Will gold spike in value because of the Federal Reserve’s potential fourth round of quantitative easing?
Last year at around this time, the price of gold made some significant gains, but it couldn’t push higher during the rest of the year. This month, the yellow metal has also performed quite well as the price has closed in on the $1,300 mark. If the Fed goes ahead with the fourth round of quantitative easing then gold can go much higher, says Peter Schiff, president of Euro Pacific Capital.
Speaking in an interview with Yahoo! Finance on Tuesday, Schiff believes gold will make gains throughout the year, even though most Wall Street analysts and strategists are bearish on gold and gold stocks.
When looking at the price of the precious metal in other currencies except the dollar, gold has shot up substantially, though he argued that this trend will take place in the U.S. when the yellow metal records some impressive gains.
“I think gold is going to go up in all currencies – it is rising faster in euros and some other currencies than it is in dollars but it’s still rising in U.S. dollars…I think it’s breaking out – now is a good time to buy,” said Schiff. “In fact this year I believe gold prices are going to hit all time record highs in just about every major currency except the U.S. Dollar. We might have to wait until 2016 before gold prices hit a record high in dollars.”
Akin to other contrarian investors like Jim Rogers and Marc Faber, Schiff posits that the greenback has nowhere to go but down, which will be great for gold moving forward.
One of the reasons why the U.S. dollar will experience a downturn is the inevitable introduction of QE4. “When the Fed announces QE 4, that’s gonna be a big game changer. It’s gonna catch everybody by surprise.”
According to Schiff, if the Fed does proceed with QE4 then it would prompt China to ape Switzerland and begin to depeg the yuan from the dollar in the same way the Swiss National Bank (SNBB) depegged from the euro earlier this month.
Since gold and the Swiss franc have complemented each other throughout history, a stronger Swiss franc will actually contribute to gold’s price increase.
Leave a Comment