Peter Schiff: We’ve Sold Our Monetary Souls to The Devil
The comments below are an edited and abridged synopsis of an article by SchiffGold
Stocks continue to surge thanks to optimism about a Covid-19 vaccine. Of course, stocks have been on a bull run ever since their big drop at the beginning of the pandemic. This led Peter Schiff to ask, if Covid-19 didn’t hurt the stock market, why should a vaccine help?
Moderna and Pfizer have developed vaccines; stocks went up and gold sold off, but why is the market rallying on a Covid vaccine?
With a Covid vaccine, people can go back to work. More people will be traveling and doing things that they used to do pre-Covid. That is good news, except none of the bad news was ever priced into the stock market. The stock market is not down because of Covid; it’s at record highs. So, if the stock market didn’t go down because of the Covid pandemic, why should it rally if the Covid pandemic is coming to an end?
The only thing that makes sense is that traders know it doesn’t really matter what happens with Covid; it’s the stimulus that has kept the market up when it should have sold off due to the economic effects of the pandemic.
Fed Chair Jay Powell said recently that the Fed cannot end emergency measures too soon and called on Congress to pass additional fiscal stimulus. In simple terms, the Fed has no way out. A Covid vaccine could help the economy improve, and earnings will likely increase, but the monetary stimulus will continue as well.
A Covid vaccine is not bearish for gold: “People weren’t buying gold because of Covid. They were buying gold because of the monetary and fiscal policy that was a response to Covid. Well, since those policies are not going to go away—in fact, they’re going to get worse, we’re going to have even more monetary and fiscal stimulus, even if these vaccines work than we had before. So, there’s no reason to be selling gold based on a Covid vaccine. You should be buying gold based on the reality that it doesn’t matter what happens to Covid. We’re going to keep printing money and we’re going to keep interest rates artificially low,” said Peter Schiff.