Peter Schiff recently appeared on Fox Business Claman Countdown along with Stephen Guilfoyle and Luke Rahbari to talk about gold, bonds and coronavirus.
Stocks have sold off two straight days as investors pile into safe-havens due to coronavirus fears. Yields on both 10-year and 30-year Treasuries fell to record lows this week. Gold has also gotten a healthy boost over the last few days. The yellow metal pushed to $1,690 per ounce on Monday, but gave up some of its gains on Tuesday in the midst of profit-taking.
Liz Claman introduced Peter as the “gold bug” and called him the “man of the hour.” Peter said this is “the most unloved bull market he’s ever seen.”
We’ve been climbing this wall of worry, so I think too many people look to take profits. They really have no idea how high the price of gold is going to go. And it’s not the coronavirus that’s driving it. It’s Fed monetary policy. And especially the additional easing that I think the markets are correctly starting to price in that is going to result from the coronavirus.”
The markets seem to agree with Peter. The Fed Fund Futures are now pricing in at least two rate cuts this year and a 44% chance of a third cut in December.
Liz noted that Treasuries are outperforming gold. Peter said he thinks anybody who is taking refuge in long-term US government bonds thinking they’re a safe-haven is going to lose a lot of money.
In the short run, it’s a crowded trade. People pile in there. What the bond market is doing – they are correctly anticipating future Fed rate cuts. But not because they’re appropriate, but because that’s what the Fed is going to do.”
Peter reminded viewers that he correctly predicted that the Fed would end rate hiking in December 2018 as the stock market was tanking.
That’s the last time you saw the stock market this weak. I said that the next move the Fed would make would be a cut. I said they were going back to zero and that they would go back to QE. They’ve already gone back to QE. They’re not quite at zero yet. But the coronavirus is simply giving the Fed an excuse to do what it was going to do anyway. But it is not going to solve the problem. The Fed is not going to cure the coronavirus. It’s not going to cure the economy. What the Fed is doing is going to make the economy sicker. And ultimately the inflation that they unleash is going to destroy the bonds that people are buying. The real safe haven is gold and that’s what people should be buying if they really understand the problem.”
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