Gold at $5,000 and beyond: Peter Schiff sticks to his call
February 13, 2013, 3:58 AM
So what does one of the biggest gold bulls out there have to say about recent action that has been anything but bullish for the precious metal?
“It’s hardly any move. These are small moves and the media likes to make a lot of noise whenever this happens. ‘We told you, gold’s a bubble. Get out,’” says Peter Schiff , the chief executive and chief global strategist of Euro Pacific Capital, who has been calling for gold to hit $5,000 since 2000, when it traded at around $300 an ounce.
Gold has languished since Monday’s pummeling, which saw it hit five-week lows. And gold is being outperformed by every other precious/base metal out there so far this year. HSBC lifted its silver SIH3 forecasts on Wednesday. (Also, check out 7 gut checks, which mentions what one hedge fund has said about gold recently.)
But Schiff is nonplussed. “If you compare the volatility to stock markets, it’s a lot less volatile. Also, whenever the stock market makes a nominal new high, the bias in the media against gold goes up,” says Schiff. (Watch Dennis Gartman of The Gartman Letter on CNBC talking about how gold is breaking down.)
Schiff’s big gold call ties into his extremely bearish view on where the dollar is headed, amid the money-printing from the Fed and other central banks and hyperinflation that he says is coming. Watch Schiff on Dow at 14,000 is no big deal
Quantitative easing is one reason many gold bugs like Schiff think the precious metal is a winner in the long run. The more money central banks print in a bid to help growth, the more it may weaken their currencies. And that works in gold’s favor. Conversely, efforts (or anticipation of such efforts) to rein in monetary stimulus tend to clip gold. Check out: Confusion reigns over G-7 position on yen
“We are creating so much money. Japan, Europe, China, the whole world is engaging in a race to debase. Everybody thinks inflation is good, printing money is good, a weak currency is good,” said Schiff.
In some ways, Schiff’s call has been a good one. Gold prices had run up by a factor of five by August 2011, when they hit a settlement high just under $1,900 an ounce on the New York Mercantile Exchange.
But the gold rally has stalled since then, putting Schiff’s call even further into the ether. On Monday, the April contract GCJ3 settled below $1,650 an ounce, a five-week low. And it’s been pretty much rangebound since.
But Schiff takes the long view.
In fact, he says gold could go beyond $5,000, depending on how much longer money printing goes on. “A lot of people will get caught by surprise. People who buy and have the patience to hold on will be rewarded,” he said. (Read also Gold is at a critical juncture)
As for the billion-dollar question – when — well, that’s a tough call even for Schiff. “Can it get to $5,000 in six months? Probably not. In two to three years it’s more likely. I doubt it will take five years. If it takes that long, it will go higher.”
Schiff has gone to the mat over what some say are “out-there” calls like that gold prediction and his stance on inflation. He’s got lots of fans and lots of detractors — like NYT columnist Paul Krugman. Krugman wrote last November that Schiff is among history’s “erroneous” predictors with his long-running cry that that hyperinflation is coming.
Schiff says government calculations are not accurate and we’ve got a CPI averaging between 5% and 7% a year. Watch Krugman vs. Schiff He’s not the only one concerned about hyperinflation though. Check out what veteran trader Art Cashin had to say earlier this week.
He likes to refer to one of his most famous calls that turned out right. He accurately predicted the 2008-2009 financial crisis two years prior. Google ‘Peter Schiff was right’ on YouTube and you’ll this video and plenty of others.
“I take flak from people who don’t really understand what’s going on,” says Schiff. “I don’t think my predictions are wrong. I think my predictions have been proven to be accurate.”
Gold bugs would like to see this big call turn out right. It’s just not clear how patient they’ll have to be.
Gold at $5,000 and beyond: Peter Schiff sticks to his call
February 13, 2013, 3:58 AM
So what does one of the biggest gold bulls out there have to say about recent action that has been anything but bullish for the precious metal?
“It’s hardly any move. These are small moves and the media likes to make a lot of noise whenever this happens. ‘We told you, gold’s a bubble. Get out,’” says Peter Schiff , the chief executive and chief global strategist of Euro Pacific Capital, who has been calling for gold to hit $5,000 since 2000, when it traded at around $300 an ounce.
Gold has languished since Monday’s pummeling, which saw it hit five-week lows. And gold is being outperformed by every other precious/base metal out there so far this year. HSBC lifted its silver SIH3 forecasts on Wednesday. (Also, check out 7 gut checks, which mentions what one hedge fund has said about gold recently.)
But Schiff is nonplussed. “If you compare the volatility to stock markets, it’s a lot less volatile. Also, whenever the stock market makes a nominal new high, the bias in the media against gold goes up,” says Schiff. (Watch Dennis Gartman of The Gartman Letter on CNBC talking about how gold is breaking down.)
Schiff’s big gold call ties into his extremely bearish view on where the dollar is headed, amid the money-printing from the Fed and other central banks and hyperinflation that he says is coming. Watch Schiff on Dow at 14,000 is no big deal
Quantitative easing is one reason many gold bugs like Schiff think the precious metal is a winner in the long run. The more money central banks print in a bid to help growth, the more it may weaken their currencies. And that works in gold’s favor. Conversely, efforts (or anticipation of such efforts) to rein in monetary stimulus tend to clip gold. Check out: Confusion reigns over G-7 position on yen
“We are creating so much money. Japan, Europe, China, the whole world is engaging in a race to debase. Everybody thinks inflation is good, printing money is good, a weak currency is good,” said Schiff.
In some ways, Schiff’s call has been a good one. Gold prices had run up by a factor of five by August 2011, when they hit a settlement high just under $1,900 an ounce on the New York Mercantile Exchange.
But the gold rally has stalled since then, putting Schiff’s call even further into the ether. On Monday, the April contract GCJ3 settled below $1,650 an ounce, a five-week low. And it’s been pretty much rangebound since.
But Schiff takes the long view.
In fact, he says gold could go beyond $5,000, depending on how much longer money printing goes on. “A lot of people will get caught by surprise. People who buy and have the patience to hold on will be rewarded,” he said. (Read also Gold is at a critical juncture)
As for the billion-dollar question – when — well, that’s a tough call even for Schiff. “Can it get to $5,000 in six months? Probably not. In two to three years it’s more likely. I doubt it will take five years. If it takes that long, it will go higher.”
Schiff has gone to the mat over what some say are “out-there” calls like that gold prediction and his stance on inflation. He’s got lots of fans and lots of detractors — like NYT columnist Paul Krugman. Krugman wrote last November that Schiff is among history’s “erroneous” predictors with his long-running cry that that hyperinflation is coming.
Schiff says government calculations are not accurate and we’ve got a CPI averaging between 5% and 7% a year. Watch Krugman vs. Schiff He’s not the only one concerned about hyperinflation though. Check out what veteran trader Art Cashin had to say earlier this week.
He likes to refer to one of his most famous calls that turned out right. He accurately predicted the 2008-2009 financial crisis two years prior. Google ‘Peter Schiff was right’ on YouTube and you’ll this video and plenty of others.
“I take flak from people who don’t really understand what’s going on,” says Schiff. “I don’t think my predictions are wrong. I think my predictions have been proven to be accurate.”
Gold bugs would like to see this big call turn out right. It’s just not clear how patient they’ll have to be.
