All eyes have turned toward Great Britain with the Brexit vote looming this week. A lot of people are speculating about what Britain’s potential exit from the EU means for gold. Peter Schiff says in the long-run, it doesn’t really matter.
In his most recent podcast, Peter said he thinks gold will go up no matter what Britain does. The yellow metal is on the rise because of what is happening in the US, not in Europe – specifically what is happening with the Federal Reserve.
And what is happening with the Fed? Basically nothing. In fact, Peter said an alien invasion is more likely than an interest rate hike in July.
He went on to point out that interest rates are actually lower now than they were at the depths of the 2001 economic downturn after the dot-com collapse and 9/11. In other words, this so-called recovery is weaker than most recessions. If this recovery is weaker than your typical recession, imagine what the next recession is going to be like.
The bottom line is all of this is good for gold.
We’ve had this pretty good run-up in the price of gold with everybody expecting the Fed to hike rates. You know, they’ve been dialing back when they believe those hikes are coming, but the anticipation is still for higher rates, just when. But imagine how much stronger gold is going to be when people no longer believe in the Tooth Fairy…they no longer believe that we are going to get higher interest rates and they start factoring in lower interest rates, they start factoring in quantitative easing. And not just factoring it in, but they have to absorb it because the Fed is doing it.”
Highlights from the podcast.
“Gold dumped about 40 bucks on the idea there might not be a Brexit as if the price of gold is going up because of fears Britain may leave the EU. As far as I’m concerned, next week’s vote is a non-event for the gold market.”
“Maybe gold will go up if Britain stays in the EU and maybe it will go up if they vote to leave. I mean, that’s pretty much the way I look at it. I kind of think gold is going to go up regardless of the way the British vote.”
“The price of gold is not going up because of what’s happening in Europe. It’s going up because of what’s going on in the United States, more specifically in Washington, and even more specifically, at the Federal Reserve.”
This is also good news for silver.
“Not only did the Fed not raise rates in June, but they actually backtracked on their intention to raise rates in the future…I mean everything got pulled back. So now, instead of announcing the second hike, the first hike of this year, and getting more hawkish, they actually did the reverse. They actually took rate-hikes off the table, or pushed them further back into time…”
“None of this is a surprise to anybody who has been a faithful listener to this podcast. It’s just people who listen to the bubble-heads, the talking heads on the major financial networks that are surprised by what is going on. They actually expected the Fed to raise rates. And why did they expect that? They actually think that the Fed’s policies have worked. They actually think we have a recovery. They haven’t figured out that it’s a bubble.”
“The question is which one is more likely, a July alien invasion or a rate-hike from the Fed? Because you know, if those are the two choices, I’m kind of leaning to the aliens…But Yellen still wants to maintain that this is all possible. Why? Because she has to pretend that everything worked. To prove that it worked is the raising of the rates.”
“We are still at a fraction of where rates were at the depths of the 2001 recession…The Fed is basically saying that this economy, after a seven-year recovery, is actually weaker than the US economy was at the depths of prior recession. Not the Great Recession, but the one before that.”
“This is supposedly this great economic miracle that President Obama is bragging about having created, and the economic miracle that Hillary Clinton wants to ride on into the White House and claim to continue all this great stuff. Yet this great economy is so weak that it can’t even handle the accommodative monetary policy that was necessary following the bursting of the dot-com bubble and September 11th.”
“This recovery is weaker than most recessions. So if this recovery is weaker than your typical recession imagine what the next recession is going to be like.”
“If they have their druthers, they’re going to try to wait until after the election to unroll another stimulus, because then it doesn’t really matter. Whether it’s Clinton, whether it’s Trump, they might as well go out and do whatever they want to do, which is print money, cut interest rates, do QE4. Of course, it’s not going to work. But that’s not going to stop them from doing it, because that’s the only thing they can do.”
“We’ve had this pretty good run-up in the price of gold with everybody expecting the Fed to hike rates. You know, they’ve been dialing back when they believe those hikes are coming, but the anticipation is still for higher rates, just when. But imagine how much stronger gold is going to be when people no longer believe in the Tooth Fairy…they no longer believe that we are going to get higher interest rates and they start factoring in lower interest rates, they start factoring in quantitative easing. And not just factoring it in, but they have to absorb it because the Fed is doing it.”
Courtesy: Samuel Bryan
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