The financial community doesn’t have high hopes for precious metals this year. Most of the financial institutions on Wall Street project gold to fall to as low as $950 per ounce because the economy is improving and inflation has been relatively stable. One contrarian investor says that’s nonsense.
Peter Schiff, president of Euro Pacific Capital and avid goldbug, spoke with CNBC on Tuesday and Wednesday and explained that he thinks a rally in the yellow metal will continue. Over the past month, gold has rallied about four percent after dropping 28 percent last year, which he blames on investors not seeing what the Fed is really doing.
Schiff stated that January could be a sign of things to come and that gold could very well end on a high note by the time December rolls around. The author of “Crash Proof” and former Republican Connecticut Senate candidate says that gold will likely spike when the Federal Reserve introduces a new quantitative easing plan.
“The real momentum to a new surge in gold is going to be when the Fed comes back with another QE plan that’s even bigger,” said Schiff. “What is Janet Yellen going to do to try to revive the economy? There’s only one thing she can do, and that’s print even more money.”
Prior to Christmas, the Fed announced it would taper its $85 billion bond-buying program by about $10 billion. Right before Ben Bernanke made his exit, the central bank confirmed it would taper by another $10 billion, but Schiff and others are doubtful because the stock market relies on its monthly injection.
Schiff conceded that he doesn’t know what price gold will be at the end of the year, but he does realize it’ll be higher.
“At some point, gold’s going to go straight up like a moonshot,” stated Schiff. “Maybe it’s going to take Janet Yellen to come out and call off the taper. Or maybe she’s going to have to say, ‘We’re doing more of it, we’re going to start increasing it.’ I don’t know what that magic moment is going to be.”
At the time of this writing, gold is up at $1,258, while silver is approaching the $20 mark.
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