The rumors of gold’s death have been greatly exaggerated.
Many financial institutions and economic analysts have called for the untimely demise of the yellow metal for months now. During the second half of 2013 and throughout 2014, numerous organizations projected that gold would sink to under $1,100 and as far down as $850. This has yet to come to fruition.
At the time of this writing, gold is trading at around $1,325. For the past six months, the precious metal has remained steady between $1,275 and nearly $1,400. The trend suggests gold will hold its own for the rest of the year.
Peter Schiff, president of Euro Pacific Capital, sat down with CNBC, Marc Faber and Dennis Gartman on Tuesday to discuss gold, the euro, the United States dollar and the Federal Reserve. Schiff’s conclusion is that the gold naysayers have essentially been wrong this year and that “they’re digging in their heels” and persistent in their bearish stance on gold.
Despite the jobs report making Wall Street enthusiastic, the yellow metal did not give up any of the gains that it had garnered in the previous week.
“So to me, we’re consolidating those gains, we’re putting in a very formidable bottom in gold,” Schiff stated. “We still have all of the naysayers, the Goldman Sachs, Societe Generale, all these guys that were negative calling for $1,100, $1,000, they’re digging in their heels, they’re just as bearish as they were at the beginning of the year despite the fact that they’ve been wrong for six months. So you have a lot of negativity, but I think the technical picture is improving rapidly for gold.”
Schiff is still positing that the Fed’s policies will destroy the U.S. dollar, but Gartman makes the case that the dollar won’t lose much value against the euro. Gartman believes investors are better off holding gold long-term in euros than in dollar terms. Schiff disagreed with this premise.
“I think that the dollar has much further to go down relative to the euro,” Schiff noted. “As bad as things are in euro-land, they’re worse in the United States. And I think we are going to push the envelope much farther than the Europeans…. The Fed will do nothing to contain inflation. That is not going to be the case in Europe.”
Faber previously stated that he generally agreed with both sides. The publisher of the Gloom, Boom & Doom Report averred that everyone should own gold, adding that the euro will tank against the greenback.
“I hold some U.S. dollars, and I really can’t see how the euro would strengthen a lot against the U.S. dollar,” Faber said. “It may strengthen somewhat, but not a lot, because if the euro strengthens meaningfully, they’re going to print as well in Europe, the same in Japan and so forth. So for that reason, I own gold.”
Faber had this dire warning: “We’re all doomed.”
Silver, which has maintained a value of around $20 per ounce during the entire year, wasn’t discussed.
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