Sunny Pannu, director of corporate development for Defiance Silver, a silver explorer and developer, recently sat down with Silver Institute executive director Michael DiRienzo for a wide-ranging discussion about the fantastic world of silver.
The discussion focused on the present state of the silver market and its future. Topics ranged from an explanation of how the silver price-fix works to the dynamics of supply and demand.
DiRienzo emphasized the dual nature of silver, noting that it serves as both an industrial metal and a precious metal for investment. He echoed the same themes as a prominent mining CEO did in a recent interview with Kitco News, saying both investor and industrial demand for the white metal is strong.
DiRienzo said silver coin sales are on a record pace, as are inflows of silver into ETFs. On the industrial side, it’s interesting to note that the demand for silver has been steady despite general sluggishness in the global economy. DiReinzo said this was due in part to the expanding and diversifying uses for the metal.
Silver is basically all around you. It’s contained in your automobile, your cell phone, your computer, solar panels, PDP televisions, and many, many, many medical uses. So, on the industrial side, you’ll find silver’s use not only a mainstay, but also its growing in many other areas as well.”
Peter Schiff recently participated in a panel discussion in Las Vegas with Goldmoney co-founder, Josh Crumb and CEO Darrell MacMullin, along with best-selling author George Gilder.
During the discussion, Peter got down to the very basics, answering the question: what is money? He explained the important distinction between currency and money, pointing out that gold is money. Paper backed by gold is true currency. The government prints fiat currency – which is nothing but paper backed by nothing.
Peter said the time to return to gold has arrived:
Today, in the 21st century, this is going to be the real century of gold. And it’s not going to be because governments decide to go back to the gold standard…but because the public rebelled against fiat money and reclaimed honest money – money that holds its value and in fact gains value.”
Jim Rickards has been predicting $10,000 gold. Recently, he appeared on CNBC’s Squawk Box and stuck to that prediction, saying the dynamics are in place for gold to reach that $10,000 mark.
Rickards said he thinks we are at the beginning of an extended gold bull market, possibly similar to the late 1990s when the price of the yellow metal went up 615% over a 12-year period. He conceded gold can be volatile, so he doesn’t pay as much attention to short-term fluctuations in price. But he did note an interesting fact in the wake of the recent price jumps after some major world events:
What impresses me is that gold going up immediately after the Brexit vote, or gold going up a little bit after the Turkey coup, that you can understand. Those are kind of flight to quality, fear-trade reactions. But gold didn’t go down a lot when those things were over…It’s got a very good foundation – kind of around the $1,330 level, so it seems poised to go up a lot from here.”
Earlier this year, Peter Schiff picked up on something few reported on when a former Federal Reserve president admitted the central bank created a phony wealth effect by pumping up stocks and other asset markets through its monetary policy. Several months later, analysis proved this was true, showing that 93% of the entire stock market move since 2008 was caused by Federal Reserve policy.
Today, the Fed continues to focus on propping up asset markets. Even a former Federal Reserve governor admits this is the case. Kevin Warsh appeared CNBC’s Squawk Box on Thursday and said the Fed isn’t really “data dependent” in the sense that it is looking at the overall economy. It is really market dependent.
They look to me asset price dependent more than they look data dependent. When the stock market falls like it did in the beginning of this year, they say, ‘Oh, we better not do anything.’ Stock markets are now at career highs. I suspect when they meet over the course of the next 10 days they will suggest, ‘Oh, now they look like they can be somewhat more responsible.’ I don’t like changing policy meeting to meeting based on data, or even with what the S&P 500 is doing. I like making it based on what’s happening on the real side of the economy, and that has not been very convenient over the last six to nine months.”
During an interview with Kitco News at FreedomFest, Peter Schiff said gold has entered a new leg of a bull market, and he expects the yellow metal to eclipse the highs reached in 2011:
I think this is a new leg of the gold bull market. I mean, gold’s been in a secular bull market since 2000…We had a cyclical bear market that I believe ended when the Fed hiked rates in December. And now we have the new leg of this bull market, which I think potentially could be an even bigger leg than the first leg, which saw gold go from sub-300 to close to 2,000. So, if this leg is bigger than that you can just imagine how high the price might go.”
Peter also reiterated his assertion that the Fed will not raise interest rates, and will in fact cut rates, most likely taking them below zero this time around. He also predicted another round of quantitative easing bigger than QE1, 2, and 3 combined.
An old dog may not be able to learn new tricks, but he can apparently rediscover those that are long forgotten.
In a recent interview with Bloomberg, former Federal Reserve chairman Alan Greenspan warned of impending inflation.
A return to a gold standard.
Greenspan noted that growth in productivity has ground to a halt in the US. He described the current economic malaise as stagnation. Greenspan pointed out that the money supply measured by M2 is steadily increasing and has tilted up in the last several months. This is a leading indicator of inflation:
The thing that we should be worrying about now, which we have actually given no thought to whatsoever, is that this type of economic environment ends with inflation. Historically fiat money has always ended up that way.”
Peter Schiff recently appeared on Info Wars with Alex Jones and offered a dire warning:
The world sits atop a house of cards erected by central banks…unfortunately it’s not going to end well for most people.”
Peter said the aftermath of Brexit shows just how fragile the world financial system is, pointing out that in a healthy economy Brexit wouldn’t really matter. But we don’t have a healthy economy and the post-Brexit turmoil is a sign of things to come:
More and more people, mainstream people…now realize that this is the ninth inning of this thing – this whole experiment with Keynesianism and fiat money. It is very, very late in the game. Time is running out. The clock has been ticking and ticking and it’s going to stop. The day of reckoning is getting closer.”
So, what lies ahead? Peter reiterated a prediction he made on CNBC last month – the Fed will sacrifice the dollar on the altar of the stock market, we are rapidly heading toward a currency crisis, and we can expect more Federal Reserve intervention:
Marc Faber, publisher of the Gloom, Boom & Doom Report, had some simple advice for a post-Brexit world – own some gold.
So, what caused UK voters to abandon the EU in the first place? There are many theories as to what drove the leave vote, but Faber said it really comes down to one thing – frustration with the current system.
If you go to England, London is doing very well. The financial sector in London is doing well. The asset economy is doing well. But ordinary people aren’t doing well…There is dissatisfaction with the system, and this is what the vote is about. And I believe it would be better if the arrogant bureaucracy in Brussels would be contained and reduced in size.”
Faber said economic growth around the world is slowing, and he offered the same reason Peter Schiff did on his recent Fox Business appearance – central bank intervention. In a segment quoted by Bloomberg but not included in the video clip, Faber said we can expect more of the same from central banks in the wake of Brexit. Like Peter, he thinks the Fed will use the post-Brexit turmoil to engage in even more monetary intervention:
If Brexit is used as an excuse, the central banks will print more money, QE4 in the US is on the way and the depreciation in the purchasing power of currencies will continue. In that situation, you want to own some gold.”
All of the talk over the last few days has focused on Brexit. But Peter Schiff says people are ignoring some bigger issues. On Monday, he appeared on Fox News Business and continued pounding this theme, calling Brexit a “day of reckoning,” and reiterating a point he made on CNBC’s Trading Nation – that the Fed now has an excuse to cut rates and launch more quantitative easing:
First of all, this is not about Brexit. Brexit is all the media. Brexit is the catalyst. It is like the match that lights the tinderbox. The markets are artificially propped up by central banks, by cheap money, by QE, and it’s all hype and hope. The markets never should have been where they were. And what Brexit is doing is challenging the belief that the markets have the confidence in central bankers to keep all these bubbles in the air…There’re a lot of dominoes that are going to come down. Yes, the Fed is going to use this maybe as an excuse to cut rates and do QE 4. It was looking for an excuse for a long time. But we have some real serious problems that go beyond what is happening in Britain.”