The Federal Reserve raised interest rates last week for the first time in nine years. It was very small: just 25 basis points. There was a lot of reaction afterwards as some said the United States economy was improving and others said it was on the verge of a recession.
Speaking in an interview with CNBC, Peter Schiff, CEO of Euro Pacific Capital, said he is in the latter camp, adding that gold is still going to soar to $5,000 per ounce.
On Friday, Schiff explained there is very little downside in gold and much of what is transpiring in the U.S. economy right now is “already built into the price.”
He added that despite what Fed Chair Janet Yellen says, the U.S. is “rapidly going into a recession.” This will prompt the central bank to retract its rate hike, and help gold become the “safe haven asset it once was.”
“I think symbolically just to show that they have confidence in the economy that they have no confidence in, [the Fed] raised rates to 25 basis points,” said Schiff. “Normally when the Fed will raise rates it’s when an economy is just getting going, so you have a lot of momentum in the economy and a lot of pent-up demand, but this recovery is already over.”
Schiff also alluded to the less than stellar manufacturing numbers in the month of November, which he believes is a sign that the national economy is starting to decelerate.
“They’re going quickly have to reverse course next year,” averred Schiff. “They are going to bring rates into negative territory … and they’re going to do QE4 and it’s going to be bigger than ever.”
Downside to gold, ask the people who purchased at $1,800 per once and held it, in 2011, thinking it was going to go higher. The problem with Gold and Silver is the governments around the world have the money to flood the market and drive the price down. Nothing in the last 15 years justifies gold at $1,200 per once.
I wish Schiff was right because I’m invested in gold, but he’s been wrong so far. He should just shut up.
There’s no doubt that EFT trading in COMEX at somewhere around 350 oz of gold per every single oz of physical gold they have, has created fraudulently devalued physical prices in precious metals across the board. I’ve taken to buying physical gold and silver this past year myself, but if Gold goes up to $5,000 an ounce or Silver to $100 an ounce, would I then want to cash it in for what will amount to be worthless Federal Reserve Notes? Hardly. It’s not about ‘investing to make profits’ to me, it’s about putting what’s becoming worthless fiat paper into something with Value. Just how long they can keep the entire Ponzi Scheme going I certainly cannot predict, but I’m certain in my simple minded opinion it will all come down by 2020 if not before. I’ve watched metals for half a century and doubt they will go significantly lower than what they’re trading at now. Their prices are totally fraudulent based on the simple economic formulas of supply and demand with 2015 having record setting volumes of physical metals purchases. The big boys have kept them down so that they can buy at these low prices, and so should you while the prices are near lows that will not last. Me personly would rather have physical anything with value than worthless paper when it all collapses, and it wil. Remember Weimar Germany? My only concern then will be what to do when they Ban the private ownership of Gold again like 1933, and they Will. But I’ll worry about that then.
ChucK, You are wrong on the supply and demand thing. Sure demand is up, but supply in gold and silver as to number of people wanting to buy at current prices, can fill the demand for years to come. Number of available ounces in gold and silver for sale goes up every year. You are never going to have a time when gold and silver demand will outstrip supply. The trader”s and government”s control the price to meet their needs.