It looks like Donald Trump is launching a full-blown trade war. Not to worry though. According to the president, a trade war is “easy to win.”
When a country is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”
Peter Schiff has a little different take. He said in his podcast last week winning a trade war isn’t so easy. In fact, America can’t do it.
In a podcast last week, Peter Schiff said rookie Federal Reserve chair Jerome Powell couldn’t be more wrong about the economy. He sees smooth sailing ahead. Peter sees a storm.
Former Reagan Office of Budget Management director David Stockman made a similar observation in a column last week.
What’s ahead is tumult, not smooth. That’s because the disconnect between a flat-lining main street economy and Wall Street’s bubble-ridden financial house of cards is blatantly unstable and unsustainable. Indeed, this fraught condition, which Powell and his Keynesian posse fail to see, will soon give rise to a thundering upheaval triggered by the Fed’s own action.”
We’ve been talking a lot about the rising levels of debt – both government and household. Set in an environment of rising interest rates, this is a huge problem very few people seem concerned about.
We’ve been enjoying a big party and it’s about to come to an abrupt end.
Russia has passed China to become the world’s fifth-largest gold-holding country.
According to a Bloomberg report, the Bank of Russia added nearly 20 tons of gold to its stash in January, raising its total to 1,857 tons. The People’ Bank of China reported holdings of 1,843 tons.
Russia has bought gold every month since March 2015 in an effort to diversify its foreign currency holdings and minimize its dependence on the US dollar.
The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
Americans can turn pretty much anything into a “holiday.” Even a groundhog.
I guess Groundhog Day isn’t a holiday, strictly speaking. I mean, I don’t get a day off work. And the government doesn’t close. That’s when you know you have a real holiday. Government shuts down and my mailbox isn’t filled with inane fliers and bills. By that measure, Groundhog Day doesn’t qualify as a holiday.
But Americans still make a big deal out of the day. And there is drinking. Everybody knows a real holiday involves getting sloshed. And what better reason is there to drink than fretting over whether a rodent is going to predict 6 more weeks of winter? So, maybe it is a holiday – at least in the vein of St. Patrick’s Day.
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.”
During a podcast last month, Peter Schiff asked a key question: who is going to buy all of the debt necessary to finance the ballooning US deficit?
In his most recent analysis, Dan Kurtz at DK Analytics explores this question more in-depth and comes to generally the same conclusion.
The dollar has lost more than 8% of its value over the last year. That decline may accelerate as bond investors sell ahead of a huge expansion in Treasuries coming into the market. Interest rates will have to climb significantly. The price of bonds will drop. As Dan put it, where bonds go, stocks follow.
We’ve excerpted some key points from Dan’s report.
The stock market plunge earlier this month reminds us why we should buy gold. As a report released by the World Gold Council shows, gold acted as a portfolio hedge during the brief downturn. The price of gold rose as stocks sold off; as stocks partially retraced their losses, gold trended lower.
But gold’s effectiveness improves when market corrections are wider or sustained for longer. In our view, the recent selloff is a good reminder that gold can deliver returns and reduce risk in portfolios.”
This is some food for thought especially in light of the fact we are ripe for a 1987-style market crash.
The dollar has shown some resilience this week. The dollar index clawed back after hitting multi-year lows last week. Meanwhile, gold saw its worst single-day decline in more than a year on Tuesday.
One thing that hasn’t changed is the upward pressure on bond yields. In his most recent podcast, Peter Schiff said he thinks this is the reason we’re still seeing some life in the dollar and downward pressure on gold.
