Peter Schiff appeared on RT America Friday to talk about the big stock market selloff in the wake of the arrest of Meng Wanzhou, a Chinese businessman accused of violating US sanction laws. The markets reacted negatively, fearing the arrest could derail apparent progress in the trade war.
Peter said Wanzhou’s arrest may have provided the catalyst sparked the sell-off, but it wasn’t the underlying cause.
This is a bear market. That’s why the market went down. If it wasn’t that, they would have found another excuse. If we were in a bull market, I think the market would have shrugged it off. So, we’re going lower.”
A strong dollar in recent months has created the biggest headwinds for gold. But will dollar strength continue? Most foreign currency traders recently polled by Reuters don’t think so.
Reuters surveyed more than 60 currency analysts and the consensus was that the dollar would be weaker against major currencies in a year. The exchange strategists say slowing economic growth in the US will drag the greenback down in 2019.
The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
Peter Schiff appeared on RT Boom Bust earlier this week to talk about the trade war “truce” between the US and China.
The announcement that there was some progress in resolving the trade war during the G20 summit boosted stock markets on Monday (the day this segment was aired), but that lasted all of one day. The markets tanked on Tuesday as investors realized the “truce” really didn’t mean anything substantive. In the RT interview, Peter said we really need to keep our focus on the bigger picture, particularly the Federal Reserve and the dollar.
World Gold Council chief market strategist John Reade projects healthy demand for physical gold in 2019 and said any kind of economic slowdown could boost demand — and the price — significantly.
Last week, we got data on the producer price index. It came in at o.6%, a much hotter number than expected. It was the biggest jump in the PPI in six years. Year-over-year, producer prices are up 2.8%.
Analysts expected the monthly increase to come in at half that – 0.3%. While the Fed typically looks at consumer prices to gauge inflation, producer prices are also significant. After all, the cost of production is ultimately passed on to the consumer.
As soon as that PPI number came out, the price of gold dropped about $10. As Peter Schiff pointed out in a recent podcast, this is because the markets still don’t get it. They are playing checkers instead of chess.
The silver-gold ratio hit the highest level in over a quarter century this week.
The ratio hit to 86:1 as dollar strength pulled both the price of silver and gold lower this week after the Federal Reserve indicated it plans to keep pushing interest rates higher. The price of silver fell even more steeply than the gold price. A research note by Commerzbank said it was that largest gap between the two metals in 25 years. Practically speaking, this means silver is undervalued compared to gold.
The Russians have an alternative money transfer system up and running, and according to a report in RT, it has now surpassed SWIFT in popularity in that country. This is part of a broader effort by countries like Russia and China to limit their dependence on the US dollar and set up alternative financial channels outside of the global dollar system.
The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
You can add Poland to the list of countries buying gold.
The Polish central bank added about seven tons of gold to its reserves in July and another two tons in August, according to International Monetary fund data. It was the largest gold purchase by Poland since 1998.
