People Don’t Understand the Significance of $2,000 Gold
The comments below are an edited and abridged synopsis of an article by SchiffGold
Gold has reached a new milestone, breaking above $2,000 for the first time. Peter Schiff talked about the new high in his latest podcast. He says most people still don’t understand the significance of $2,000 gold.
Peter noted that when gold first broached $2,000, it immediately sold off. He said that kind of nervousness is exactly what he wants to see in a gold bull market. He said gold could be building support above $2,000, although it’s too early to tell.
More evidence of the wall of worry is that we haven’t seen a big rush into gold stocks yet. They are doing well, but they are nowhere near their 2011 highs, even though gold is higher than it was at that peak.
An analyst recently discussed why gold’s move above $2,000 wasn’t a big deal and predicted that it would will sell off as soon as real interest rates go positive. Peter said that if you’re worried about gold crashing, you should be more concerned about the stock market, or the real estate market, or the bond market, or the entire economy crashing.
In reality, gold is the only asset that’s not in a bubble because of negative real interest rates.
Silver has gone along for the ride with gold. It was trading just below $26 when Peter recorded his podcast. At that price, silver is still a steal.
The only thing that really surprises him about $2,000 gold is that it took so long to get here, and the rising price of gold tells us that the dollar is in trouble.
Even though the rise in gold is vindicating and financially rewarding, Peter doesn’t feel like celebrating. He thinks the dollar is close to dropping off a cliff.
In the podcast, Peter also talks about the Fed’s willingness to commit to more inflation.