up front that he is not a “gold bug.”
I’m not a gold bug. I don’t like the gold bugs. I’m not a believer that the world is coming to an end.”
After that disclaimer Gartman, the anti-gold bug said, “Buy gold!”
Gartman said as long as central banks continue expansionary monetary policy, the upward trend in gold will continue. And there is every indication that negative interest rates and quantitative easing will continue indefinitely. The stimulus the European Central Bank announced this week will last well into the future. As Bloomberg put it, “The ECB’s new measures have just entrenched policies designed for crisis times into the next decade.”
This article was written by Justin Spittler and originally published by Casey Research. Any views expressed do not necessarily reflect the views of Peter Schiff or SchiffGold.
Have you heard of “negative interest rates?”
It’s become a phenomenon with economists and the media. There’s a good chance you’ve read an article about it. But I’m writing to tell you something about negative interest rates you haven’t heard. You certainly won’t hear about it in the mainstream press.
What’s coming at you is a historic event. It’s something our grandchildren will hear stories about…much like the Great Depression or the Cold War.
What’s coming could send the price of gold much higher in the coming years. If you know what’s coming, it could mean the difference between having lots of free cash in retirement or barely getting by. To understand the gravity of this moment, let’s cover one of the most bizarre ideas in the world…
