The United States dollar has been on a roll as of late and has been trading higher than the six major currencies. But is this really positive news considering that many currencies worldwide, like the euro and pound, aren’t exactly fiat models of prudence and strength? One financial guru believes the greenback’s ascension won’t last too long.
Speaking in an interview with Yahoo! Finance earlier this week, Peter Schiff, CEO of Euro Pacific Capital, says the U.S. dollar’s rise won’t persist because the national economy is staggering and the Federal Reserve is going to delay, yet again, raising interest rates, which will then spark up inflation.
Schiff conceded that he was surprised the dollar has moved up this much, but it won’t be something that is indeed permanent. He added that when traders finally realize how bad these pro-dollar trades are they will eventually reverse these trades and “the dollar is going to unwind quickly.”
“When people realize we can never raise rates and it’s permanent QE [quantitative easing], that the Fed can’t shrink its balance sheet and has no ability to control inflation, there will be no place to hide,” Schiff averred. “The real move of the dollar is going to be a crash. . . . The Fed has inflated the mother of all bubbles.”
Ultimately, this will be great for gold, predicting a substantial increase to $5,000, something Schiff has called for repeatedly since 2011. “There’s no real ceiling on gold because there’s no floor on the dollar.”
At the time of this writing, the yellow metal is trading at the ever-important $1,200 threshold.
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