Yellen’s Backtracking, America’s Next Recession, and Silver Opportunities (Video)
Peter Schiff got right to the point with Alex Jones last week: Obama is just trying to finish out his term without any major disasters. At this point, Peter thinks the Federal Reserve just might raise interest rates a hair this month, but then immediately lower them again when it becomes clear the economy is in a recession in 2016. Meanwhile, he believes the inclusion of the Chinese yuan in the IMF’s basket of reserve currencies signifies the end of an era for America on the global economic stage. Peter thinks buying gold and silver is a great way to profit from the coming crises, and he explained why he thinks silver may be an even better investment than gold.
Highlights from the interview:
“I think Obama is just trying to finish out his term without any major disasters happening. That’s probably the most important thing for him. Then if something happens after he’s gone, well – it’s somebody else’s fault. The real problems that I’m paying attention to are what’s happening in the economy. Because those are manmade disasters. Those are disasters that we’re really bringing about on our own. We have more control there. I’m more concerned with the damage being done to our economy from within than I’m concerned about the threats from without. And that’s unfortunate, because the federal government is there to protect us from our international enemies, but instead we need protection from our domestic enemy, which is the federal government…
“The government spends so much resources, so much time doing the things it shouldn’t do, that there’s not much left over to actually do the things they’re supposed to do. The government is there to preserve and protect our liberties, and unfortunately our liberties are at threat from the government…
“Today we got the non-farm payroll number, which is all anyone talks about. They don’t talk about the trade deficit that came out today too, which was much worse than expected. In fact, our exports were at the lowest they’ve been in three years. In fact, our trade deficit with Mexico just hit a three-year high. They revised up last month’s trade deficit, made it worse than they originally reported. So all of this is going to weigh on GDP. In fact, earlier in the week, we got the ISM Manufacturing number. It came out way below estimates: 48.6. The biggest drop in more than six years. The last time the ISM was this low was during the 2008-2009 Great Recession. The only time it almost got this low was back in 2012, just before the Fed launched QE3. So manufacturing is already in a recession…
“Everyone is still convinced the Fed is about to raise interest rates in a week and a half. And you know, they just might do it now, because Janet Yellen has basically assured everybody that it doesn’t matter if they raise rates now. What matters is what they do afterwards. She’s basically trying to take the sting out of it, by making this the most dovish rate hike ever, by saying, ‘Look, even if we raise rates, we’re not going to raise them much in the future. And it’s going to be a long time before we raise them again. But don’t worry, we’ll go very slowly.’ I think they’re going to go so slow that it’s going to be one and done. If they raise rates, the next thing they’re going to do is cut them back down to zero, because we’ll probably be in a recession next year or close enough to it that the Fed tries to delay the onset of that recession…
“Ever since the stock market was tanking in September, when they were afraid of the rate hike, Janet Yellen has been doing everything she can to backtrack. The only reason she might raise rates, despite the fact that the data she claims to be depending on is awful, is because she feels that her credibility will be lost if she doesn’t. She only wants to raise rates to prove that we could do it. It’s to try to send some kind of message of confidence, that the Fed is confident enough to raise rates, even though they’re not confident at all. If they were confident, they would have raised rates years ago…
“[The Chinese yuan being added to the IMF’s basket of reserve currencies], for Americans, signifies the end of an era. I think it’s the beginning of a larger move that will elevate the value of the yuan relative to the dollar. I think anything that threatens the dollar’s dominance as our reserve currency is a threat to our phony standard of living. I mentioned earlier that we had a larger than expected trade deficit. Our trade deficits are enormous. What we do is we give the world the paper that we print for the goods that they produce. And it’s not an even swap. We get things of real value, and they just get little pieces of paper. As the world wakes up to reality, they’re not going to want our paper anymore. They’re going to realize that it’s not worth the paper it’s printed on. Then it’s going to be impossible for us to import the things that we need. It’s also impossible to produce the things that we need, because we don’t have the productive capacity. We don’t have the factories anymore. We don’t have the workers who know how to operate the machines, assuming that we had them… What’s going on with the Chinese yuan is a step in that process…
“Regardless of what the Fed does – whether they raise by 25 basis points or not – gold prices are going higher, because it’s already fully discounted into the market. I believe more rate hikes than are actually going to be delivered have been built into the market. Lots of people have shorted gold on anticipation of a rate hike. They’re buying the fact beforehand…
“While everybody is pretending that everything is great in the US, the economic data is actually stronger now in Europe than it is in the United States. That’s how bad our data is. Our Federal Reserve is talking about heightening, even though our data is weaker than the European data, and they’re talking about more stimulus. So I think what is going to surprise everybody next year is the fact that the Europeans have to slam on the brakes. We’re the ones that are going to be stepping on the monetary gas. So the dollar is going to be the weak currency, and gold is going to be the primary beneficiary of that…
“I don’t know if [silver] is the new gold. It just needs to be the old silver. Silver is still valuable. It doesn’t have to replace gold. It’s simply gold’s less expensive cousin. It has monetary properties. It’s been used as money. And the two precious metals kind of move in the same direction, maybe silver just has more volatility. So when the metals are going down, silver goes down more, and when they go up, it goes up more. But I expect substantial appreciation in both gold and silver. But when it comes to the difference between the two, or the ratio between gold and silver, I actually think there’s more upside potential in silver relative to gold, given the ratio now is very extreme in gold’s favor against silver. So i would look in this bull market, when the new bull market resumes, and if gold is $2,000, $3,000, $5,000 – wherever it ends up, maybe higher than that. I think the appreciation of silver on a percentage basis will be even higher…
“[Which metal is more undervalued?] I don’t know. Historically, you would say silver if you just look at the ratio. But there could be other things that are at play that influence that. But historically, the ratio is pretty solid… I know that gold in general is scarcer than silver. It has properties silver doesn’t have. It’s a more valuable metal based on its properties. I think that when the world goes back to a gold standard, I don’t think it’s going got go back to a bimetallic standard officially. Like with the United States, we had gold and silver. But when we remonetize gold, I don’t know that the same thing is going to happen to silver. But silver is still going to be used by the people as money, and there’s going to be a lot more demand for it…”
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