Peter Schiff: Gold in the Crosshairs
In his latest commentary, Peter Schiff encourages gold bears to stay focused on the big picture: gold is moving from indebted nations to emerging markets that are reducing their dependence on US dollar reserves.
“In the opening years of the last decade, most mainstream investors sat on the sidelines while “tin hat” goldbugs rode the bull market from below $300 to just over $1,000 per ounce. But following the 2008 financial crisis, when gold held up better than stocks during the decline and made new record highs long before the Dow Jones fully recovered, Wall Street finally sat up and took notice. The new devotees helped to push gold to nearly $1,900 by September of 2011. For the next year and a half it held relatively steady, trading mostly between $1,500 and $1,800 as more mainstream investors caught the fever. But now it appears that the brief love affair is at an end. It was really only a flirtation as the two were never a good match in the first place. Gold’s new suitors never understood the fundamental case for gold and now they are turning their affection back to their true love: U.S. equities.
This is creating a brutal season for gold investors. The metal is in the midst of its largest pull back in nearly five years, and as the selling has gathered momentum powerful Wall Street voices as diverse as Goldman Sachs and George Soros have declared the end of its nearly fifteen year run of dominance.”
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I don’t know. The pace at which the price has collapsed alone, makes me suspicous. I do hope though, rumours of a $1,300 floor price prove unfounded. Nevertheless, I’m happy to ride this out as the recent activity seems overblown and even a little counterintuitive?