Forget the Fed; Gold Prices Could Be on the Verge of Breakout, Says Peter Schiff
Precious metal prices could soar in the coming weeks with the U.S. economy entering a recession. Investors accept the Federal Reserve will not be able to raise interest rates in 2016. At least, that’s the latest gold price forecast from popular market commentator Peter Schiff.
The last week has been particularly great for gold and silver. Following the dismal jobs data announcement, the uncertainty surrounding the Fed’s next monetary policy move has finally settled. As expected, gold and silver prices rallied.
Confirmations of the same are now coming from the upper echelons of the investment world. Well-renowned gold bug Peter Schiff is out with another video, this time supporting the expected pop in gold prices. In his latest YouTube video, Schiff calls the notion of a rate hike nothing more than a myth. According to him, even if the Fed decides to tighten the monetary policy, a highly unlikely move, gold bugs have no reason to fear since the change will be too nominal to substantially impact gold prices. (Source: Gold Will Breakout as Rate Hike Myth Dies, Peter Schiff, October 6, 2015.)
“First of all, even if the Fed were about to raise interest rates, which I have never believed was the case. But even if that was in fact the case, there is no historical evidence to suggest that the rate hikes would actually be negative for gold. If you look historically, there are some times where rate hikes are bearish for gold and there are other times when it’s not.
[…] In fact, the rate hike that she [Janet Yellen] was talking about or bluffing about was only a quarter of a point. I mean, that’s nothing. How would moving rates from zero to 0.25 really undermine the case for owning gold? It wouldn’t. All I think you have is speculators with a narrative and pushing a trend. But ultimately they ran into a wall of buying and their repeated efforts to really knock gold below $1,100 failed.”
Schiff feels that the Fed is just “bluffing” about the interest rate hike, sending false signals of an improving economy while the latest jobs data has proved otherwise. He feels that another round of money printing is coming and this time it will shoot precious metal prices through the roof. He reasons that QE4 will have a more dire impact on investor sentiments than QE3, which was earlier predicted to be the last quantitative easing. This time, however, all fears of a recession will be confirmed.
“I think when we get the November reports later this year, it’s going to continue to show weakening on the job front and soon all this talk about higher interest rates is going to be replaced with new talk about a fresh round of quantitative easing—QE4—and I think that is going to be super bullish for both gold and silver.
In fact, there’s a pretty good chance that we might get a negative GDP print for the third quarter. And if we get a negative GDP print in the third quarter, I bet we get one in the fourth quarter too, and that means we’re in recession. And of course we know what the Fed is going to do.
And don’t think that it’s crazy for me to forecast this because remember, the great recession of 2008 began in December of 2007. And by the middle of 2008, just before the financial crisis, no one on Wall Street or the Federal Reserve even had a recession anywhere in its forecast, even though the economy had been within one for more than half a year.”
You can watch Peter Schiff’s entire commentary here.