Peter Schiff, the CEO of Euro Pacific Capital, says gold will skyrocket as soon as the Fed reverses course on tapering…
And he may be right.
Since the Fed started tapering its asset purchases in December, the U.S. and global economies have begun to wobble. The “recoveries” in U.S. housing and employment have stalled, and emerging markets are falling to pieces.
If the trend continues, the Fed is likely to get cold feet and either slow or stop its tapering. And once it does, watch gold prices fly.
“At some point, gold’s going to go straight up like a moonshot,” Schiff told CNBC. “Maybe it’s going to take Janet Yellen to come out and call off the taper. Or maybe she’s going to have to say, ‘We’re doing more of it, we’re going to start increasing it.’ I don’t know what that magic moment is going to be.”
Freshly-minted Fed Chair Janet Yellen could indeed stall the tapering process, which was begun by her predecessor, Ben Benanke.
As Schiff pointed out, Yellen could be “an even bigger money printer than Ben Bernanke, who was an even bigger money printer than Alan Greenspan.”
You see, while Bernanke’s scholastic ambitions led him to study the Great Depression, Janet Yellen focused on social concerns, primarily unemployment and income inequality.
Not only that, but promoting job growth is part of the Fed’s dual mandate. And right now, the numbers aren’t looking good. To the contrary, they’re downright gloomy.
The U.S. economy added just 188,000 jobs in December and January combined. That’s well below the 274,000 jobs added in November, alone. In fact, more jobs than that were created in eight out of the 12 months that made up 2013 year. And 11 out of 12 posted a job gain of 141,000 or more.
If the labor market continues to deteriorate, the Fed will at least pause its tapering, and maybe ramp purchases back up.
“This is what’s coming,” Schiff predicted. “And when everybody figures it out, there’s only one place to hide, and that’s gold.”
“For some people, they need a proverbial safe to fall on their head,” he added. “But at some point, people are going to figure out what’s going on. By the time the crowd figures it out, it’s going to be very expensive to buy gold.”
