Gold Will Explode; The Dollar Will Implode When The Markets Figure This Out
The comments below are an edited and abridged synopsis of an article by SchiffGold
Peter Schiff says gold will explode and the US dollar will implode when the markets figure out that the Fed is crying wolf when it comes to monetary tightening.
The Fed wrapped up another meeting without making any changes to its current extraordinary, loose, inflationary monetary policy. But it did hint that it may start tapering its QE program “soon.”
That was enough for the markets. They continue to expect the Fed will tighten monetary policy and fight surging inflation. Gold sold off after the FOMC statement came out.
Gold has battled these headwinds for months. Every time the Fed hints at tightening, gold sells off. Every time inflation numbers come in hot, gold sells off. This doesn’t make sense. Why would investors sell an inflation hedge during an inflationary period? Perhaps they think the central bank will sweep in and successfully fight inflation.
But the Fed cannot possibly tighten in this economic environment. In a recent interview, Peter Schiff said that even if the Fed does begin to taper, it will eventually reverse course and ultimately expand QE.
The Fed knows the only foundation this bubble economy has is its easy money policies. It probably doesn’t have any actual plans to taper. If it starts, it will have to reverse the process because ultimately, the Fed is going to expand the QE program and buy a lot more government Treasuries and mortgage-backed securities.
The markets will tire of this game. They will figure it out; they will understand the Fed’s predicament, and then all bets are off; gold will explode and the dollar will implode. Investors need to be positioned before everyone wakes up.
During the recent stock market sell-off, the dollar was up overall, but it was down against gold. Nevertheless, many people claimed the dollar was strong, proving that it remains the go-to safe haven. But that’s not true.
The dollar was down against the Swiss franc and the yen. Also, gold went up against the dollar. Action in the foreign-exchange market and in gold doesn’t prove that the dollar is retaining its safe-haven status. It’s evidence that more people prefer Japanese yen, Swiss francs and gold to the dollar.