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…'”
South Korea, China Buying Up Gold
Reuters, Bloomberg – South Korea and China both reported an increase in gold purchases last month. Based on first-half sales through the country’s largest gold merchant, South Koreans are on pace to purchase $860 million in bullion – a yearly record. Analysts estimate South Koreans hold around 800 metric tons of gold in households and private vaults. China upped its gold reserves by 1.1% in July, an increase of about 19 tons. In an unexpected update, Chinese officials said the country owns about 1,677.4 tons of gold. The previous update came in July, after China had been silent on the size of its reserves for six years. Read full South Korea Article>> Read full China Article>>
Perth Mint Gold Sales Hit 9-Month High
Reuters – Gold sales at the Perth Mint climbed to a nine-month high in July. The spike followed a similar rise in US Mint sales of gold coins, which hit a two-year high last month. Perth Mint sales of gold coins and minted bars rose to 51,088 ounces in July, from 31,019 ounces in June. That was the highest increase since October 2014. The Perth Mint runs the only gold refinery in Australia, which is the world’s second-biggest gold producer after China. Read Full Article >>
Stefan Molyneux hosted Peter Schiff on Freedomain Radio last week. They discussed at length the decline in the United States equity markets and the effects of Federal Reserve monetary policy. They also had a broader conversation about the fundamental economy of the US, as well as Peter’s track record of economic predictions. In the second half, they got into a discussion about the big-name presidential candidates, Jon Stewart’s retirement, and what Peter would do if he were elected president.
Peter Schiff spoke with the Shadow of Truth podcast last week. They had a friendly conversation about the Chinese yuan, the downfall of the US dollar, and the condition of Peter’s imprisoned father, Irwin. They also discussed the track records of the Federal Reserve Chairmen and how the price of gold can be used as a yardstick to judge the success of their monetary policies.
Alan Greenspan used to say that he could tell whether or not he was doing a good job by the price of gold. If the price of gold was lower than $400 an ounce, he was doing a good job, and if it was above, he was doing a bad job…
[So] Bernanke wants to discredit gold, because gold is discrediting the Fed. Gold prices going up is a vote of ‘no confidence’ in the fiat money that the Fed is creating. What is really a barbaric relic is the federal reserve note, the dollar, just a piece of paper backed by nothing. Gold is real money. It has a tradition of safety. Paper money has a tradition of failure.”
In mid-July, Scott Nations of CNBC as much as laughed in Peter Schiff’s face when Peter predicted the Federal Reserve may raise interest rates a very small amount before launching a fourth round of quantitative easing in 2016. Nations said:
It seems that you’re a little bifurcated here. You say that you think the Fed may raise rates a little bit by the end of the year, but that they’re also going to implement QE4. Which is it? Because those are absolutely binary. Those are completely polar opposites… How in the world do they raise rates and institute QE4?”
Peter clarified: “No, no, no, they would reverse that. Let’s say they raise rates to 25 basis points. Then by 2016, they lower them back to zero and do QE4.”
Jackie DeAngelis jumped in, reproaching Peter with the stern voice of a mother chiding a foolish child: “They cannot raise rates, then lower them back to zero, Peter.” (Watch the full interview for yourself here.)
Do you think CNBC would have reacted the same if Peter’s forecast came from one of the largest hedge funds in the world? Because now it has.
This article was submitted 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.
Bloomberg recently published an article about how world political leaders don’t have too much to say about the current sell off in equities – the worst of its kind since 2008. It states:
It’s wiped out more than $8 trillion in the value of global equities, leaving virtually no market unaffected, yet reaction from world leaders so far has ranged from muted to dismissive.”
Essentially, the message is that despite people’s portfolios hemorrhaging value and the world economy clearly starting to slow down, this is no big deal. There is no reason to panic and get out of the stock market. Oh – and it’s also China’s fault.
Dr. Ron Paul turned 80 years old last week, and the Mises Institute threw a birthday party for him. Tom Woods and Judge Napolitano introduced Dr. Paul with stirring speeches, reminding us of how pivotal Ron Paul has been to the libertarian and free-market movements.
Dr. Paul delivered a resounding inspirational talk directed at those who strive to spread the message of free markets and a free society. While he reminded us of the terrible effects of an overreaching federal government and central bank, his message is primarily one of hope.
Argue the case for liberty. Then you are going to argue the case for the greatest prosperity for the greatest number of people, the largest middle class. Then we have a society where if the goal is to seek excellence in virtue, you can do it. It’s all your responsibility… If you accept the notion that the government should protect us in a moral way and tell us what our habits should be, or we need the government to redistribute wealth, it can’t be done without the taking away of liberty.”
Lew Rockwell originally published this address on his podcast, and SchiffGold has compiled it into a YouTube video for you to enjoy.
Stories about plummeting stock markets, a sputtering Chinese economy, and the yuan versus the dollar have dominated financial news over the past few weeks. Lost in the din: the economic disaster continuing to unfold in Venezuela.
Venezuelans face crippling shortages of basic staples as their currency, the bolivar, continues to inflate at breakneck speed.
Hyperinflation has rendered the bolivar practically worthless. A photo uploaded to Reddit of a man using a 2 bolivar note as a napkin went viral last week. Business Insider reported that based on the official exchange rate, the makeshift napkin was worth about 32 cents. But in reality, the man didn’t waste nearly that much.
