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Peter Schiff: The Most Unloved Gold Bull Market I’ve Ever Seen

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Last week was a big week for precious metals. Gold broke above $2,000 an ounce and kept climbing, pushing over $2,075 later in the week. Meanwhile, silver blew through $28 and $29 ounce on Thursday and knocked on the door of $30. But even with another week of solid gains, there still seems to be a lot of skepticism about precious metals. Peter talked about gold’s bull run on his podcast and said it’s the most unloved gold bull market he’s seen in his entire career.

On Friday, we did finally got a corrective sell-off. Gold was down about $40 at one point and silver fell back below $28 for a time.

But even with the selloff, gold still closed well above $2,000 and was up 3% on the week. Silver ended up closing above $28 and saw a 15.5% weekly gain. Gold has closed higher for nine consecutive weeks. But as Peter pointed out, there have been down days.

Nothing goes up every single day, and gold and silver are not going to be the exception to that rule. There are no bull markets that are up every day. You’re always going to have down days.”

Peter said it seems investors haven’t figured this out. Gold and silver stocks started selling off Thursday even before spot prices dropped and they continued selling Friday. GDX (an index of gold mining companies) was down slightly on the week. Peter said this tells you a lot about the nature of this bull market and the wall of worry that is has been scaling.

I’ve been talking about this phenomenon on this podcast the entire time — that gold stocks have not really confirmed the bull market even though the bull market is taking place anyway, we haven’t seen it in gold stocks.”

Initially, a lot of people were saying the same thing about silver because it was lagging behind gold’s rally.

A lot of the reasons people were kind of diminishing the significance of the gold bull market was they said, ‘Hey, it’s not being confirmed by silver. Gold is going up but silver is going nowhere, and you can’t have a bull market in gold unless you have a bull market in silver.’ Well, OK. Now we have a bull market in silver. We’ve had a significant breakout in the price of silver. But still, people don’t believe this bull market. I mean, this is probably the most unloved gold bull market I’ve ever seen in my career.”

Peter said the fundamentals are better than any he’s ever seen.

The Federal Reserve is printing trillions of dollars. Fed Chair Jerome Powell has said it isn’t even thinking about thinking about raising interest rates. And there are reports that the central bank is set to make a commitment to ramping up inflation. All of this is extremely bullish for gold.

In a CNBC interview, US Global Investors CEO Frank Holmes said he can see $4,000 gold in the relatively near future with G-20 finance ministers and central banks “working together like a cartel and they’re all printing trillions of dollars.”

We’ve not seen this level where central banks are printing money at a zero interest rate. At zero interest rates, gold becomes a very, very attractive asset class,” Holmes said.

Peter said the technical charts look good for gold as well.

So, you’ve got a great chart. You’ve got great fundamentals. Yet still, people don’t believe this bull market. And the proof that they don’t believe the bull market is the gold stocks. They are not rallying the way you would expect. They are being dragged kicking and screaming to new highs by a relentless bull market that everybody assumes is over.”

Peter pointed out that there’s a difference between the buyers of gold and those who buy gold stocks. The buyers for gold and silver are real buyers — individual investors, and in the case of gold, central banks.

The buyers of physical metal are buying as an alternative to fiat money. … They are voting with their feet. They are running away from their fiat currencies, and they are running towards a real monetary alternative in gold and silver.”

On the other hand, buyers of gold stocks tend to be stock buyers and speculators. Peter said he thinks the investment community doesn’t believe the gold rally is going to last. They don’t believe gold mining companies are really going to benefit from a temporary rise in gold. Peter mentioned that a lot of people seem to think the rally in gold is simply a function in COVID-19. In fact, the CNBC article highlighting Holmes’ comments cited a coronavirus vaccine as a development that could stop gold’s rally in its tracks. Peter said they don’t understand the fundamentals.

That’s obvious, because every time the price of gold goes up, they expect it to fall. And every time the price of gold falls, they think it’s going to keep falling because they feel that that’s some kind of vindication. Meanwhile, the price of gold keeps going up. … So, the price of gold continues to defy the so-called experts. It continues to quietly make new highs. And this bull market is just going to keep going until ultimately the gold stocks participate — just like silver. How long did it take before silver joined the gold party? It eventually did.

You have to focus on the fundamentals. A lot of investors aren’t doing that.

They’re not looking into the future and realizing the monetary fiscal policies that have already driven gold past $2,000 are going to continue and drive it past $3,000, $4,000, $5,000. So, all of this potential should be reflected in the share price of these stocks, but it’s not. And therein lies the opportunity.”

In this podcast, Peter also talks about President Trump’s ban on TikTok and his recent executive orders. Peter called the EOs bad economics and unconstitutional.

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