Peter Schiff: Silver Is Poised to Set Records
Last week, Peter Schiff appeared on RT Boom Bust to talk about precious metals and the state of the economy. He said not only are the economic dynamics bullish for gold, but silver is also poised to break records.
At the time of the interview, gold and silver prices were both under pressure as the stock market continued to rally due to optimism for a quick recovery as governments begin lifting coronavirus restrictions. Peter noted that there was selling in most safe-haven markets, including bonds, the dollar, yen and the Swiss franc.
I think that gold got caught up in that a little bit, as well as enthusiasm for the US stock market. But remember, the only reason the US stock market is going up is because of the Fed. We have bad economic news. Now we have the riots, the looting, which is making a bad economy worse. And so the worse the economy gets, the more money the Federal Reserve prints, and so the more stocks investors want to buy. But when the Fed is creating inflation, you’re better off buying gold than the S&P 500.”
Ben Swann also appeared on the show. He talked about the possibility of negative interest rates and said they would certainly be bullish for gold.
There are some analysts who are looking at it saying that if that happens, gold could actually hit an all-time high.”
Swann reiterated Peter’s point, saying every time the Fed makes a move, it’s better for any kind of safe-haven asset because the Fed continually demonstrates it is erratic in its behavior.
It’s not based in any kind of sound fiscal policy. It’s not based on anything that deals with the future and what future economies would look like. It’s all knee-jerk reactions to prop up an economy that is almost on life-support.”
The discussion then turned to silver. The white metal just charted its best month in nine years, with the price of the white metal gaining 20.7% in May. With its dual role as both a monetary and industrial metal, a lot of analysts think it could really take off as economies around the world open back up.
Peter said he thinks gold has bottomed out, not only in dollar terms, but also in terms of gold.
Silver recently hit all-time record lows priced in gold. You could buy 120 ounces of silver for one ounce of gold.”
As Peter pointed out, silver had never been that undervalued compared to gold in over 5,000 years of human history.
Right now, that ratio is about 95-1, but that still means you get a lot of silver for one ounce of gold. And I agree with Ben. I think the silver price is going to go much higher. It could take a little while before it hits a record high. Remember, in 2011, it got up to $50 an ounce. So, we need to triple approximately to get up there now. But I think that is going to happen. And it’s going to be a general commodity bull market that’s going to include a lot of commodities and precious metals when we really start to see the consequences of all the inflation that the Federal Reserve has not only created in the past and is creating now, but even more inflation that it’s going to create in the future. That is going to manifest itself in a sharply lower dollar against other fiat currencies. That’s really going to drive the demand for safe havens like gold and silver. And we’re also going to see big increases in consumer prices, whether we see negative nominal interest rates, it’s still a coin toss. But we already have negative real interest rates, and that’s going to get bigger and bigger. Because the rate of inflation is going to keep going up, yet the Fed is going to be stuck at zero because if they raise rates to fight inflation, they collapse the bubble economy.”