Gold's Bright Future According to Schiff
Gold's Performance in 2024 and Predictions for the Future
Peter Schiff recently appeared on Oliver Renick's show, “Market on Close,” on the Schwab Network. During the show, they discussed the impressive performance of gold in 2024 and speculated about the future of the precious metal. Schiff also shared his thoughts on the price of crude oil, treasury yields, and the recent rate cut by the Federal Reserve.
Schiff drew a comparison between the gold market in 2024 and that of 1979, with one crucial difference. In 1980, the Federal Reserve increased interest rates, effectively halting the rise of gold. However, after the recent announcement by the Fed, rate hikes seem highly unlikely:
“Gold has increased by almost 30% this year. It has reached another all-time record high today, nearing 2700 in the spot market. This is the best performance of gold since 1979... The key difference between now and 1979 is that 1979 marked the end of the gold bull market. In 1980, Paul Volcker increased interest rates to 20%. That move killed the bull and reduced inflation. However, the current Fed is cutting rates and is expected to continue doing so in 2025. Therefore, gold is just getting started.”
The Implications of the Fed's Recent Rate Cut
Schiff suggests that the recent 50 basis point rate cut by the Fed indicates that the institution is either concerned about America's economic future or believes that the country is already in a recession:
“The Fed seems to be very desperate. Typically, they wait until there's a problem before they cut rates. They wait for a significant stock market decline or a recession. However, this time, they're cutting rates even before we're officially in a recession, and with the stock market, real estate prices, and the gold price all at all-time record highs. We've never seen the Fed start cutting rates when gold was at an all-time record high. In fact, the record high in gold proves that the Fed's rate cut was a mistake.”
Debt and its Impact on Economic Data
Schiff argues that much of the data suggesting a healthy economy is distorted by the prevalence of both private and public debt. He cites GDP growth as an example:
“The GDP consists of consumers spending borrowed money to purchase more expensive groceries and such. Government spending of borrowed money is a significant part of that GDP. We have a massive deficit as a result of this artificial GDP growth... We do not have a strong economy. We don't have a growing economy. We have inflation. And inflation creates the illusion of economic growth. But people are getting poorer, even though the numbers are going up.”
For more insights from Schiff and the Austrian school of economics, check out a recent interview between Peter and Jason Burack, the host of “Wall Street for Main Street.”
Bottom Line
The future of gold seems bright according to Peter Schiff, who suggests that the precious metal is just getting started. He also criticizes the Fed's recent rate cut and argues that much of the data suggesting a healthy economy is distorted by the prevalence of debt. What are your thoughts on Schiff's insights and predictions? Do you agree with his assessment of the economy and the future of gold? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, available every day at 6pm.
