The Economic Recovery is a Mirage

“This stuff goes on longer than you expect. People were asking the same questions about the housing bubble, which I was warning about for years. They would say ‘well, nothing bad has happened, so what makes you think it’s going to?’ It’s just inevitable.

The fact that we’ve been able to postpone the day of reckoning for so long just makes the problems worse, which means the day of reckoning is worse. The further back into the future we deal with the consequences, the bigger the problems are, the bigger the consequences.

Right now, part of the reason we are able to continue this charade is all of the other countries, particularly Europe and Japan, are in so much trouble that people assume we are the safe haven. They think we are the only economy that is recovering.

We’re not, it’s like a mirage in the desert, and the closer you get to it, you eventually find out it’s an illusion.”

- Source, Peter Schiff via ETF Daily

Everyone is Confusing a Bubble for a Genuine Recovery

We are more dependent on QE than ever before. So, rather than raising interest rates next year like everybody expects, I think they are going to launch QE 4, which nobody expects. There is no end to this.”

The Fed has to do this indefinitely because the minute they stop propping up this artificial phony economy, it will implode. 

Everyone is confusing a bubble for a genuine recovery. It’s not.

- Source, Peter Schiff via ETF Daily

The FED Didn't Solve Any Problems, They Made Things Worse

“Because they did QE 1, 2 and 3 and kept interest rates at zero, the Federal Reserve saved the U.S. economy and they solved all the problems. Because the problems have been solved, we no longer need the Fed and everything is fine.

That is complete fantasy. There is a bigger disconnect now than there was just before the 2008 financial crisis. The truth of the matter is the Federal Reserve didn’t solve any of our problems. They made them all worse."

- Peter Schiff via ETF Daily

The Abenomics Death Spiral

As Japanese Prime Minster Shinzo Abe has turned his country into a petri dish of Keynesian ideas, the trajectory of Japan's economy has much to teach us about the wisdom of those policies. And although the warning sirens are blasting at the highest volumes imaginable, few economists can hear the alarm.

Data out this week shows the Japanese economy returning to recession by contracting for the second straight quarter (and three out of the last four quarters). The conclusion reached by the Keynesian apologists is that the benefits of inflation caused by the monetary stimulus have been counteracted, temporarily, by the negative effects of inflation caused by taxes. This tortured logic should be a clear indication that the policies were flawed from the start.

Although the Japanese economy has been in paralysis for more than 20 years, things have gotten worse since December 2012 when Abe began his radical surgery. From the start, his primary goal has been to weaken the yen and create inflation. On that front, he has been a success. The yen has fallen 23 percent against the dollar and core inflation, which was running slightly negative in 2012, has now been "successfully" pushed up to 3.1 percent according to the Statistics Bureau of Japan.

But there is no great mystery or difficulty in creating inflation or cheapening currency. All that is needed is the ability to debase coined currency, print paper money or, as is the case of our modern age, create credit electronically. These "successes" should not come as a surprise when one considers the relative size of Abe's quantitative easing program. For much of the past two years, the Bank of Japan (BoJ) has purchased about 7 trillion yen per month of Japanese government bonds, which is the equivalent of about $65 billion U.S. [Forbes 9/24/14, Charles Sizemore] While this is smaller than the $85 billion per month that the Federal Reserve purchased during the 12-month peak of our QE program, it is much larger in relative terms.

The U.S. has roughly 2.5 times more people than Japan. Based on this multiplier, the Japanese QE program equates to $162.5 billion, or 91 percent larger than the Fed's program at its height. But, according to IMF estimates, the U.S. GDP is 3.3 times larger than Japan. Based on that multiplier, Japanese QE equates to $214.5 billion per month, or 152 percent larger. And unlike the Federal Reserve, the Bank of Japan hasn't even paid any lip service to the idea that its QE program will be scaled back any time soon, let alone wound down.

In fact, Abe's promises to do more were spectacularly realized in a surprise move on October 31 when the BoJ, claiming "a critical moment" in its fight against deflation, announced a major expansion of its stimulus campaign. (The fact that official inflation is currently north of 3 percent — a multi-year high, seems to not matter at all.)

At the same time the BoJ also announced its intention to roughly triple its pace of its equity and property purchases on Japan's stock market. According to Nikkei's Asian Review (9/23/14), the BoJ now holds an estimated 7 trillion yen portfolio of Japanese stock and real estate ETFs. Even Janet Yellen has yet to cross that Rubicon.

And what has this financial shock and awe actually achieved, other than 3 percent inflation, a weaker yen, a stock market rally, and continued international praise for Abe? Well, unfortunately nothing other than a bona fide recession and a growing threat of stagflation.

The weaker yen was supposed to help Japan's trade balance by boosting exports. That didn't happen. In September, the country reported a trade deficit of 958 billion yen ($9 billion), the 27th consecutive month of trade deficits. The deterioration occurred despite the fact that import prices rose steeply, which should have reduced imports and boosted exports. And while some large Japanese exporters credited the weak yen for easier sales overseas, small and mid-sized Japanese businesses that primarily sell domestically have seen flat sales against rising fuel and material costs.

But price inflation is not pushing up wages as the Keynesians would have expected. In August, Japan reported real wages (adjusted for inflation) fell 2.6 percent from the year earlier, the 14th straight monthly decline. This simply means that Japanese consumers can buy far less than what they could have before Abenomics. This is not a recipe for happy citizens.

Japanese consumers must also deal with Abe's highly unpopular increase of the national consumption tax from 5 percent to 8 percent (with a planned increase to 10 percent next year). The sales tax was largely put in place to keep the government's debt from spiraling out of control as a result of the fiscal stimulus baked into Abenomics. And while economists agree nearly universally that the price increases that have resulted from the sales tax have caused a sharp drop in consumer spending, they fail to apply the same logic that price increases due to inflation will deliver the same result.

A bedrock Keynesian belief is that falling prices create recession by inspiring consumers to delay purchases until prices fall further. According to the theory, even a 1-percent annual drop in prices could be sufficient to decimate consumers' willingness to spend. Conversely, they believe rising prices, otherwise known as inflation, will spur spending, and growth, as it inspires people to buy now before prices rise further. But if consumers have clearly been put off by rising prices due to taxation, why would they be encouraged if they were to rise for monetary reasons? Don't look for an explanation, there isn't any. In reality, as any store owner will tell you, shoppers shop when prices are low and stay at home when prices are high.

Despite the bleak prospects for Japan, Abe continues to bask in the love of western economists and investors. In an October 6 interview with the The Daily Princetonian, Paul Krugman, who has emerged as Abe's chief champion and apologist, responded to a question about the European economic crisis by saying "Europe need something like Abenomics only Abenomics, I think, is falling short, so they need something really aggressive in Europe." A Bloomberg article ran on November 18 under the headline "Abe's $1 Trillion Gift to Stock Market Shields Recession Gloom." So according to Bloomberg, Abenomics is not responsible for the country's fall back into recession, which hurts everyone, but it is responsible for the surging stock market, which primarily benefits the wealthy.

One wonders how much more bad news must come out of the Japanese experiment in mega-stimulus before the Keynesians reassess their assumptions? Oh wait ... I'm sorry, for a second there I thought they were susceptible to logic. But those who are not blinded by left-wing dogma should take a good look at where the road of permanent stimulus ultimately leads.

- Source, Peter Schiff via CNBC

US Dollar Collapse and the Rise of China

Peter Schiff discusses the false strength recently seen in the US dollar. He sees a global recession of epic proportions on the horizon. More QE is on the way.

There Will Be More QEs than Rocky Movies

This week, we are delighted to present a new guest, Mr. Peter Schiff. Mr. Schiff is the President and Chief Global Strategist of Euro Pacific Capital, a registered broker-dealer based in Westport, Connecticut. He is also the president of EuroPac Precious Metals, a bullion dealer and EuroPac Bank, an offshore bank headquartered in St. Vincent and the Grenadines.

Peter Schiff - QE4 is Coming

Tending Bar Between Jobs Should Not Count As Being Employed

Live by QE Die by QE. Don’t Be Fooled by the Strong Dollar!

Peter Schiff of Euro Pacific Capital and SchiffGold.com predicts, “I think we are going back into recession, and what is the Fed going to do to avoid that recession? More QE, and maybe that’s going to be the wakeup call. The only reason we’ve been able to get away with it is because people believe it’s temporary. They believe it’s going to work. They believe the Fed has an exit strategy. When they realize it didn’t work and it failed, and because it failed, it’s never going to end. It will be repeated indefinitely. It’s QE infinity, which is what I said from day one. Once we went down that road, we would never stop. I said if we had an economy that lived by QE that it would die by QE. That’s exactly what’s going to happen.”

- Source, USA Watchdog

Peter Schiff's Message to Switzerland: Save Your Currency and Your Country

Peter Schiff appeals to the Swiss people to vote "yes" on the Save Our Swiss Gold initiative on November 30th. He shares his wisdom and explains how he sees a coming collapse on the horizon. Switzerland is one few safe havens that Peter Schiff see's in the world.

Ending QE Will Plunge US Into Severe Recession

Peter Schiff appears on CNBC with Rick Santelli, where he discusses Inflation and Growth. He believes that if the FED ends QE, they will plunge the US economy into a severe recession.

Greenspan's QE Criticism Too Little Too Late

The U.S Recovery is as Real as Ireland is a Part of the U.K.

Central Banks Got It All Wrong on Inflation

Biggest Crisis Ever Looms

This year has seen plenty of political turmoil - the waves of instability seem to do little to the world’s economy. Will that remain so for long? And if not - is there an another crisis looming, like the one that left thousands if not millions helpless and in poverty in 2008? And, finally, what does tomorrow hold for dollar? We ask these questions to leading financial analyst and CEO of Euro Pacific Capital Peter Schiff.

- Source, Russia Today

America is the most dependant country on the planet

I think America is the most dependant country on the planet. We depend on the rest of the world, like no other country does. We don’t have the ability anymore to produce the consumer goods that we require and so we count on the rest of the world to fill the void, to send us all the goods that they produce in exchange for nothing - because we don’t have the exports to pay for our imports. We count on the world to lend us the money to buy the products that they produce. We have the world’s biggest trade deficits, the biggest current account deficits, we’re the worlds’ biggest indebted nation. So, in a way, we’re like a global economic parasite - we feed off the rest of the world and we need to maintain the illusion that the world depends on America instead of the other way around. Of course, in the long run, I think this relationship is doing far more damage to America than to the global economy, because eventually the world is going to figure out what we’re doing, and they’re not going to support us anymore, and the world will pull the plug on america and then, of course, because this has gone on for so many years and our economy has been able to evolve in such an unsustainable bubble fashion - it’s going to be very, very painful when we have to live within our means again and start to produce and save rather than borrow and consume.

- Source, Peter Schiff via Russia Today

Coming Collapse Becoming More Evident to Investors

Peter Schiff believes that a coming collapse is on the way. Are investors waking up to this reality? Finally?

Stock Market Going Up For Wrong Reasons

Peter Schiff discusses why he thinks stocks are going up for the wrong reasons. Interest rates are also discussed. The FED has it all wrong when it comes to inflation according Peter Schiff.

The FED CAN'T Raise Interest Rates

I think a lot of people are delusional. They believe in this false narrative, they have confidence in what the Federal Reserve has done, the believe the forecasts of many of the economists about vibrant growth in the U.S. economy in years ahead, and of how Fed will raise interest rates, and the economy continues to expand. All that is impossible. The Federal Reserve has placed itself into position where they can never raise any interest rates - in fact, I don’t think they’re going to be able to go very long without launching another round of quantitative easing, because our bubble economy is completely dependant on the continuation of that policy. When the Fed takes it away, we’re headed for a massive economic collapse.

- Source, Peter Schiff via Russia Today

The FED is Doing a Lot of Damage

Right now, a lot of people don’t appreciate how much damage the Federal Reserve is actually doing, because there’s a lot of false optimism right now regarding the success of the Federal Reserve's QE program, and its 0% interest rates. People believe that it’s been successful at reviving the U.S. economy, and that’s why there's some interest in the dollar in our markets - but all what Fed has succeeded in doing is exacerbating all of the problems that caused the 2008 financial crisis and they’ve inflated a much bigger bubble - so I think the crisis that we have coming is unfortunately going to be much worse that the one we passed.

- Source, Peter Schiff via RT

Gold Videocast: Peter Schiff Answers Questions from You!

In his latest Gold Videocast from Euro Pacific Precious Metals, Peter takes the time to answer some of the trickier questions he gets from his clients and subscribers.

Fed Haters vs. Fed Cheerleaders

FED Hater, Peter Schiff and FED Cheerleaders go face to face in this battle on CNBC.

Ron Paul and Peter Schiff Talk Iraq, Perry, Rand, Fed, IRS

Peter Schiff and the legendary Ron Paul discuss current events in the United States and around the world. Peter brings up the unfolding situation in Iraq, his son Rand, the FED and the IRS.

Peter Schiff on Economy and Inflation

Yellen: Where No Man Has Gone Before

Although Fed Chairwoman Janet Yellen said nothing new in her carefully manicured semi-annual testimony to Congress last week, her performance there, taken within the context of a lengthy profile in the New Yorker (that came to press at around the same time), should confirm that she is very different from any of her predecessors in the job. Put simply, she is likely the most dovish and politically leftist Fed Chair in the Central Bank's history.

While her tenure thus far may feel like a seamless extension of the Greenspan/Bernanke era, investors should understand how much further Yellen is likely to push the stimulus envelope into unexplored territory. She does not seem to see the Fed's mission as primarily to maintain the value of the dollar, promote stable financial markets, or to fight inflation. Rather she sees it as a tool to promote progressive social policy and to essentially pick up where formal Federal social programs leave off.

Despite her good intentions, the Fed's blunt instrument policy tools of low interest rates and money supply expansion can do nothing to raise real incomes, lift people out of poverty, or create jobs. Instead these moves deter savings and capital investment, prevent the creation of high paying jobs, and increase the cost of living, especially for the poor (They are also giving rise to greater international financial tensions, which I explore more deeply in my just released quarterlynewsletter). On the "plus" side, these policies have created huge speculative profits on Wall Street. Unfortunately, Yellen does not seem to understand any of this. But she likely has a greater understanding of how the Fed's monetization of government debt (through Quantitative Easing) has prevented the government from having to raise taxes sharply or cut the programs she believes are so vital to economic health.

But as these policies have also been responsible for pushing up prices for basic necessities such as food, energy, and shelter, these "victories" come at a heavy cost. Recent data shows that consumers are paying more for the things they need and spending less on the things they want. But Yellen simply brushes off this evidence as temporary noise.

In her Congressional appearances, Yellen made clear that the end of the Fed's six-year experiment with zero percent interest rates is nowhere in sight. In fact, the event is less identifiable today than it was before she took office and before the economy supposedly improved to the point where such support would no longer be needed. The Bernanke Fed had given us some guidance in the form of a 6.5% unemployment rate that could be considered a milestone in the journey towards policy normalization. Later on these triggers became targets, which then became simply factors in a larger decision-making process. But Yellen has gone farther, disregarding all fixed thresholds and claiming that she will keep stimulating as long as she believes that there is "slack" in the economy (which she defines as any level of unemployment above the level of "full employment.") Where that mythical level may be is open for interpretation, which is likely why she prefers it.

The Fed's traditional "dual mandate" seeks to balance the need for job creation and price stability. But Yellen clearly sees jobs as her top priority. Any hope that she will put these priorities aside and move forcefully to fight inflation when it officially flares up should be abandoned.

These sentiments are brought into focus in the New Yorker piece, in which she unabashedly presents herself as a pure disciple of John Maynard Keynes and an opponent of Milton Friedman, Ronald Reagan, and Alan Greenspan, figures who are widely credited with having led the rightward movement of U.S. economic policy in the last three decades of the 20th Century. (Yellen refers to that era as "a dark period of economics.")

Perhaps the most telling passage in the eleven-page piece is an incident in the mid-1990s (related by Alan Blinder who was then a Fed governor along with Janet Yellen). The two were apparently successful in nudging then Fed Chairman Alan Greenspan into a more dovish position on monetary policy. When the shift was made, the two agreed "...we might have just saved 500,000 jobs." The belief that central bankers are empowered with the ability to talk jobs in and out of existence is a dangerous delusion. As her commitment to social justice and progressivism is a matter of record, there is ample reason to believe that extremist monetary policy will be in play at the Yellen Fed for the duration of her tenure.

For the present, other central bankers have helped by taking the sting out of the Fed's bad policy. On July 16 the Wall Street Journal reported that the Chinese government had gone on a torrid buying spree of U.S. Treasury debt, adding $107 billion through the first five months of 2014. This works out to an annualized pace of approximately $256 billion per year, or more than three times the 2013 pace (when the Chinese government bought "just" $81 billion for the entire calendar year). The new buying pushed Chinese holdings up to $1.27 trillion.

At the same time, Bloomberg reports that other emerging market central banks (not counting China) bought $49 billion in Treasuries in the 2nd Quarter of 2014, more than any quarter since 3rd Quarter of 2012. These purchases come on the heels of the mysterious $50 billion in purchases made by a shadowy entity operating out of Belgium in the early months of this year (see story).

So it's clear that while the Fed is tapering its QE purchases of Treasury bonds, other central banks have more than picked up the slack. Not only has this spared the U.S economy from a rise in long-term interest rates, which would likely prick the Fed-fueled twin bubbles in stocks and real estate, but it has also enabled the U.S. to export much of its inflation.As long as this continues, the illusion that Yellen can keep the floodgates open without unleashing high inflation will gain traction. She may feel that there is no risk to continue indefinitely.

But as the global economic status quo is facing a major crisis (as is examined in this newsletter), there is reason to believe that we may be on the cusp of a major realignment of global priorities. Despite her good intentions, if Yellen and her dovish colleagues do not receive the kind of open-ended international support that we have enjoyed thus far in 2014, the full inflationary pain of her policies will fall heaviest on those residents of Main Street for whom she has expressed such deep concern.

- Source, Peter Schiff, via Schiff Radio

Fed Should Reverse Policy!

“The Fed should reverse its policy; its policy has been a mistake, it has inflated a bubble, and it has prevented legitimate economic growth from taking place. We have serious structural problems.”

- Source, Peter Schiff via Fox Business

Doug Casey on The Peter Schiff Show

Doug Casey and Peter Schiff discuss gold, the economy and the great crash that is coming.

The Bond Trap

The American financial establishment has an incredible ability to celebrate the inconsequential while ignoring the vital. Last week, while the Wall Street Journal pondered how the Fed may set interest rates three to four years in the future (an exercise that David Stockman rightly compared to debating how many angels could dance on the head of a pin), the media almost completely ignored one of the most chilling pieces of financial news that I have ever seen. According to a small story in the Financial Times, some Fed officials would like to require retail owners of bond mutual funds to pay an "exit fee" to liquidate their positions. Come again? That such a policy would even be considered tells us much about the current fragility of our bond market and the collective insanity of layers of unnecessary regulation.

Recently Federal Reserve Governor Jeremy Stein commented on what has become obvious to many investors: the bond market has become too large and too illiquid, exposing the market to crisis and seizure if a large portion of investors decide to sell at the same time. Such an event occurred back in 2008 when the money market funds briefly fell below par and "broke the buck." To prevent such a possibility in the larger bond market, the Fed wants to slow any potential panic selling by constructing a barrier to exit. Since it would be outrageous and unconstitutional to pass a law banning sales (although in this day and age anything may be possible) an exit fee could provide the brakes the Fed is looking for. Fortunately, the rules governing securities transactions are not imposed by the Fed, but are the prerogative of the SEC. (But if you are like me, that fact offers little in the way of relief.) How did it come to this?

For the past six years it has been the policy of the Federal Reserve to push down interest rates to record low levels. In has done so effectively on the "short end of the curve" by setting the Fed Funds rate at zero since 2008. The resulting lack of yield in short term debt has encouraged more investors to buy riskier long-term debt. This has created a bull market in long bonds. The Fed's QE purchases have extended the run beyond what even most bond bulls had anticipated, making "risk-free" long-term debt far too attractive for far too long. As a result, mutual fund holdings of long term government and corporate debt have swelled to more $7 trillion as of the end of 2013, a whopping 109% increase from 2008 levels.

Compounding the problem is that many of these funds are leveraged, meaning they have borrowed on the short-end to buy on the long end. This has artificially goosed yields in an otherwise low-rate environment. But that means when liquidations occur, leveraged funds will have to sell even more long-term bonds to raise cash than the dollar amount of the liquidations being requested.

But now that Fed policies have herded investors out on the long end of the curve, they want to take steps to make sure they don't come scurrying back to safety. They hope to construct the bond equivalent of a roach motel, where investors check in but they don't check out. How high the exit fee would need to be is open to speculation. But clearly, it would have to be high enough to be effective, and would have to increase with the desire of the owners to sell. If everyone panicked at once, it's possible that the fee would have to be utterly prohibitive.

As we reach the point where the Fed is supposed to wind down its monthly bond purchases and begin trimming the size of its balance sheet, the talk of an exit fee is an admission that the market could turn very ugly if the Fed were to no longer provide limitless liquidity. (See my prior commentaries on this, including May 2014's Too Big To Pop)

Irrespective of the rule's callous disregard for property rights and contracts (investors did not agree to an exit fee when they bought the bond funds), the implementation of the rule would illustrate how bad government regulation can build on itself to create a pile of counterproductive incentives leading to possible market chaos.

In this case, the problems started back in the 1930s when the Roosevelt Administration created the FDIC to provide federal insurance to bank deposits. Prior to this, consumers had to pay attention to a bank's reputation, and decide for themselves if an institution was worthy of their money. The free market system worked surprisingly well in banking, and could even work better today based on the power of the internet to spread information. But the FDIC insurance has transferred the risk of bank deposits from bank customers to taxpayers. The vast majority of bank depositors now have little regard for what banks actually do with their money. This moral hazard partially set the stage for the financial catastrophe of 2008 and led to the current era of "too big to fail."

In an attempt to reduce the risks that the banking system imposed on taxpayers, the Dodd/Frank legislation passed in the aftermath of the crisis made it much more difficult for banks and other large institutions to trade bonds actively for their own accounts. This is a big reason why the bond market is much less liquid now than it had been in the past. But the lack of liquidity exposes the swollen market to seizure and failure when things get rough. This has led to calls for a third level of regulation (exit fees) to correct the distortions created by the first two. The cycle is likely to continue.

The most disappointing thing is not that the Fed would be in favor of such an exit fee, but that the financial media and the investing public would be so sanguine about it. If the authorities consider an exit fee on bond funds, why not equity funds, or even individual equities? Once that Rubicon is crossed, there is really no turning back. I believe it to be very revealing that when asked about the exit fees at her press conference last week, Janet Yellen offered no comment other than a professed unawareness that the policy had been discussed at the Fed, and that such matters were the purview of the SEC. The answer seemed to be too canned to offer much comfort. A forceful rejection would have been appreciated.

But the Fed's policy appears to be to pump up asset prices and to keep them high no matter what. This does little for the actual economy but it makes their co-conspirators on Wall Street very happy. After all, what motel owner would oppose rules that prevent guests from leaving? The sad fact is that if investors hold a bond long enough to be exposed to a potential exit fee, then the fee may prove to be the least of their problems.

- Source, Peter Schiff

Freedom Fest 2014 "The Real Crash"

Peter Schiff talks about his book, "The Real Crash," in which he argues that the U.S. is heading for an economic collapse that will dwarf what happened in 2008. Mr. Schiff spoke at FreedomFest, held at the Planet Hollywood Resort & Casino in Las Vegas.

Draghi Hits Savers To Salvage Faux Recovery

On June 5th, Mario Draghi, President of the European Central Bank (ECB), announced a package of measures, including a policy of negative interest rates, aimed at encouraging or even forcing Eurozone banks to increase their lending to businesses.Although previously imposed by Swiss banks on their depositors, this will be the first time that a central bank has charged negative interest rates. The package also contained a reduction in Base Rate, a further major new Long Term Refinancing Operation (LTRO), a reaffirmation of 'Forward Guidance' to indicate low interest rates for the foreseeable future, and hints that the ECB might in future engage in Bernanke-style Quantitative Easing (QE).

Taken together, the total package is manna from heaven, or money for nothing, for the neo-Keynesians now holding power in most Eurozone governments. However, to Austrian School economists, it amounts to a political acceptance by Germany of a further postponement of the price of economic reality. It raises the eventual price to be paid in future for the illusion of economic growth today. In the meantime, the package likely will discourage savings, while perhaps encouraging imprudent lending, mal-investment, an asset price boom and currency distortions due to a carry trade based on low cost euros.

Stock markets rose strongly on Draghi's news. Amazingly, the 2.58 percent yield on 10-year Spanish government bonds fell below that of 10-year U.S. Treasuries. Given the continued structural problems that plague the Spanish economy, this fact indicates persistent delusions in markets.

It is hoped that charging a negative interest rate of 0.10 percent on bank deposits with the ECB will encourage banks to lend their excess deposits to other banks (in the interbank market) or to lend to corporate or retail borrowers. It is a desperate measure to force banks to take more risks. One of the unforeseen results may be the further development of the so-called "carry trade."

Given the relatively low cost of borrowing euros vis-à-vis other currencies, many investors could be tempted to borrow euros to purchase higher yielding currency (either for an interest rate spread or to use the newly raised funds to invest in the host country). For example, an investor may borrow euros, exchange them for British Pounds and invest the proceeds in the London property market, inflating further what the Bank of England has warned is a dangerous property bubble. In addition, upwards pressure is exerted on Sterling rendering British exports less price competitive. Of course, this suits Eurozone members such as Germany.

Although Draghi's decision to drop the interest rates on the ECB's massive 400 billion euros Long Term Refinancing Operation (LTRO)has received less publicity, its impact may be just as great. The lower LTRO rate may encourage further risky lending and dubious investment. In the short-term such lending will conceal current bad loans, boost speculation and financial markets. The future costs of default likely will be socialized. But, by then, it is to be hoped that those bankers and politicians responsible will have been promoted or moved on!

In addition, the continuation of ultra low interest rates, under QE, will erode savings further and even discourage the ethos of saving in favor of current spending. The discouragement of saving in favor of current synthetic growth appears to be politically deceptive and deeply destructive of a healthy economy.

Furthermore, some would argue that, with bond markets at record highs, most banks are at far greater risk than appears at first sight. Already, Eurozone banks are far more highly leveraged than their American counterparts. As such, they are especially vulnerable to a dramatic rise in interest rates and a collapse in government bond prices.

Mario Draghi is acknowledged widely for his PR ability. However, more prudent observers see him more as a conjuror. While his policies have not attracted as many headlines as the Federal Reserve's Quantitative Easing program, the full roster of the ECB's liquidity injectors is perhaps more injurious to economic growth. Draghi has joined and even exceeded the central bank 'monopoly money' policies of the United States, Great Britain and Japan.

It's a shame. The ECB could have been a beacon of sanity in an otherwise insane world.

- Source, Peter Schiff

The More US Spies on the World the Quicker the Dollar Loses Power

Germany is again having to deal with revelations that the US has been spying on it. A German intelligence agent was allegedly sending hundreds of top secret documents straight to Washington. Peter Schiff, President of investment group Euro Pacific Capital, joins RT to discuss this issue.

Irwin Schiff's motion to the Supreme Court

My father makes a powerful case that the IRS has been collecting the income tax in violation of law, multiple Supreme Court decisions, and the U.S. Constitution. At the very least his efforts provide compelling evidence of the sincerity with which he holds his beliefs and that his conduct was in no way criminal. My father is 86, practically blind, in failing health, yet is still fighting for a cause he wholeheartedly believes in. He is proceeding without a lawyer and despite his physical limitations and the limited computer access provided in federal prisons, he still managed to put this comprehensive motion together. Read it yourself and share it with as many people as you can. My father would appreciate your assistance in making sure that his message is heard. Even if the courts ignore it, let's try and make sure that the American people do not. Thanks for your help.

- Source, Peter Schiff

Is This What A Bursting Bubble Looks Like?

Peter Schiff discusses what's next for stocks and the bubble that has formed in the general stock market. Is it a Boom or a Bubble?

Debt is No Salvation

Thus far 2014 has been a fertile year for really stupid economic ideas. But of all the half-baked doozies that have come down the pike (the perils of "lowflation," Thomas Piketty's claims about capitalism creating poverty, and President Obama's "pay as you earn" solution to student debt), an idea hatched last week by CNBC's reliably ridiculous Steve Liesman may in fact take the cake. In diagnosing the causes of the continued malaise in the U.S. economy he explained, "the problem is that consumers are not taking on enough debt." And that "historically the U.S. economy has been built on consumer credit." His conclusion: Consumers must be encouraged to borrow more money and spend it. Given that Liesman is CNBC's senior economic reporter, I would hate to see the ideas the junior people come up with.

Before I get into the historical amnesia needed to make such a statement, we first have to confront the question of causation. Just as most economists believe that falling prices cause recession, rather than the other way around, Liesman believes that economic growth is created when people tap into society's savings in order to buy consumer goods that they could not otherwise afford. But consumption does not create growth. Increasing productive output allows for greater consumption. Something needs to be produced before it can be consumed.

But even allowing for this misunderstanding, consumer credit does little to increase consumption. All it accomplishes is to pull forward future consumption into the present (while generating a fee for the banker). This is like giving yourself a blood transfusion from your left arm to your right. Nothing is accomplished, except the possibility of spilling blood on the floor. But it's not even that benign.
If, for instance, a consumer borrows to take a vacation, the debt will have to be repaid, with interest, from future earnings. This just means that rather than saving now (under-consuming) to pay in cash (which under normal circumstances would earn interest and defray the cost) for a vacation in the future, the consumer borrows to vacation now and pays for it in the future. But shifting consumption forward can only create the illusion of growth.

Unlike business credit that can be self-liquidating (businesses borrow to invest, thereby expanding capacity, increasing revenue, and gaining a better ability to repay the loan out of increased earnings), consumer credit does nothing to help borrowers repay. Why would a consumer expect it to be easier to pay for a vacation in the future that he can't afford in the present? Especially when he is using credit to pay, which will add interest costs to the final bill. As a result, consumer loans diminish future consumption more than current consumption is increased.

In fact, borrowing to consume is the worst use of society's limited store of savings. As explained in my book, How an Economy Grows and Why it Crashes, savings leads to capital formation and investment, which grows productive capacity. When production grows, goods and services become more plentiful and affordable, thereby raising living standards. Consumer credit interferes with this process. Funds borrowed for consumption are not available for more productive uses. Since consumer credit reduces investment, it also reduces future production, which must also reduce future consumption.

Liesman is also mistaken that consumer credit has been the historic foundation of growth in the United States. It may surprise him to know that consumer credit was largely unknown until the second half of the 20th Century. Before that, people simply did not, or could not, buy things on credit. They tended to pay in cash (even for cars) or with the now quaint system of lay-a-way (which is essentially the opposite of consumer credit). Credit cards did not become ubiquitous until the 1970s. It was also much more common for Americans to save money for an uncertain future, the "rainy day," that we were always being warned about. But savings rates now are only a fraction of where they had been for most of our history. Consumers now expect to borrow their way out of any crisis. Yet the American economy enjoyed some of its best years before consumer credit ever became an option.

What Liesman is really advocating is that consumers borrow money to buy things they cannot afford. What kind of economic advice is that? Especially now that one third of Americans have less than $1,000 saved for retirement; a statistic so shocking that even CNBC recently cited it as a cause for concern. Does he really think that these savings-short Americans should take on even more consumer debt? Does creating a nation of bankrupt seniors who are too broke to retire ever create a more prosperous society?

Contrary to Liesman's asinine contention, it's not consumer credit that built the U.S. economy but its opposite - savings! Under-consumption not excess-consumption is what made America great. By saving instead of spending, consumers provided society with the means to increase investment and production that led to rising living standards for all. Unfortunately, it's consumer credit that is helping to destroy what savings once built.

- Source, Peter Schiff

Peter Schiff New Hampshire Liberty Forum Full Presentation

Unfortunately just like 1976, a true economic recovery is not just around the corner. More likely we are in the eye of an economic storm that will blow much.

Casey Research interviews Peter Schiff

Casey Research chairman Doug Casey interviews financial pundit and author Peter Schiff. Their conversation covers a range of issues: gold, the validity of th.

For the latest Peter Schiff, go to - Peter Schiff interviewed an Anarchist on his show, Stefan Molyneux. In this interview, Peter .

The Bubble is a feature length documentary that ask those who predicted the greatest recession since the Great Depression.

Mark Dow vs. Peter Schiff on Gold, Inflation, Fed

Peter Schiff is questioned on CNBC about his stance in regards to the FED. Peter Schiff still believes that the FED can't end QE. He believes that the FED's assessment of the US economy is completely wrong.

Peter Schiff on US Economy & Lacy Hunt on Ineffectiveness of Monetary Policy

As the World Cup begins, the Brazilian economy is in need of a boost. Growth has been decelerating for a couple of years now. While the economy was growing at 7.5 percent in 2010, growth was down to a meager 2.3 percent last year. Edward takes a look at how the Cup might affect the Brazilian economy.

Then, we bring you part two of our interview with Peter Schiff who discusses the current state of the US economy. Schiff talks about debt, inflation, and Federal Reserve policy. After the break, Erin brings you her conversation with Dr. Lacy Hunt who believes that monetary policy is not effective with such high levels of debt in our economy.

For today's Big Deal, Edward Harrison sits down with Breaking the Set producer Manny Rapalo to talk about the World Cup, Brazil, and international soccer.

- Source, Russia Today

How Clueless Can People Be? Now We Know!

Peter Schiff talks about the dumbing down of Americans and how kids going to college these days is a waste of money. He breaks down how government is making student loans more expensive.

David Brat Knows Workers Suffer Most from Minimum Wage Laws

Peter Schiff discusses David Brats recent avoidance of the minimum wage laws when questioned. Peter Schiff explains how dangerous the minimum wage laws can be and are.

Peter Schiff on Crisis in Iraq Hitting World Economy

Iraq's largest oil refinery shut down Wednesday amid ongoing fighting between military forces and insurgents with the Islamic State in Iraq and Syria. The Beji refinery accounts for a quarter of the country's refining capacity, and the shutdown showcases how the economic effects of the crisis may quickly spiral. RT's Ameera David discusses the potential economic impacts of the fighting with Peter Schiff, president of Euro Pacific Capital.

There are No Reasons for the Dollar to be World’s Reserve Currency

The more the US antagonizes the world with spying or huge fines on foreign banks, the quicker the process of abandoning the dollar as a reserve currency will be unraveled, Peter Schiff, the president of investment house Euro Pacific Capital, told RT.

RT: This is just the latest in a series of scandals linked to America's spying on Germany. Why does Berlin not react more strongly?

Peter Schiff: I do not know. America is doing a lot to p*** off its friends - not only spying on them. Believe me, many Americans do not like it any more than the Germans. But we are also fining major European banks in Switzerland, in France and in the UK for violating US law. The Germans maybe should be even more concerned with what happened to their gold than about the spying.

RT: Why are European countries so economically dependent on the States?

PS: They are not. I think it is the other way around - the US is very dependent on the rest of the world. It is just incumbent on the rest of the world to figure that out. But the US dollar is still functioning as a reserve currency, so the dollar is a part of larger transactions but there is no reason for the dollar to be at the center of these transactions because the dollar shouldn’t be a reserve currency. Maybe at one time when we were the world’s largest exporter, as far as biggest trade surpluses, we had high savings rates, and the dollar was backed by gold. [At] one time maybe the dollar deserved to be a reserve currency, but certainly those conditions have changed dramatically. The US does not share any of the characteristics it had when the dollar became a reserve currency. It is just a matter of time before it no longer functions as a reserve currency. And the more we antagonize the rest of the world with spying or with these huge fines on foreign banks, the quicker this process is going to be unraveled.

RT: If Germany did decide to do something about America's spying activities, what could it actually achieve?

PS: I do not know, but certainly what emboldens the US to act in this way is this feeling of invincibility or superiority, and it is going to be very humbling when the truth comes out, when America is going to be forced to face what has happened to this country. We have been living beyond our means, we have been living based on our fantasy, not based on reality and the world is certainly helping to preserve that fantasy by accumulating US dollars, by continuing to loan us more money. If the world was not loaning us so much money, we wouldn’t be able to afford to spy on anybody, even on American citizens. Speaking as an American citizen, that would be an improvement.

RT: Germany is a friend of the US, so should it even be worried about being spied on?

PS: Look, Americans are afraid that they are being spied on, too. Nobody wants people spying on them. The government claims that this is all to keep us safe, this is all to protect us from terrorists, but I do not trust government and if the Germans do not trust our government, then I don’t trust them either. You always have an abuse of power, so you want to limit government power, and I think what the US government is doing with respect to the American citizens is not only immoral but unconstitutional. And again, welcome to the club. If the Germans were upset about “our government spying on us,” they probably have a right to be. But at least if they are spying on the Germans, maybe they can make an argument that might be more related to potential terrorist threats than spying on Americans.

- Source, Russia Today

Schiff Makes Case for Gold, but Gartman Not Buying it

Peter Schiff, the CEO of Euro Pacific Capital, is one of gold's biggest proponents; Dennis Gartman, the editor of "The Gartman Letter" who is sometimes called "The Commodities King," refuses to buy the metal in U.S. dollar terms.

So who will be proven right?

On Tuesday's "Futures Now," the two gold experts debated the issue directly.

"Most people on Wall Street were very impressed by [the jobs numbers] yet the price of gold did not surrender any of the gains in the previous week," Schiff pointed out.

"So to me, we're consolidating those gains, we're putting in a very formidable bottom in gold. We still have all of the naysayers, the Goldman Sachs, Societe Generale, all these guys that were negative calling for $1,100, $1,000, they're digging in their heels, they're just as bearish as they were at the beginning of the year despite the fact that they've been wrong for six months. So you have a lot of negativity, but I think the technical picture is improving rapidly for gold."

Obama and Biden Lie to Graduating Cadets

Peter Schiff discusses the sad state that the US economy currently finds itself in. He talks about recent speeches Obama and Joe Biden gave to graduating cadets.

- Source, Schiff Radio

Is It Time to Hide Your Money Under the Mattress?

It's Not the End of the World, but it's the End of the Party

Ron Insana and Peter Schiff go head to head on a number of topics. Gold, stocks, the Ukrainian Crisis and much more.

- Source, CNBC

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Fed Will Stop the Taper, Support Markets

Peter Schiff of Euro Pacific Capital says the Fed will get scared of the taper this summer and start the printing presses again.

- Source, Yahoo Finance

The Colder War and the End of the Petrodollar

Peter Schiff Educates Day Trader On Gold As Money

Peter Schiff of Euro Pacific Capital goes head to head with a day trader on CNBC. He educates him on the merits of owning gold and its value.

The #1 concern of savers and investors is not, “Will I get a return on my money?” but “Will I get a return of my money?” Learn how to protect your hard-earned cash. Find out more here.

Peter Schiff on Cost of Living Fears

Peter Schiff appears on a CNBC panel where he gives his view point on the gold market and general economy. He discusses the rapidly growing increase in the money supply.

80 US banks have gone under in the last two years. The FDIC insures each account up to $250,000, but that doesn't mean you'll get your money quickly. Learn how to protect your money—find out more.

Peter Schiff Takes Down Former WH Council Economic Advisor Nouriel Roubini

Peter Schiff and Roubini go head to head over the US economy, gold and QE.

- Source, CNBC

Gold Maple Leaf Coins RCM 9999 - 24/7 Ordering Buy Now - BBB Trusted Silver Gold Bull

Peter Schiff at Las Vegas Moneyshow 2014

Peter Schiffs full presentation at the 2014 Las Vegas Money Show.

Good Reason for Doom and Gloom

Peter Schiff's Full Take on Bitcoin and Gold

Peter Schiff dishes on bitcoin, gold, and the US dollar, with CNBC's Jackie DeAngelis and the Futures Now Traders.

- Source, CNBC

Silver Gold Bull - Your Trusted Bullion Dealer

Peter Schiff - Brace For Impact

In the past, when you could get 6 or 7 percent interest on a CD, and inflation was 2 or 3 percent, you were still ahead of the game. But now you get a half a percent on your CD and inflation is 2, 3, 4, 5, whatever it actually is - you're losing. You can't win. And so as more people wake up to this reality, the demand for gold is just going to explode worldwide. And the price of gold is going to go through the roof.

- Source, SGT Report

Too Good to Be True? Legally Avoid Paying Income Tax

The Debate Debate by Peter Schiff

While there is wide agreement that the cost of college education has risen far faster than the incomes of most Americans, there is some debate as to whether the quality of the product has kept pace with the price. Not surprisingly, almost all who argue that it has (college administrators, professors, and populist politicians) are deeply invested either ideologically or financially in the system itself. More objective observers see a bureaucratic, inefficient, and hopelessly out of touch ivory tower that is bleeding the country of its savings, and more tragically, its intellectual acuity.

Nowhere is this more clearly illustrated than in the demise of collegiate debate. This once courtly rhetorical sparring ground for class presidents and lawyers-in-training is supposed to be forum for ideas, proofs, and conclusions. And while traditional debates did not typically offer high drama, they did teach students how to produce objectively superior arguments, a skill that many types of potential employers would value. But more recently, debate has succumbed to the worst aspects of moral relativism, academic sloth and politically correct dogma that have transformed it into an unintelligible mix of performance art and petty politics. It’s not a debate, but we pretend it is.

The 2014 National Championship of the Cross Examination Debate Association (CEDA), one of collegiate debate’s governing bodies, made headlines as the first to include two all-African-American finalist teams. The winning team, from Towson University in Maryland, was the first ever comprised solely of African-American women. The results were heralded as a triumph for minority achievement in a field traditionally dominated by white “elites.” But this success has come at a great cost: A dramatic change in the rules of the game. The championships, as well as dozens of the CEDA sanctioned debates and championships, are easily found on YouTube. I challenge anyone to watch any of those “debates” and describe the ideas and arguments that participants are supposedly addressing.

At this year’s championship, the actual debate question concerned the wisdom of restricting the war powers of the U.S. president. But instead of addressing one of the most important U.S. foreign policy questions of the past half century, the two teams focused exclusively on how the U.S. was supposedly “at war” with poor black people. Although these arguments were clearly off-subject, it seems that the topic did not matter. The “debate” came off as a mix of rap, personal invective, speed talking, soapbox harangue, and explicative filled rants. When one contestant’s time expired, he “brilliantly” yelled “F-ck the time!” As was the case in 2013, when another African American team took the championship, the arguments of the winners completely ignored the stated resolution, and instead used personal experience to challenge the “injustice” of the very notion of debate itself. But subjective arguments have been traditionally dismissed as poor rhetoric. “I won the lottery” is not a good argument in favor of the lottery system.

But in recent years, logic and objective analysis have come to be considered “white” concepts. In an Atlantic Monthly article (Apr. 16), Osagie Obasogie, a liberal law professor from University of California, is quoted as saying “Various procedures – regardless of whether we’re talking about debate formats or law- have the ability to hide the subjective experiences that shape these seemingly ‘objective’ and ‘rational’ rules. …This is the power of racial subordination: making the viewpoint of the dominant group seem like the only true reality.” In other words debates, like much in society, was devised by white people to favor white people. This idea, which is the essence of affirmative action, may make professors and students feel good about themselves, but it simply means that minorities have license to underachieve.


Creating an alternate set of rules for people of different backgrounds creates huge problems. What would have happened to Venus and Serena Williams had tennis officials drew up a special set of rules for them to compensate for their background? While they may have won more tournaments, they would not have been pushed to achieve their true potential and their victories would have been empty achievements. While it’s true that they faced more obstacles than privileged players from the suburbs, changing the rules to allow for their subjective experiences would have prevented their ultimate success.

That is exactly what is happening today, not just in debate tournaments, but across universities in general. Excuses are being made and rules are being bent in order to account for our personal differences, race, gender and sexual orientation in particular. This trend is producing a generation of marginally skilled, professionally unprepared graduates. The poor quality of our higher education means that we can’t compete with other nations who insist on educating their young people through “objective” and “oppressive” systems. This can also be said of our economy. Dumbed down and subjective criteria allow us to pretend that our economy is growing even as living standards are falling, the labor force is shrinking, savings are evaporating, and opportunity is more and more elusive. Rather than admit the obvious, that we have a remedial economy, we have consistently redefined success downward with revisions to tools we use to measure our economy like GDP, inflation and unemployment. See a deeper analysis of this trend in may latest special report, Taxed By Debt.

Like with our deteriorating educational system, our economy no longer measures up to previous standards of performance. In education, you can see the difference through comparison to a century old Jr. High School test that I believe would stymie most of today’s college graduates. Our economic deterioration can be seen in our high trade deficits, big budget deficits, high public and private debt levels and the explosion in the number of people who rely on government assistance be it in the form of welfare, food stamps, or disability.

However, according to many economists, none of this is cause for concern as it is simply the way things work in our new “consumer-based,” “service-sector,” economy. Instead of growth through savings, capital investment, and production, we now rely on money printing, asset bubbles, leverage, and consumer credit. Inflation, which was once acknowledged as being bad, is now considered good. Persistent trade deficits, once a sign of economic distress, are now considered signs of strong domestic demand. Instead of dealing painfully with intractable problems, we have redefined our liabilities as assets and declared victory.

In the end, will awarding debate championships to undisciplined, barely comprehensible minority students really help these individuals succeed in life? No law firm or corporation will look to hire debate winners as the competitions have now lost all relevance. Similarly, dumbing down standards to whitewash our poor economy performance will only worsen our problems. Fortunately the Supreme Court last week, with its decision to support Michigan’s campaign to end race-based selection practices at state universities, took a tiny step in dismantling this lunacy. But we must be on the lookout for much lower profile aspects of the same confrontation. The front lines are everywhere.

- Source, Peter Schiff via Value Walk

Fed QE, Weak Dollar Will Help Increase Gold to $5,000

It is expected that the Federal Reserve will likely decrease its quantitative easing bond-buying program by another $10 billion this week to $55 billion. However, there are some contrarian investors who say the Fed will most likely taper the taper talk because the United States economy needs stimulus.

This, in the end, will cause gold to rise substantially.

Speaking in an interview with the Wall Street Journal over the weekend, Peter Schiff, president of Euro Pacific Capital, believes the party for gold is just getting started – so far this year the yellow metal has risen eight percent (gold is trading at around $1,300). In the future, investors could see gold reaching $5,000.

“I believe the consensus expectation that the U.S. recovery is real and that the Fed will end its [QE] program and normalize interest rates is wrong,” Schiff said. “When the Fed has to admit that its forecast of a sustained recovery is wrong, it will come to the aid of a faltering economy with even more QE. When that happens, gold will rally.”

Of course, it isn’t just because of QE that will assist in Gold’s rise. Other factors at play include increasing commodity prices and a weaker dollar.

“Also, any major geopolitical concerns, particularly if there is a deterioration of the situation in Ukraine, will add to gold's appeal. I also expect renewed physical demand from emerging markets like India and China,” Schiff explained. “Most likely prices have bottomed, as too many speculators are looking for lower prices. The fundamental case for gold has also never been stronger. From a gold short seller's perspective, this will prove to be the equivalent of a perfect storm. Their losses will be severe."

Schiff has projected before on numerous occasions that gold would hit $5,000, citing reckless public spending and expansion of the money supply (inflation).

In 2009, it was reported that Schiff told one business news network that gold would hit $5,000 per ounce in the next couple of years – he also made the case that silver would rise to $250 per ounce. In 2012, he said the Federal Reserve would cause gold to jump to $5,000 by 2014.

"One day we're going to look back at $1,700 with nostalgia," Schiff said. "People are going to be shocked at how inexpensive gold was when it could be snapped up for such a bargain price."

- Source, The Examiner

Jobs Mysteriously Vanish as Minimum Wage Increases

Peter Schiff discusses the lie about minimum wage. Politicians believe that raising the minimum wage will boost the economy. Wrong, a drastic raise in the minimum wage will only force automation, resulting in a major loss of jobs.

- Source, Schiff Radio

The Weather is Warming, but Despite the Hype the Economy is Not.

Peter Schiff discusses the myth of how the weather is dragging the economy down. Politicians are using it as a scapegoat, but reality is going to take hold very soon. Now that the weather is warming, we see the myth for what it is, a farce.

- Source, Schiff Report

Marxism Rebranded

Peter Schiff talks about the dangers of Marxism and its rebranding by politicians.

- Source, Peter Schiff via Schiff Radio:

http://www.schiffradio.com/site

Chinese Gold Demand to Rise 20% by 2017

A renewed weakness in the dollar and strength in oiland other commodities will add to gold’s appeal during 2014. Also, any major geopolitical concerns, particularly if there is a deterioration of the situation in Ukraine, will add to gold’s appeal. I also expect renewed physical demand from emerging markets like India and China.

The World Gold Council recently forecast that Chinese gold demand will rise 20% by 2017 from the current level of 1,132 metric tons a year.

- Source, Peter Schiff via MarketWatch

Ultimately the Fundamentals of Gold Will Prevail

I thought that the selloff in 2013 was completely out of touch with reality, so I expected the price to rise this year. In this, I was virtually alone in the financial community. Just about every major investment house had predicted even more losses for gold in 2014.

So far this year, gold is the best-performing asset class, but I think the pullback we have seen over the last few weeks is just another indication of how much negative sentiment remains. Ultimately however, the fundamentals will prevail. The Fed will keep printing [dollars] and gold will keep rising.

- Source, MarketWatch

Reckless Fed May Push Gold to $5,000

Peter Schiff, chief executive officer of Euro Pacific Capital, has been known to make forecasts outside the mainstream, and his long-running belief that gold has the potential to hit $5,000 an ounce is no exception. Prices, after all, are struggling to get a grip on $1,300.

We caught up with Schiff to ask him how gold, a big disappointment for commodities investors last year, gets back its groove. Last year, gold futures and heavyweight ETF SPDR Gold Trust lost 28%, breaking at least eight years of annual gains.

First off, Schiff’s gold forecast isn’t brand new. The author of “The Real Crash — America’s Coming Bankruptcy” has talked about the possibility of gold hitting $5,000 or higher since at least 2011, when prices for the metal topped $1,900 in intraday trading.

Schiff reiterated his call on the potential for $5,000 gold and beyond during a heated debate with Paul Krake of View from the Peak CNBC’son “Futures Now” episodeposted on April 15.

In an email interview with MarketWatch this week, he offered his thoughts on exactly why he expects gold prices to continue to climb and under what circumstances, what it would take to change his bullish outlook on gold and whether prices for the metal have already hit bottom this year.

- Source, MarketWatch