Peter Schiff: Gold Is Going to Go Ballistic (Video)
Ten-year Treasury yields flirted with 3% this week, hitting a four-year high of 2.95. Does the Treasury yield hold the leash of the stock market?
Peter Schiff talked about it in an interview with Liz Claman on Fox Business, saying the Fed has kept rates artificially low for years, but given current conditions, it’s inevitable that the market will lift rates toward “normal.”
The result?
Gold is going to “go ballistic.”
It’s not just the 10-year. Go all the way out to the 30-year. Rates are going a lot higher. You have to remember, the way the Federal Reserve was able to prop up the market and prop up this economy was by keeping interest rates artificially low. And they’ve succeeded in doing that for a long time. But now, the markets are going to raise interest rates back up to where they should be – and they should be a lot higher – because we have record debt, record budget deficits coming, record trade deficits, a 10-year low in our savings rate. We have to borrow tremendous amounts of money and the world is not going to lend it to us at these ridiculously low interest rates. They are going to normalize quickly.”
Claman pointed out that yields are slightly higher now than they were in ’08. “Why does this number engender so much fear?” Peter said because it’s going to go higher.
Look, we have more than twice the debt we had in 2008. Remember, when we were doing trillion dollar deficits, under Obama, the Fed was doing a trillion dollars a year in QE. So now, the Fed is doing no QE, and the Fed is actually threatening to shrink its balance sheet, which means the Treasury is going to have to sell extra bonds to pay off the Fed. So, the amount of debt that we’re going to be selling is unprecedented, so supply is going to go off the charts, so price rates have to go up. And the markets don’t understand exactly how high rates are going to go.”
Trump isn’t helping the situation. Claman rightly pointed out the president criticized the debt when he was campaigning. Peter agreed, saying Trump criticized a lot of things as a candidate.
Now he’s embracing everything he criticized, including the big, fat, ugly stock market bubble. You know, I believe that bubble popped. I believe we are now in a bear market. It’s not a correction unless the Fed decides to blow more air into it, which is still what I believe is going to happen. QE4 is coming.”
The Fed is talking about raising rates and reducing its balance sheet. Peter has been saying for months this is all talk. Earlier this week he said Trump is no Reagan and Jerome Powell is no Volker. He reiterated that point to Claman, saying he thinks QE4 is the endgame.
The Fed is going to sacrifice the dollar to prop up the stock market, to try to prop up the economy.”
Peter said all of this is bullish for gold and bearish for the dollar.
You know, nobody can figure this out. The mainstream is scratching their heads. They don’t know why yields are rising and the dollar is falling. It’s because of a loss of confidence in the Fed. It’s because of rising inflation. Rates are not rising for the right reasons. They’re rising for the wrong reason. And Trump is wrong. You don’t stimulate the economy by cutting taxes. You stimulate the economy by shrinking government.”
Peter said investors need to get out of US stock markets. Get out of the US bond market. Get out of the US dollar. Where should they go?
One place is gold.
Gold is going to go ballistic when the markets figure out what I already know.”
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