Peter Schiff-Deflationary Period Good for the US Economy and Struggling Americans

Today, Peter Schiff has announced his plan to help struggling Americans. If you do not know who Peter Schiff is, he is an American author, businessman, financial commentator, and a 2010 candidate for the United States Senate. He is also president and chief global strategist of Euro Pacific Capital Inc. and is often quoted in major financial publications and frequently makes guest appearances on internet radio as well as CNBC, Fox News, and Bloomberg Television. He also is the host of the podcast Wall Street Unspun.


Schiff is known for extremely bearish views on the United States stock market, bond market, the US dollar, and the United States economy in general. Recently he has stated that a deflationary period would be good for the US and struggling Americans to be specific.

With unemployment still uncomfortably high, the housing market down, and the consumer price index (CPI) down three straight months, at Fed Chairman Ben Bernanke's semi-annual testimony to Congress this week he was very careful to downplay deflation and to assure markets that the Federal Reserve has the capacity to reverse deflation, should it occur. However, Bernanke's comments didn't settle the deflation debate, nor did they convince Peter Schiff that the Fed chairman knows what is going on.


In an Article today, Schiff stated "I don't know where anyone thinks prices are falling,” alluding to rising prices for food, healthcare and energy. He also declared "I don't know where most people do their shopping but I don't see falling prices. To me, prices are rising." While the Fed believes it has prevented a deflationary spiral such as Japan faced in the 1990s from taking root, Schiff sees more government stimulus analogous to feeding an addiction. He states that “we are high on government stimulus; the US needs to go “cold turkey” from more monetary stimulus and government spending

After Bernanke’s testimony yesterday, Schiff stated "It's not that the Fed has done too little, they've done too much, interest rates are too low, they need to be much higher.” He says the federal government is spending too much, they need to spend a lot less, and government stimulus is the source of our problems." Schiff believes the U.S. economy is addicted to government stimulus and is at risk of overdosing. He stated "They're trying to sober up a drunk by giving him more alcohol - it won't work."

Schiff does concur with the view that there will be economic would become weaker if the Fed and Congress force the economy to go "cold turkey" rather than slowly weaning it off stimulus. But the pain would be short-term; however, any short-term pain will be well worth the long-term gain, and may even avoid another Great Depression.

Schiff believes that even though we have been in the worst recession since the Great Depression, at the moment, deflation is non-existent because the government has created so much inflation that they have prevented prices from falling. Schiff stated. "It would have been a relief for a lot of Americans...if things cost less and the cost of living was falling in line with a weaker economy."

Schiff believes inflation is a much greater threat than deflation. In his view the government created inflation by creating too much money, keeping interest rates at zero, and increased spending. The result of this government induced inflationary period is that Americans are soon going to be paying much more for food, clothing, energy, healthcare, etc. However, the prices of financial assets and real estate are not going anywhere but down, according to Schiff.

Authors note: We all know that the US cannot continue to print dollars, just because they have the ink and paper. Since this is a precious metals blog, I feel I should interject with the notion that when paper money is worthless (seems to be heading in that direction), people will fall back to anything of value. PMs such as Silver and Gold will likely be used to purchase goods and services. I know what I am describing is the SHTF scenario, but it always pays to be prepared.

On Euro Pacific Capital, Inc. Peter Schiff wrote: “I have long been an advocate of fortifying investment portfolios with precious metals. Holding actual precious metals is important, but it is primarily a way to preserve capital. I believe that a fully realized precious metals portfolio also includes some exposure to the companies that explore and produce gold and silver.”

In the paragraph above, Schiff is advising holding precious metals as a hedge and investing in mining companies. Of course he would not say “take all of your free money and buy Silver and Gold” because that would be reckless and likely to cause a panic that could precipitate the SHTF. Now, this last statement is not a fact, it is just my thoughts and opinions. I DO recommend buying as much silver and gold as you can. How much? That depends on how much you are comfortable with. Most places of business still want payment in dollars, so do not use all of your money to buy PMs or you might find it hard to pay your mortgage, rent, utilities, etc.

Why It Is Crucial To Your Finances and Future to buy Gold and Silver-Goldwars.blogspot.com

I may have written on this subject before but I cannot stress enough, do not wait! You should be buying precious metals such as gold and silver now.  I have stated my point of view, now I give you an other's POV.  Kirsty Hogg has written an article in her blog GoldWars on why it is now crucial to your finances and future to buy gold and silver? I urge you to read this treatise as it explains why PMs guard against inflation, why Central banks are manipulating the prices of PMs, and much more. With the National debt at 13 Trillion and counting as the paper flies through the printing presses, our economy cannot hold back the floodgates of inflation much longer.  Read it for yourselves, but more importantly, ACT!

Ben Bernanke is Confused about Gold

written by Kevin McElroy


Monday, June 14, 2010

Federal Reserve Chairman Ben Bernanke recently expressed some confusion about increases in gold prices. According to a recent story in The Wall Street Journal, Bernanke said, "I don't fully understand movements in the gold price." It seems like Bernanke and Treasury Secretary Tim Geithner, formerly of Goldman Sachs (NYSE: GS), believe that massive deficits and billion dollar gifts to Wall Street bankers should have no consequences. For anyone paying attention to the Federal Reserve's massive bailouts gifted to super-rich bankers, it's small wonder that world investors have started bidding up gold's price - they're sick of working hard for dollars while the Fed gives them out for free to the world's elite financial institutions.

Here's a wake-up call for Ben Bernanke, Timothy Geithner and President Obama: deficits do matter! Recent polls suggest that deficit spending is now the #1 issue on voters' minds. Willingness to print the dollar into oblivion will continue to be matched by a stronger and stronger bull market in gold.  To take advantage of this bull market, Ian Wyatt, the Chief Investment Strategist at Wyatt Investment Research, has written a full report about his favorite American gold company. This company has over $20 billion in proven gold reserves, with a market cap of around $200 million. Even if this company only mines 1% of its reserves, it could double its current share price.

Warning: This is a solicitation from Wyatt Investment Research.  I do not work for them, and I receive no type of payment for blogging this.  I just thought that the introductory article was very timely and shows how Bernanke, Geithner, and Obama are working to destroy this market.  If you want to read the rest of the report you can go HERE.

This Little PIIGGY: Spain and Gold Prices

Since the economic situation in the EU was either better or less worrisome last weekend, many investors' felt that market trading was less risky.  Therefore, traders tentatively sold gold for stocks. Global stock markets  posted modest gains encouraged by the U.S. late-day rally on Friday.

There may be more volatility ahead  for gold prices as they continue to take their cue from the risk trade. In the short term, a weaker US dollar could boost demand for gold as the dollar-backed commodity becomes an inexpensive purchase in other currencies; furthermore, any significant pullback could lure in any bargain-hunters looking to buy gold at a discount.

Even though Spain denied rumors last week that it would be the next EU nation to request bailout funds, sovereign debt risk from Spain is waiting in the wings as a gold provocateur.  Even though the Spain's yields are on the rise. Bond yields typically rise when a government must sweeten the pot to entice  investors to lend the country money. Currently, the yield on Spain's 10-year bond is 4.59% while Portugal's is 5.33%. These levels do not yet compare with Greece's double-digit yield at the height of its' financial crisis, but investors are still worried, and any bad news out of the eurozone would trigger a gold rush as investors buy the metal as a form of money that retains value when paper currencies fail.

Gold bulls are hoping that prices can reclaim and exceed their record high last week of $1,254 an troy ounce. However, gold set that record intraday and settled under $1,250 leaving many analysts wondering if there is any momentum to this gold is bullish movement.

For the Silverbugs and base metal buyers: Monday, silver prices were rising .18 cents to $18.42, while copper was rallying 8 cents to $2.99.

Gold Prices Soar on EU, US troubles

Gold prices soared today as investors sought out the metal's safe haven. Prices have traded as high as $1,130.20 and closed at $1,126.90 as the U.S. dollar index slipped 0.49%.  Gold's spot price rose $18.10 according to Kitco's gold index.

Most investors bought gold as an alternative investment, seeking the safety of a hard asset over a pandemic of struggling currencies. Not only is the US dollar in trouble but the EU's multibillion-euro bailout for Greece is sketchy, and now Spain, US, UK, France and Germany are at risk for losing their triple-A credit rating from Moody's. Many analysts are anticipating further euro weakening and subsequent inflation.

Further currency debasement could help support higher gold prices, but global rate hikes might provide some short-term downside. After China's higher-than-expected inflation reading, analysts are expecting the government to raise interest rates to control economic expansion.

The Fed has pledged to keep interest rates low for an extended period of time despite fledgling economic recovery. But wary investors are ever vigilant, watching for any tell that the Fed will tighten rates sooner than expected. Gold has historically been the go to hedge against inflation bought by investors. Thus, any signs that the government will end the flow of free money will impact gold and other precious metal prices.

Gold Futures Higher on Stronger Euro, Weaker Dollar

An article on Forbes.com reported that gold futures moved higher this morning as the Euro strengthened against the US dollar, and an employment report showed improvement in the U.S. jobs picture. Gold went as high as $1,144.40 per ounce early in the session, to its highest levels since Jan. 11. 2010. Greece's plans to rein in its debt gave strength to the Euro and thus weakened the US Dollar.   Furthermore, the ADP jobs report stated the U.S. private-sector employers cut 40,000 less jobs in February than in January. Gold mining companies also traded higher during this mornings advance. Barrick Gold, AngloGold Ashanti, and Newmont Mining all posted modest gains.  To read the entire article:
Gold Rallies As Dollar Dallies
Greenback falls on Greek belt-tightening, provides boost to metal prices, stocks.
By MarketNewsVideo.com
http://www.forbes.com/2010/03/03/gold-barrick-anglogold-markets-equities-silver-marketnewsvideo.html?partner=email