Gold bull market is just getting started, silver has even greater upside, and Bitcoin ETFs will flop – Peter Schiff

Gold bull market is just getting started, silver has even greater upside, and Bitcoin ETFs will flop – Peter Schiff

While gold has backed well off the all-time highs it set two days ago and Bitcoin has stolen the spotlight, the real bull market for gold and silver is only just beginning, according to Peter Schiff, founder of Schiff Gold and Chief Market Strategist of Euro Pacific Asset Management.

“A lot of people are taking this to mean that that's it, this is some kind of blowoff top, this is the end of the gold bull market,” Schiff said in a video posted on Monday. “I think this is just the beginning.”

Schiff said he thinks the fact that gold traded above 2100 for the first time and set a new all-time high “is indicative of a new bull market, not an old bull market that's dying, but a new one that's just been born.”

He said the market has spent the last several months building massive support for the gold price. “Even in the face of relentless Fed rate hikes and tough talk about doing whatever it takes to combat inflation, gold has held pretty firm despite what the markets perceive as very strong headwinds, with a strengthening dollar and rising yields that are normally perceived as a big negative for gold.”

Schiff said the precious metal has held up very well and has enjoyed “overwhelming demand” from investors.

Looking at the specific circumstances of the sudden rally early in Monday’s Asian trading session, he said it appears to have been the result of geopolitical concerns and opportunistic market players acting amidst low liquidity.

“I believe that some short-term speculators who had bought gold took advantage of the gap up,” Schiff said. “The catalyst was heightened geopolitical tensions in the Middle East and I'm sure more of that is going to come, but I think traders who are very short-term focused wanted to put those profits in their pocket because obviously anybody who had bought gold was looking at some good profits, especially if they were levered up.”

Schiff said that we’re now seeing prices come back down to earth, and he sees the $2,000 level as firm support. “Does that mean there's some kind of line in the sand where gold can't go below $2,000? No, but I think there'll be tremendous buying at any opportunity to buy below $2,000,” he said. “I think that we've cleared a pathway and there are tremendous gains coming.”

Addressing the recent shift in rate cut expectations, Schiff said he believes that the Federal Reserve has shot their shot, and rates are on their way down no matter what the central bank says.

“Wall Street is already pricing in rate Cuts as early as Q1, Q2 of next year, so the hikes are over as far as Wall Street is concerned,” he said. “If gold couldn't go much below $2,000 when the Fed was hiking rates, imagine where it can go now that it stopped hiking and is about to cut.”

Schiff said markets must come to terms with the reality that inflation is not dead, and it won’t go much lower. “Where we are now, maybe three, four percent, that's as close as the Fed's going to get, because I think we're getting close to a major dollar selloff,” he said. “The Fed can bark about fighting inflation, [but] it really can't bite, because it doesn't have any teeth.”

“If it really does what it takes to put that inflation genie back in the bottle, it will create the mother of all financial [crises] that will make 2008 look like a Sunday school picnic, and it will also force the U.S. government into insolvency.”

Schiff said that the Fed will respond to the coming fiscal crisis the same way they responded to the financial crisis, “by printing money, creating inflation, and then the bottom's going to drop out of the dollar. Inflation is going through the roof, and gold is going to be leading the way.”

He was adamant that the time to buy gold is now. “Now that we've taken out this resistance, if you haven't already bought your gold, buy some,” he said. “If you have gold but you can buy more, if you don't feel like you have a strong enough position, you can add to it.”

Schiff said that he believes silver is an even better buy at current prices. “It's still around $25, it's still half of its 52-week high,” he said. “In fact, silver traded at $50 an ounce back in 1980. Think about what's happened in the last 44 years… how many things could you buy today at the same price as 44 years ago? If you don't have any silver, this is definitely the time to buy.”

He also couldn’t resist taking another shot at Bitcoin. “If you're holding any ‘fool's gold’, Bitcoin stole a lot of gold thunder today because Bitcoin rose above $42,000,” he said. “All the financial headlines were focused on what's happening in Bitcoin, very few were even paying attention to what happened in gold.”

Schiff said that the recent rise in cryptocurrencies is being fueled by “rampant speculation” based on the prospect of several spot Bitcoin ETFs being approved in the United States. “You have the whole community speculating that as soon as investors have a chance to buy Bitcoin in a spot ETF they're going to buy it, and it's going to create all this demand which is going to send prices higher,” he said. “I don't believe there's this huge pent-up demand that has been sitting on the sideline for years waiting for a spot ETF.”

“I think the people waiting for the spot ETF are the sellers, particularly the whales, who maybe view this as an opportunity to unload a bunch of Bitcoin on the bag holders who buy the ETFs,” Schiff said. “I don't think it's going to work out.”

Spot gold last traded at $2,019.17, down 0.48% on the session, while Bitcoin is currently up 4.09% on the day and trading at $43,705 at the time of writing.

By

Ernest Hoffman

For Kitco News

 

 

David

Gold will shine bright as Bitcoin, cryptocurrencies collapse

 

Gold will shine bright as Bitcoin, cryptocurrencies collapse

The gold market is holding firm in relatively neutral territory, trading in a narrow range between $1,800 and $1,850 an ounce; however, some commodity analysts are optimistic that gold could see renewed investors' interest as sentiment in financial markets rapidly disintegrates.

 

Specifically, some analysts see gold finding new safe-haven demand as investors flee the cryptocurrency market.

In 2021, Bitcoin's rally to an all-time high of $65,000 an ounce took away some of gold's luster. Last year some analysts said that Bitcoin's rally reduced gold's market valuation by as much as $200. Many investors saw Bitcoin and other digital currencies as a better store of value than gold. However, sentiment is quickly shifting as Bitcoin dropped below $18,000 a token and Ethereum dropped below $900.

"I would argue this blow-up in cryptos reinforces the value of gold," said Kristina Hooper, Chief Investment Strategist at Invesco, in a recent interview with Kitco News, "There's really only one asset that historically has the qualities of being a hedge against inflation and geopolitical risk and it's not cryptos."

Many analysts have noted that cryptocurrencies have fallen in line with risk assets like equities as the Federal Reserve continues to aggressively tighten its monetary policy to slow the economy and cool down extraordinary inflation pressures.

Rising interest rates coupled with the plan to reduce its balance sheet have reduced the amount of liquidity in the marketplace impacting riskier assets. Bitcoin is down more than 70% from its 2021 all-time highs. Year-to-date, the digital currency is down more than 50%, even as prices bounce from Saturday's multi-year low.

But it's more than just bitcoin; few financial assets are doing well in the current environment. So far this year, the S&P 500 is in solid bear-market territory, down 23%. Even the traditional safe-haven U.S. bonds are down on the year. The yield on a 10-year note is trading well above 3% and are up more than 100% since January.

 

Gold hasn't lost its luster even as the Fed continues to raise rates – State Street's George Milling-Stanley

Robert Minter, Director of ETF Investment Strategy at abrdn, said that in the current environment, as interest rates and inflation rise, investors should look to have solid assets in their portfolios. While gold should always be part of a balanced portfolio, Minter said that he also likes base metals as they are even a better hedge against inflation.

 

"Bottom line is you want something real in your portfolio. You want something that if you drop it on your foot, it is going to hurt," he said.

George Milling-Stanley, Chief Gold Market Strategist at State Street Global Advisors, said that the selloff in Bitcoin proves it's just another risk asset.

 

"Gold is starting to look more and more, the last outlier. I expect gold to hold its value," he said. "There is a very good chance that as other assets fall, gold relative performance is going to look even better."

By Neils Christensen

For Kitco News

Time to buy Gold and Silver on the dips

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