In a recent interview published at the Daily Bell, Anthony Wile engaged in a wide-ranging discussion with economist and investment expert Marc Faber.
Wile and Faber hit on a wide range of subjects from oil markets, to agricultural lands, to the future price of gold.
Faber said we shouldn’t follow the media lead and blame China for all of the current problems, echoing what Peter Schiff has said. Ultimately it all comes down to central bank and government actions – policies Faber views as unsustainable.
But what exactly does the future hold? Faber said there is no way to precisely tell, but it isn’t good:
It’s difficult to make predictions but it’s impossible to make any accurate prediction when you have interventions. We have a lot of interventions, and in the whole history of mankind, which is documented say starting 5,000 years ago up to today, interest rates have never, ever been this low. Never. And this is an experiment the professors and academics who never worked a day in their lives in a real job have undertaken. Nobody knows the precise outcome. I can only say the outcome will be negative.”
In his most recent gold videocast, Peter Schiff said he thinks the recent Fed rate hike was the end, not the beginning of the tightening cycle. The next move will be a drop back to zero and another round of quantitative easing. When that happens, investors who have been selling gold believing the economy is on the rebound will have to reverse their bets and begin buying as gold rallies.
It’s looking more and more like Peter was right, and now some of the mainstream folks are starting to catch on. A recent Bloomberg article proclaimed “gold is back in fashion.” The reason? People are beginning to recognize the shakiness of the economy. As a result, they are turning back to gold as a safe haven:
The $15 trillion rout in global equity markets since May is reawakening the lure of gold for investors seeking safety.”
The downturn in the US stock market is a problem made in America by the Federal Reserve, argued Peter Schiff on the Daily Ledger. The only question now is when will the Fed restart quantitative easing to ensure the Democrats and Hillary Clinton don’t face the same problem Republicans encountered at the end of Bush’s presidency – a lost election thanks to a crumbling economy. Peter thinks they might wait until the US is “officially” in a recession, which could be as long as 7 months from now.
This article was written by Addison Quale, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
Perhaps you’re already familiar with the investment strategy based upon the gold-silver price ratio. For those who are not, allow me to explain a bit about how focusing on this ratio can actually help you maximize your gold holdings.
(A quick disclaimer – SchiffGold does not recommend the trading strategy explained in this two-part article. Some sophisticated traders of gold and silver do employ it to increase their gold holdings. I’m writing about this, because SchiffGold believes gold investors should be aware of the long-term relationship between gold and silver and the implications of this price ratio. You can read more in our free special report – The Powerful Case for Silver.)
The strategy is pretty straightforward once you understand the gold-silver price ratio. The ratio is exactly what it sounds like: the price of gold divided by the price of silver. As of the writing of this article, gold sits at $1098 and silver checks in at $14.17. Dividing, we arrive at a gold-silver ratio of 77.49 ounces of silver to one ounce of gold. SchiffGold tracks the live gold-silver price ratio here.
So what’s the significance? Well, this price ratio is not constant.
On Wednesday, the founder of the world’s largest hedge fund appeared on CNBC and made exactly the same prediction Peter Schiff has been making for months – the Federal Reserve’s next moves will be taking rates back to zero and launching another round of quantitative easing.
It’s important to remember that Ray Dalio doesn’t share Peter’s economic point of view. He is a classic Keynesian who believes the Fed has done an excellent job. He even claimed that “QE saved the economy.” He and Peter probably agree on very little. But Dalio’s remarks bear consideration because he represents the conventional wisdom of today. He believes in central bank intervention and he recognizes that the current state of the US economy demands more of it. To use Peter’s analogy, Dalio wants the drug addict to get more of his favorite drug, and he believes the Fed will deliver.
In his most recent Liberty Report, Ron Paul declared that the economic calamity anticipated by many free market advocates is now at hand.
Paul focused in on the obsession people like Paul Krugman have with deflation, pointing out that it isn’t the problem; it is merely the symptom of an economy trying to correct itself. Unfortunately, the Federal Reserve and government central planners seem intent on continuing the very policies that created the underlying problems in the first place:
Concentrating only on deflation and ignoring the unlawful, dangerous powers of the Fed to inflate and regulate will always result in a steady weakening of the economy – the economy which today is facing total collapse. Deflationary pressures do exist. Some debt and malinvestements are being liquidated. But the correction is constantly impeded by the Federal Reserve’s monetary policy and congressional spending.”
In his most recent interview with Douglass Goldstein, Peter Schiff talked about the massive US debt and its impact on the US economy.
Peter took issue with Paul Krugman’s view that the US government can simply keep borrowing money endlessly, pointing out that it already has more of $100 trillion in liabilities. Peter argues that not only does this bode ill for the future, we’re already reaping the consequences.
Mining industry leaders say gold production has reached its peak for the cycle, and that we should expect falling mine output and tighter supply in the future.
According to CNBC, analysts say few big projects will reach the point of actual production over the next year:
The lack of new assets and declining output at existing mines is expected to curb gold supply, a glimmer of hope for surviving producers of the precious metal in an industry coming to terms with a rush of investment when prices were far higher.”
Peter Schiff appeared on InfoWars with David Knight and talked about how the Federal Reserve has systematically sabotaged the economy.
Peter made a strong case that the actions of the Fed have created an economy that is even worse than it was seven years ago, before the so-called “Great Recession.” He also observed that the recent rate increase – small as it was – sent markets spiraling downward, just as he predicted, pointing out that it takes a smaller pinprick to pop a bigger bubble. Peter went on to predict the Fed will be forced to launch QE4 and even raised the possibility of more government stimulus in the near future:
They’re going to have to do even more crazy stuff this time because the problem is bigger. Everybody wants to pretend the Fed solved the problem. They didn’t solve anything. The market would have solved our problems if the Fed had allowed it. But the Fed didn’t. The Fed prevented the market from working…As a result, the economy is far more screwed up than it was seven years ago.”
Over the past two weeks, Peter Schiff released a podcast and a Schiff Report video. He also appeared on CNBC, the Daily Ledger, Fox Business, X22, Newsmax, Yahoo! Finance, Stefan Molyneux’s podcast , and CCTV America.
Since the beginning of the new year, Peter has focused on the horrible start on Wall Street and the likelihood of an economic downturn in 2016. In several appearances, he continued to argue that the Federal Reserve won’t be able to maintain its interest rate increase, and will ultimately drop the rate back to zero and launch another round of quantitative easing. Peter also offered his views on the State of the Union Address.
Follow these links to jump to the video or article you’d like to see:
1. CNBC Admits Peter Schiff Was Right, Jan. 14
2. CNBC: Blame Market Volatility on the Fed, Not Commodities, Jan. 14
3. Yahoo! Finance: What Will the Fed Blame the Coming Recession On?, Jan. 14
4. Stefan Molyneux’s podcast: The State of the Union: A Big Joke on the American People, Jan. 13
5. Schiff Radio podcast: Obama Delivers the Most Clueless State of the Union Address Ever, Jan. 13
6. The Daily Ledger: Yellen Could Pave the Way for Hillary with More Easy Money, Jan. 11
7. Fox Business: Bull vs. Bear; When Will the Stock Market Capitulate?, Jan. 11
8. Schiff Report: Deja Vu All Over Again: Stocks Plunge; Gold Surges; Markets Ignore Reality, Jan. 9
9. X22 Report: Next Crisis Will Be Much Harder on All Americans, Jan. 5
10. Peter Schiff Says Wild Ride on Wall Street Will Continue Until Fed Admits the Truth, Jan. 5
11. CCTV: Peter Schiff: Puerto Rico Bailout Immoral; Bankruptcy a Better Solution, Jan. 4
