FOMC Minutes Confirm Peter Schiff’s Forecast: No Rate Hike in September (Audio)
After the Federal Open Market Committee’s meeting yesterday, the markets finally started to wake up to the fact that Janet Yellen’s Federal Reserve has no clue when or how it will raise rates. Analysts are starting to realize what Peter has said before – how will the Fed deal with the next recession if rates are stuck at zero? Of course, nobody but Peter is pointing out that a fourth round of quantitative easing is the Fed’s only solution.
The price of gold moved up on the news, while stocks were choppy. As usual, Peter Schiff took the time to dig into the latest economic data that reveals the economy is in no condition for the Fed to raise rates in September, let alone this year. This is just one of many reasons why now might be the perfect time to invest in physical gold.
Case in point was the Empire State Manufacturing Index that came out earlier this week on Monday. This is for August. Last month in July, that index was 3.86%, which is a really low number. The consensus was for a slight improvement to 4.75%. That’s what everybody thought. Well we actually got minus 14.92%… It wasn’t even in the realm, anywhere close. The lowest forecast that anybody made was 3%. Positive 3%.”
Highlights from the podcast:
“Today we got the official Federal Open Market Committee (FOMC) minutes, which were released at 2 o’clock this afternoon… This is the last look inside the FOMC members before their September meeting, when everybody is convinced that they are about to raise rates. Although everybody was convinced until just before 2 o’clock this afternoon, when all of the sudden a lot of people began to question that narrative and now we’re pushing back the expectations to December.
“Prior to the release of these minutes, the price of gold was up about $10-11. Silver prices were up as well, maybe 30 cents or so. Despite the fact that people were anticipating the possibility of some very hawkish comments coming out of those FOMC minutes. Gold prices are now trading at a more than 1-month high. We ended up about $15-16 on the day. We added to our gains after the FOMC minutes were released… The fact that we’re at more than a one month high in the gold price, now above $1130, we’re well over $50 from the lows. This rally happened against the backdrop of extreme negative sentiment, crazy bearishness like I’ve never seen before. It’s a very good indicator that maybe this was it. It was the capitulation and we’ve seen the lows. It’s a little premature to make that statement conclusively, but I think there’s some strong evidence that suggests that we’ve seen the low in this cycle. Also, silver which was up about 40 cents today – what’s more significant is that it was down 50 cents yesterday. It didn’t quite close down 50 cents yesterday, maybe a little bit less… Followed by almost as huge a rise today. Big drops in the silver market have happened many times over the last several years. But what’s unique about this big drop is the recovery the next day. I don’t think I’ve seen a big drop where silver pretty much recovered everything it lost the following day. Normally it goes down again. Maybe this is the type of action that supports a turn in trend…
“There are a lot of people that are saying the only reason the Fed wants to raise rates is to get them off zero, so that they have some ammunition, they have some dry powder, to fight off the next recession. People will acknowledge that this recovery is long in the tooth. It’s already well beyond the duration of the average recovery, even though it’s much weaker than the average. In fact, it’s the weakest recovery ever. It is still on the long side. We’re getting ready for a recession. People are saying the Fed wants to be prepared. It doesn’t want to get caught with its monetary pants down. It wants to make sure it reloads the gun, raise interest rates, so it can cut them for the next recession. Which makes no sense…
“Think about it. They’re raising rates just so they can cut them? The irony is if they really are worried about a recession coming and they want to raise rates higher so they can cut them when it starts, if they raise them now in order to prepare for it, it’s going to happen that much quicker. Raising rates will accelerate the recession that apparently the Fed is so worried about that it doesn’t want to be caught with rates at zero when it starts…
“[The Fed doesn’t] want to tell us exactly what we need [for a rate hike], because then we’ll know we’re there, and then we won’t get the rate hike, so they’ll lose their credibility. So they have to be sly. Whatever the improvements are, they’re just not good enough. Of course, the problem is they don’t want to acknowledge how bad things are getting…
“Case in point was the Empire State Manufacturing Index that came out earlier this week on Monday. This is for August. Last month in July, that index was 3.86%, which is a really low number. The consensus was for a slight improvement to 4.75%. That’s what everybody thought. Well we actually got minus 14.92%… It wasn’t even in the realm, anywhere close. The lowest forecast that anybody made was 3%. Positive 3, not even negative 3. Positive 3. We got minus 14.92%. That was the lowest number since April of 2009, during the Great Recession… This is the biggest miss of expectations since 2010. This is the kind of data we’re getting… How does this show we’re getting close to the mythical place the Fed can raise rates? …”
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