In his latest Schiff Report, Peter Schiff tears into the latest non-farm payroll jobs report, which everyone claimed could be the deciding factor for the Federal Reserve to raise interest rates. Peter also discusses the new phenomenon of quantitative tightening, which is the process of foreign central banks selling the US Treasuries they’ve accumulated.
[These countries have already started selling their US Treasuries.] Now you’ve got people in the media who have labeled this ‘quantitative tightening.’ Quantitative easing was when the Fed was reducing the supply of Treasuries by printing money. If foreign central banks are going to be increasing the supply of Treasuries by dumping theirs, how is the US economy going to deal with quantitative tightening? In fact, it can’t.”
The world’s two leading consumers of gold continue to demand more. Gold imports spiked in India in August, building on a year-long trend, as gold also continued to flow into China.
According to the Times of India, 15.78 metric tons of gold were imported into India last month. That compares to 7.2 tons of gold imported in the same period in 2014, an increase of 119%.
This wasn’t a one-month anomaly, but continued a year-long trend of increased gold imports into the country. According to Business Standard, gold imports in the first eight months of this year are estimated to be 40% higher than last year. Analysts predicted, “By December 2015, the total imports will touch 1000 tons.”
Early last week, Newsmax TV interviewed Peter Schiff and Steve Beaman, Chairman of The Society to Advance Financial Education. The had a friendly conversation about the factors that triggered the dramatic fall in Chinese and US stocks. Surprisingly enough, Beaman agreed with much of what Peter said about the Federal Reserve, though he still maintained that investors need not worry about a looming recession.
Productivity has been falling. The first quarter of this year and the fourth quarter of last year we had big drops in productivity. Corporations have already spent all that cash in record share buybacks, and of course they bought back all that stock at much higher prices. That was cash they should have used to invest in plant and equipment, which is the oldest it has been in over 60 years. Whatever cash they have left, they’ve borrowed. I think corporate balance sheets are a mess. So are individual balance sheets. Everybody in this country is loaded up with debt, including the federal government.”
Jim Rickards defended holding 10% of your portfolio in gold on Fox Business this week. Dagen McDowell aggressively challenged his argument that gold is the equivalent of an insurance policy for your wealth, but Rickards pointed to thousands of years of history supporting his investment strategy. Rickards also stuck with his forecast for the gold price to hit $10,000 per ounce sooner than later.
When people say gold is up, I don’t think of it as up. I think the dollar is down. In other words, you get less gold for your dollar, so the dollar is really down. If gold went to $10,000 an ounce – which I do expect – I wouldn’t think of it as a rise in gold, I would think of it as an 80% collapse in the dollar…”
Foreign central banks want their gold back and they are pulling it out of Federal Reserve bank vaults.
According to a recent Federal Reserve report on its foreign official assets, physical gold holdings fell 9.6 tons last month to 5,950 tons. Total foreign physical gold held by the Fed now sits at just over $8 billion, down more than $67 million since January. If that figure sounds low to you, it is. Since 1973, the Fed has valued its gold based upon a statutory $42.22 price per ounce.
Federal Reserve foreign gold holdings dropped every month this year except June, when they held steady. Put in broader perspective, foreign central banks have withdrawn 192 tons of gold over the past year, and 246 tons since the January 2014.
This reflects a continuing trend of foreign gold repatriation.
In his latest podcast, Tom Woods talks with Peter Schiff about Peter’s track record of forecasting, past and present. Peter defends the performance of his investment strategy, explaining why he thinks mainstream naysayers will soon be proven wrong. After that, Peter and Tom discuss the terrible and absurd condition of college education and the looming student loan bubble. You can download a free white paper on that topic here: The Student Loan Bubble: Gambling with America’s Future
Government wanted to make college more affordable. They made it more expensive. And at the same time, they destroyed the value of the degree. It costs more to get a degree, and the degree is worth less, because everyone now has one. If you actually want to differentiate yourself, you got to get a master’s degree. You got to get a PhD. A college degree means nothing. I think a college degree today has less marketable value than a high school diploma did before the government started subsidizing college. This whole bubble is going to burst…”
This article accompanies SchiffGold’s newly released white paper, The Student Loan Bubble: Gambling with America’s Future. To learn more about the shocking student debt bubble, click here for a free download.
“You need a college degree to succeed in America.” This idea has become so commonplace that the right to higher education is now a core issue in most political platforms. What if a young person cannot afford a college degree? The “obvious” answer from politicians on both sides of the aisle is that the government should subsidize them. Very few are brave enough to ask the far more important question: “At what cost?”
The answer is simple: as of today, the cost is $1.2 trillion. That is the current level of student loan debt in the United States, which represents the second largest category of consumer debt after home mortgages. It has grown by leaps and bounds since the financial crisis of 2008 and now surpasses even car loans and credit card debt.
The American Dream used to be simple: the ability to shape one’s own destiny and wealth without interference from the king, the government, or other powerful interests – the right to “life, liberty, and property.” Over generations, this dream has been coopted by politicians and bankers to gather votes and riches. In the 20th century, the idea of owning a home became an integral part of the Dream, which led to the disastrous idea that even unqualified borrowers deserve the opportunity to buy a house. We are all familiar with the fallout – the subprime mortgage crisis and ultimately the Great Recession.
Peter Schiff shared his perspective on the gold market with Kitco News yesterday. Other guests on Kitco have insisted that the Federal Reserve has no choice but to raise interest rates in September, or else the Fed won’t be able to deal with a looming recession. Peter counters this by pointing out how a small rate hike immediately followed by quantitative easing and an rate cut would completely undermine the Fed’s credibility. What about the price of gold? It will rise when the markets wake up to the fact that the Fed’s biggest easy money days are yet to come.
It’s the strength of the dollar and the anticipation of future strength of the dollar [that is driving gold right now]. So many people misunderstand the true strength of the US economy. They don’t understand that it’s a bubble, not a recovery. They’ve misinterpreted what they believe the Fed is going to do. They think the Fed is going to be raising rates, shrinking its balance sheet. That is not what it’s going to be doing. It’s going to be expanding its balance sheet faster than ever before. It’s going to be holding interest rates at zero as long as it can…”
Yesterday, the Arms Index (TRIN) spiked dramatically to levels not seen since 2011 and nearly twice as high as last week’s “Black Monday.” The Arms Index is a way of measuring how balanced the stock market is, with higher values suggesting the market might head in a bearish direction sooner than later. As ZeroHedge describes it:
A sudden surge in the TRIN indicates a jump in trader lack of confidence, as everyone scrambles to either go long the 2-3 rising stocks, or to sell or short the biggest decliners, ignoring the bulk of the market.
Of course, the Arms Index is a purely technical indicator that stock speculators watch closely, but it coincides with a growing mountain of data pointing to frightening volatility in American stocks and major cracks in the rosy mainstream narrative of an economic recovery in the United States. International banks, investment firms, big-name fund managers, and everyday technical analysts have all been sharing insights into terrible data and trends the financial media has largely ignored.
In his podcast released yesterday, Peter Schiff reviews the latest economic data and the ridiculous September rate hike talk from the Federal Reserve. He also talks about his visit to Jackson Hole this past weekend, and the so-called “protest” that the Fed allowed to run parallel to its official event.
I think Fed Up was there, because the Fed wanted them to be there. I think this whole thing was staged. I think this is exactly the kind of protest the Federal Reserve wants. Because basically this protest was saying, ‘We applaud the Fed. We think you’re doing the right thing. Your monetary policy is creating economic growth. It is creating jobs. Just not enough. Not in the black communities…'”
