War Between Gold, the U.S. Economy and U.S. Dollar


One of our favorite market forecasters is Peter Schiff. His gold trade has finally turned positive as gold stocks have largely outperformed the market in recent months. Schiff still believes the U.S. dollar is going much lower and that its collapse will usher in a new period of growth for precious metal stocks. The Dollar Index was down 0.35% to 99.46 Thursday.

 

Schiff’s Gold Trade Hangs on Weaker U.S. Economy

 

Schiff cites weaker economic data, including housing starts, factory orders and the ‘macroeconomic surprise’ index, which recently posted its largest decline in 7 years. The economic surprise index was created by Citi and is simply an indicator which shows how the data is turning out versus expectations. It can be positive or negative, but of late the results have been surprising to the downside, as opposed to the upside which they were for much November, December and January.

Schiff explains,

“The surprises are going to keep on coming because the news is going to get a lot worse. All of this false optimism, all of this hope that Trump was somehow going to be a panacea and that all the problems that got him elected, were going to go away simply because he was elected; as that reality sets in and disappointment permeates the market then these numbers are going to get even worse.”

 

The Atlanta Fed continues to predict Q1 GDP will come in at only 0.5%. If the economy performs worse or begins to contract, it is our opinion Trump will not hesitate to cut interest rates and support Janet Yellen.

We visited Peter at his home in Connecticut in mid-2015. The video was titled Peter Schiff Talks to Pinnacle Digest about Gold-Backed Debit Cards, the Fed and the 2016 Election and can be viewed below: