In his 100th podcast, Peter Schiff looks at the latest lousy data from the labor market. Last quarter’s wage growth is the worst since the government started recording it in 1982. He also discusses the disparity between the paper and physical gold markets, and the reactions his brokerage and metals clients have had to the growing bubble of the US dollar.
You have more paper gold trading relative to the actual physical supply than ever before… But in the real, physical [gold] world, the actual buyers – it’s skyrocketing. The mints are running out of supply. Orders are getting backed up… Nobody is calling to sell. Everybody who’s calling is calling to buy more… On the other side of the coin, people who have brokerage accounts and asset management accounts, most of the calls I’m getting now are from clients who are wanting to sell…
“My Canadian clients who hold the same stocks as my US clients, their statements are going up. Because their statements are in Canadian dollars… But people should react the same way, because this is a bubble in the dollar. This is a bubble in confidence in the US recovery that doesn’t exist. Confidence that the Fed has finished QE, when they’ve only just paused. Confidence that they’re about to embark on a rate tightening cycle, when I don’t think we’re anywhere near that…”
This article is written by Peter Schiff and originally published by Euro Pacific Capital. Find it here.
While the world can count dozens of important currencies, when it comes to top line financial and investment discussions, the currency marketplace really comes down to a one-on-one cage match between the two top contenders: the US dollar and the euro.
In recent years the contest has become a blowout, with the dollar pummeling the euro into apparent submission. Based on the turmoil created by the European debt crisis and the continuing problems in Greece and other overly indebted southern tier European economies, many investors may have come to assume that euro boosters will be forced to ultimately throw in the towel and call off the entire experiment, thereby leaving the dollar completely unchallenged as the champion currency, now and for the foreseeable future. This is a stunning turnaround for a currency that was seen just a few years ago as a credible threat to supplant the dollar as the world’s reserve.
This article was written by Dickson Buchanan, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
The month of July has seen the most intense demand for physical gold and silver since April of 2013, setting numerous records for the year. On the heels of the spectacular drop in spot prices, buyers of physical metal have come out in droves. In fact, available supply is hardly able to keep up with the demand for immediate delivery of metals.
This betrays a fundamental reality about the market for physical gold and silver bullion that many investors – even regular buyers of bullion – are not aware of. There simply is not much supply available at any given time. In other words, gold and silver products spend very little time sitting on the shelf waiting to get bought, making inventory very tight. As such, in times of intense demand, the entire available supply can be bought up in a matter of weeks, or even days. This results in higher product premiums and extended shipping times.
This is exactly where the market is for physical metals is right now. Consider what has happened in just the last couple of weeks.
On Friday, the Federal Reserve accidentally published the economic forecasts of its staffers, which normally remain private. The numbers reveal that the Fed is painting a much rosier picture of the United States economy than they publicly admit. Peter Schiff dug into these numbers during his podcast published on Saturday. Use the chart below to follow along with Peter’s analysis. Peter also discusses the gold market, which he believes is setting itself up for a massive short squeeze.
This article is written by Peter Schiff and originally published by Euro Pacific Capital. Find it here.
In his July 17th blog post, “Let’s Get Real About Gold”, author and Wall Street Journal columnist Jason Zweig likened investor interest in gold with the “Pet Rock” craze of the 1970s, when consumers became convinced that a rock in a box would provide continuous companionship, elevate their social standing, and give them something hip to talk about at parties. Zweig asserts that investor faith in gold, which he argues is just another inert mineral with good marketing, is similarly irrational, and has kept people from putting money in the much more lucrative stock market.
First off, Zweig’s comparison of gold to equities as an investment vehicle sets up a false dichotomy. Gold is not an investment. It is, as Zweig indicates, nothing but a rock. But it is a rock that is extremely scarce, with highly desirable physical properties that have resulted in its being used as money for all of recorded human history. As a result, it should not be compared to stocks or real estate, but to other forms of money, such as any one of a number of fiat currencies now in circulation. Ironically, in a world awash in fiat currencies that are created at an ever increasing pace, and whose value is solely derived from faith in the issuing state, gold is the only form of money whose value does not require a leap of faith.
Under the original Coinage Act of 1792, drafted by Alexander Hamilton, the penalty for debasing a coin was death.
Under that law, President Lyndon B. Johnson was guilty of a capital offense.
Fifty years ago today, Johnson signed the Coinage Act of 1965, setting into motion five decades of currency debasement that continues today. Under the law, silver dimes and quarters would no longer contain silver. Instead, the Treasury would mint coins made of “composites, with faces of the same alloy used in our 5-cent piece that is bonded to a core of pure copper.”
Today, we call pre-1965 dimes and quarters “junk silver,” but we really should be calling the modern coins junk, because that’s what they’re worth.
The following article was written by Keith Weiner of Monetary Metals and recommended by our Precious Metals Specialists. Any views expressed do not necessarily reflect the views of Peter Schiff or SchiffGold.
Lions, Tigers, and Gold Bears, Oh My!
We can’t count how many articles we saw today, bemoaning gold going down. The price action is bad for gold (whatever that means). China underreported their gold holdings. No, China doesn’t care about gold. No they want the price to go down so they can buy it cheap. No, they want to convince the IMF to include the yuan (which has capital controls, by the way) into the SDR basket. No, China really intends to revalue gold (whatever that means).
This is your brain on dollars. Any questions?
In his podcast released yesterday evening, Peter Schiff explains why the price of gold plunged on Sunday night. More importantly, he reminds investors why gold is not a faith-based asset, like fiat money. He also reviews China’s relationship to gold, and compares the current market to the last time a bear market in gold ended.
I am convinced, when his market turns, it’s going to be vicious. When the people who have been selling their gold try to buy it back, it isn’t going to be there. Because the people who have been buying into the selling… they’re not going to turn around and sell it. When the speculative sellers are gone, there are no sellers left… I think the market is going to go up even faster than it has come down…
This article is written by Peter Schiff and originally published by Euro Pacific Capital.
While Greece is now dominating the debt default stage, the real tragedy is playing out much closer to home, with the downward spiral of Puerto Rico. As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency. But the damage done to the Puerto Rican economy by the United States has been far more debilitating than whatever damage the European Union has inflicted on Greece. In fact, the lessons we should be learning in Puerto Rico, most notably how socialistic labor and tax policies can devastate an economy, should serve as a wake up call to those advocating prescribing the same for the mainland.
The US has bombed the territory of Puerto Rico with five supposedly well-meaning, but economically devastating policies. It has:
1. Exempted the Island’s government debt from all U.S. taxes in the Jones-Shaforth Act.
2. Eliminated U.S. tax breaks for private sector investment with the expiration of section 936 of the U.S. Internal Revenue Code.
3. Required the nation to abide by a restrictive trade arrangement.
4. Made the Island subject to the U.S. minimum wage.
5. Enabled Puerto Rico to offer generous welfare benefits relative to income.
Demand for physical gold and silver has surged over the past two months, with mints around the world reporting robust sales in the midst of the Greek crisis and warning signs in other economies.
According to US Mint figures, the sale of 1-ounce American Gold Eagles more than quadrupled, jumping from just 13,500 coins sold in May to 62,500 in June. The pace has only accelerated in July, with the US Mint reporting 69,000 Gold Eagles sold to date. This is the highest level of sales all year.
Last week, US Sliver Eagles completely sold out.
