Gold: It’s Not About North Korea; It’s About the Fed

Gold: It’s Not About North Korea; It’s About the Fed from Schiff Gold

Gold hit two-month highs this week as investors seek safe-haven amidst increasing geopolitical tensions. Pres. Trump promised “fire and fury” if North Korea continues its threatening posture. Meanwhile, relations with Russia continue to deteriorate.

During an interview on RT, Peter Schiff said world tensions and the weak dollar should be playing an even larger role in pushing up the price of gold than they have been. Given the dollar has tanked this year, gold has really not strengthened very much. But Peter went on to say he thinks people will begin to embrace gold – although not for the reasons you might think. He didn’t focus on the current geopolitical brouhaha now in the news cycle, but instead emphasized we should be watching the Federal Reserve and central bank policy.

At some point, I do expect people to embrace gold. Not necessarily because of the geopolitical aspect, but because of the inflationary aspects, because people realize these fiat currencies  are going to lose a lot of purchasing power, that a lot of central banks are stuck at the zero bound, and even if they raise interest rates slightly, they’re going to lower them back down, and they keep doing quantitative easing. So, I think people will be drawn back to gold for the monetary properties it has had for centuries.”

Peter said the real problem for the greenback will come when the Fed finally admits it can’t substantially raise rates, and he touched on some themes he brought out in a speech earlier this year when he said the Fed will ultimately sacrifice the dollar.

Ultimately, the big move in the dollar is going to come when they have to stop raising rates, when they have to admit they are finished tightening, and that they’re going to start easing again, because that hasn’t even begun to be factored into the dollar. Wait until the Fed has to cut rates. Wait until they have to do QE4. I mean, the dollar is losing ground right now when people expect quantitative tightening. They expect the Fed to be shrinking its balance sheet later this year. When the markets are surprised by the Fed having to admit the balance sheet is going to grow even larger instead, I think it’s a long way down for the dollar.”

Peter also reiterated a point we made in a recent report on the development of a new lung cancer treatment using gold. Gold is more than just a pretty metal.

You know, there are a lot of uses for gold. Surprisingly, so many people think there are none. But you know, they have been using gold in medicine for a while, and the fact that they can find new cures that might involve bits of gold, I mean, it’s just another reason that gold works as money – because it has so much intrinsic value. It has properties that other metals don’t have. And so it has a lot of uses separate and apart from it being a store of value or a medium of exchange.”

 

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Peter Schiff

Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for more than twenty years, he joined Euro Pacific in 1996 and served as its President until December 2010, when he became CEO. An expert on money, economic theory, and international investing, he is a highly sought after speaker at conferences and symposia around the world. He served as an economic advisor to the 2008 Ron Paul presidential campaign and ran unsuccessfully for the U.S. Senate in Connecticut in 2010.