Yesterday was the end of some short-lived rallies as stocks fell back from their record highs and the dollar index retreated back to pre-Brexit lows. In the long term, these changes are showing the dollar continues to lose its purchasing power due to central banking’s bad fiscal policy. As the dollar declines, gold prices are likely to respond with upward movements throughout the remainder of the year.
It’s been an electrifying summer for gold. The explosive potential of precious metals investment has really taken off over the past few months, and the Fed has followed the exact trajectory Peter Schiff predicted they would. Peter recently appeared on Albert Lu’s Power and Market Report to discuss gold’s true value, the Federal Reserve’s mishaps, and the recent merger with GoldMoney.
Several economists for the International Monetary Fund (IMF) recently expressed concerns about moving interest rates into negative territory. They believe it could backfire on the European Central Bank (ECB), making banks less profitable overall and reducing lending.
Each week there are plenty of new reasons to get fed up with our beloved central bank. Here’s what they’ve been up to in the past seven days.
Ben Bernanke: Uncertainty Could Lead to No Rate Hike until 2017
On Monday, former Fed Chair Ben Bernanke laid out his thoughts on how the rest of this year would play out for the US economy. Overall, he sees that the past two years have brought about tighter financial numbers, weaker growth, and low inflation. Bernanke seems to estimate the Fed’s false promises of a rate hike have caused investors to slow down and even reverse course in some ways.
“Fed-watchers will see less benefit in parsing statements and speeches and more from paying close attention to the incoming data,” Bernanke said in his article for Brookings. “Market participants now appear to expect few if any additional rate rises in coming quarters.”
Of course, Peter Schiff has been predicting all along that any expectation that the Fed will raise rates should be taken with a hefty grain of salt.
The price of gold is up 26% for the year so far. Overall, the price increase is beginning to change investor portfolios, as more people consider buying gold and other precious metals. However, the hike in gold prices is also starting to influence governments and cultures all over the world, from Japan scouring the ocean floor for gold to Egypt changing its long-held marriage rites.
Unlike re-printable fiat currency, gold is money because there is a finite amount of it. The Fed can’t produce more gold whenever it wants. For this reason, gold has functioned as a barter and wealth preservation system for thousands of years. But how much gold is left in the earth? What will happen to the price when exploration stops or is limited?
Despite the better than expected non-farm payroll reported, many are skeptical of the 255,000 “created” jobs the Bureau of Labor Statistics (BLS) reported last Friday. In a CNBC interview, Dennis Gartman, Founder, Editor and Publisher of The Gartman Letter, expressed some doubt on how well these reports gauge the health of a growing US economy.
We have to remember however that there were two things that I think need to be discussed. One is that a great good deal of this increase was because of the birth/death adjustment as they call it, which added about 85,000 payroll jobs to the number.”
Lately, there’s so much gold stockpiled by governments and investors, someone should pitch a new reality TV show called Gold Hoarders. But rather than poor agoraphobics maddeningly piling up old newspapers and canned food, the show would feature smart individuals like Bill Gross who have the foresight to see the writing on the wall. The message is simple, “Look out for a collapsed dollar and low-yielding assets.”
Bill Gross is all straight talk when it comes to his preference for precious metals investment. “I don’t like bonds; I don’t like most stocks; I don’t like private equity,” the Janus Capital portfolio manager told investors this week.
What’s his reasoning? It’s pretty straightforward. Central banking policy has eliminated a healthy, open market atmosphere where high-yield opportunities are no longer readily available.
Your weekly dose of the Fed’s latest antics.
Bank of England Slashes Rates, Gold Surges Forward
It’s important to remember that it’s not just the US Federal Reserve that launches the price of gold upwards with every misguided decision. As we predicted on Wednesday, the Bank of England dropped their interest rate to record lows in order to combat their struggling post-Brexit economy. The main result for the precious yellow metal was nearly a half-point surge in value overnight, bringing it closer to the $1,400 mark.
At Freedom Fest last month, Peter Schiff appeared on AMTV discussing how the Fed’s monetary policy has created an impending economic crisis to rival the 2008 housing crisis.
“The problems were created by the Fed,” he states. “They were created by monetary policy being too loose. Rates were too low when they were at 1%. That’s what inflated the housing bubble. But by keeping them at zero for seven years, the damage the Fed has done to the economy this time is much greater than what was done prior. So, I think we’re headed for a much worse economic crisis than what we went through in 2008”
