Peter Schiff: Gold Rises, Even With Bad News

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by Tyler Durden
Tuesday, Apr 09, 2024 - 01:45 PM


This week Peter recaps another stellar week for precious metal. He also discusses Friday’s jobs report, commodity prices, and Bitcoin.

Peter starts by putting this week’s surge into context:

“There’s an old Wall Street saying: ‘nobody rings a bell,’ meaning that nobody warns you when you’re at a major top or a major bottom. The problem is there are bells. It’s just that people don’t recognize them. They don’t hear them. They don’t know what to listen for. Well, there was a big bell rung today in the gold market, in the silver market. And everybody is tone deaf. … To give you an idea of the size of the gain this week in gold and silver, gold rose 4% on the week, which is a big move for gold in one week. Silver rose 10%.”

Friday’s relatively strong jobs report is no consolation since most of this month’s new jobs are in the public sector:

All these jobs— net— are part-time jobs. Look at the jobs. Almost 70% of them are government jobs. They are health care jobs, and a lot of health care jobs are really government jobs in disguise. And food and beverage, hospitality, waiters, bartenders, hotel maids, that kind of stuff— that’s where the jobs are. We had no creation of manufacturing jobs at all. And last month’s loss of manufacturing jobs, which was originally reported at minus 4,000, was revised to minus 10,000.”

Even with bond yields rising, gold still went up this week. This suggests there’s something more at play than what Wall Street’s trading algorithms can detect:

“Gold’s going up no matter what. It’s just that it’ll go up even more on weak economic news than on strong economic news. But whatever the news is, gold is going up! Gold is being repriced. Central banks are increasing their gold reserves. They don’t care! They don’t care about the Fed at this point. They don’t care how many rate cuts we’re going to get this year. They don’t even care if we get any rate cuts this year. None of it matters. Gold is going up no matter what.”

Evidence keeps mounting that inflation is not under control, with the CRB Commodity Index up 17% this year and oil up 22%. This directly counters the Federal Reserve’s most recent narrative:

The Fed should be hiking rates, but they can’t. As I said, they’ll cause a financial crisis. … So they keep talking about how inflation is contained— that they still think it’s coming down. They’re just not quite sure yet. They need a little bit more evidence. All the evidence shows that inflation is going up. So it’s all B.S. They’re sticking to their script. … If the Fed hiked rates, it would be the biggest admission of a mistake, because if the Fed hikes rates, what does that mean? … They were wrong!”

Today’s economy is reminiscent of 2007’s. Every economic problem is supposedly under government control— until it isn’t:

This is all like 2007, 2008, when after so many years of warning about a problem in the housing market and the subprime market, it finally blew up. And the mainstream were still completely oblivious. They were still holding to this ‘Goldilocks’ greatest story ever told. … Right up until the collapse of Lehman. This is the same thing. We’ve had the equivalent of the subprime lenders going bankrupt and people thinking, ‘Don’t worry about that. It’s contained.’ And at the same time, we got all these Bitcoin ETFs creating this huge distraction, this huge side show that’s distracted people’s attention from the center ring. They’re all over there in Bitcoin, and they’re missing out on gold.”

Some of the economic damage could’ve been contained had Jerome Powell and the Fed not enabled disastrous Federal policy:

“When the president makes a mistake and the chairman of the Federal Reserve knows it’s a mistake, he doesn’t just sit there silent! It’s his job to criticize it, because the average American doesn’t know. … We’re supposed to put real smart guys to head the Federal Reserve— smarter than the average truck driver or waitress. So he needs to explain to that truck driver and that waitress what they’re doing is wrong. They’re going to destroy the value of your savings— of your paychecks. But no, he’s afraid to do that. He won’t criticize any policy because he doesn’t want to upset any of the congressmen. Why not? If they’re doing the wrong thing, what’s more important? Their feelings? Their political career or the country?”

Sadly it does in fact seem that the political forces at play will keep the Fed from exercising the proper monetary policy needed to correct years of inflation.