With gold and silver taking off to the upside after the Fed released its statement, today King World News interviewed Peter Schiff, Founder of Europacific Capital.
When asked about the rise in gold and silver after the Fed statement Schiff replied, “Ben Bernanke may deny that there is a causal relationship between his monetary policy and rising prices but the market knows differently. In fact when Ben Bernanke denies the relationship, then the expectation is that he is going to continue on his current monetary policy course which is the green light to buy gold, buy silver, buy oil, buy commodities, sell the dollar and that’s exactly what’s happening. That’s why the dollar is hitting new lows today.You could see the dollar begin to fall as soon as the statement was released, and then the fall intensified when he (Bernanke) began opening up his mouth. He’s either lying or he’s incompetent or a combination of both, but neither inspires confidence in our country, our currency or our economy. I mean whenever Ben Bernanke opens his mouth you want to sell anything that is related to the United States. They said they are going to continue to reinvest their maturing principle back into treasuries, so the Fed said they are basically not going to shrink their balance sheet and that’s inflationary on its own. Who are they kidding? The Fed is going to keep buying bonds because if the Fed doesn’t who else is going to do it? There is nobody who is going to buy them because the rates are too low. So the Fed is just talking, but anybody who understands reality can see through it. And obviously with the gold price soaring and the dollar plunging, a lot of people can see through it.”
When asked about the US dollar specifically Schiff remarked, “I think as early as this fall we could be in a dollar crisis because I expect the dollar to weaken throughout the summer. And if we don’t get a big bounce during the summer when they end QE2, which I don’t think they are going to end it but they might pretend they are ending it, if the market senses that the Fed is still printing money which they will be doing, the dollar I think could go into free fall. That is going to force the Fed’s hand and you are going to have really high interest rates and this economy is going to implode...but we have a phony economy that needs to implode.”
When asked about gold Schiff replied, “I think gold is going to have a big move. I think gold is underpriced right now. I don’t think this is going to be the move that wakes them (the public) up out of their coma, I think that move is coming. It’s going to be a much more spectacular move down the line.”
When asked what it will take to get the gold stocks going Schiff had this to say, “When this market senses that this gold rally is real. The gold bull market is 10 years old, you would think they would figure it out by now but there is more fear than greed in the gold market and you can see that in the mining stocks. So I think we are still early in the gold bull market.”
One things is certain in the gold and silver markets and that is that there is an increase in the violence of the moves. It is important to remember that this is normal, healthy activity during a secular bull market.
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