Via Peter Schiff

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Gold ended 2019 up 19%. It was the best year for the yellow metal since 2010.

A strong surge during the last two weeks December pushed the gold above the $1,500 mark and it closed out the year at $1,520.90. After a sluggish fall, gold gained 3.4% in the final month of 2019.

Silver also had a good year. The white metal ended 2019 at $17.89, a 15.6% gain.

According to MarketWatch, based on trade in most-active futures contracts, 2019 charted the strongest performance for gold since 2010, when it rose 29.7%.

Gold and silver yielded big returns last year despite a relatively strong dollar and a record year for stocks. Loose monetary policy served to push both equities and precious metals higher.

Looking back to December 2018, the Federal Reserve was still raising interest rates. Most analysts expected two to three more rate hikes in 2019. But instead, 2019 started off with the Powell Pause. At the time, Peter Schiff said a pause in rate increases wouldn’t be enough.

I think that soon the markets are going to be demanding a lot more from the Fed than just a cessation of rate hikes and a commitment not to shrink the balance sheet. I think what the addicts are going to require is going to be more quantitative easing and a return to zero, and that is exactly what the Federal Reserve is going to provide once it realizes that’s what’s necessary.”

In fact, even before the Fed’s last hike in December 2018, Peter predicted the next move would be a rate cut.

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Peter was right. The Fed ended up cutting rates three times in 2019. Not only that, the central bank effectively launched QE4.

Powell and Company have said that they don’t plan on any more rate cuts in the foreseeable future. But they don’t plan on rate hikes either. In fact, Fed Chair Jerome Powell has said the central bank doesn’t plan to raise rates, even if inflation heats up. In essence, the Fed is willing to let the inflation Jeanie out of the bottle. If that happens, it will be nearly impossible to stuff it back in. And as we have said many times – inflation is good for gold.

Peter says he doesn’t think the central bank is finished cutting. He sais the Fed won’t be done until rates get to zero.

No, they’re not done until they get to zero, and then we’ll see if they’re done or if they want to try to go negative … What the Fed has assured the markets is that under no circumstances will they raise rates. That no matter what the data is, the only decision that the Fed has to make is do rates stay the same or do they go down. And I think that’s the only reason that the stock market has rallied. It’s based on that ‘Powell Put,’ where the fear of a rate hike is no longer in the market. But I do think at some point next year, the economy will be weakening, or maybe we will get a sell-off in the stock market, and the only way for the Fed to try to prop the market back up would be to start doing more rate cuts. And they will supply them as soon as the market demands them.”

Bond yields have been dropping. This helped gold rally through the last weeks of 2019. In a note to clients cited by MarketWatch, AxiTrade said, “Gold is receiving an undercurrent of support into year-end from lower US bond yields, persistent geopolitical risks, and ongoing US economic uncertainty.”

But with the weaker US dollar narrative gathering steam into the election year 2020, risk hedgers are starting to flock to the security of gold rather than the dollar.”

There are reasons to believe gold and silver will continue to perform well into 2020 including continued loose monetary policy, the ongoing trade war, a weakening economy and a global trend toward de-dollarization.

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The World Gold Council offered two major reasons it expects gold to continue to push upward in the coming year.

  • Financial and geopolitical uncertainty combined with low interest rates will likely continue supporting gold investment demand.
  • Net gold purchases by central banks will likely remain robust even if they are lower than the record highs seen in recent quarters.

The WGC also said it expects price volatility to remain high into 2020 due to momentum and speculative positioning. In the short-term, the WGC said we could see a drop in consumer demand for gold due to expectations of weaker economic growth, but structural economic reforms in India and China will support demand in the longterm.

During a recent appearance on Kitco News, Peter said you should own your gold now, before the stampede. Now is the time to buy gold – before the masses figure out what’s going on in the economy and flock to the yellow metal.

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