Too Big to Pop

In his latest commentary for Euro Pacific Capital, Peter Schiff questions mainstream investors’ newfound faith in the Federal Reserve’s ability to keep the economy propped up. Gold’s poor performance in 2013 is considered proof that the economy really is recovering, but Peter warns investors against turning into gold bears too soon.

“A primary element of this new faith is that the Fed can sustain any number of asset bubbles if it simply supplies enough air in the form of freshly minted QE cash and zero percent interest. It’s as if the concept of “too big to fail” has evolved into the belief that some bubbles are too big to pop. The warnings delivered by those of us who still understand the negative consequences of such policy have been silenced by the triumphant Dow.

The proof of this shift in sentiment can be seen in the current gold market. If the conditions of 2013 (in which the Federal Government serially failed to control a runaway debt problem, while the Federal Reserve persisted with an $85 billion per month bond buying program and signaled zero interest rates for the foreseeable future)could have been described to a 2007 investor, their conclusions would have most likely been obvious: back up the truck and buy gold. Instead, gold tumbled more than 27% over the course of the year. And despite the fact that 2013 was the first down year for gold in 13 years, one would be hard pressed now to find any mainstream analyst who describes the current three year lows as a buying opportunity. Instead, gold is the redheaded stepchild of the investment world.”

Read the Full Commentary Here

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One Response to Too Big to Pop

  1. Seems to me like the gold market (physical that is) is slowly abandoning the West and migrating east. If India elects the pro-gold guy and re-enters the gold market with force, we could be up for a huge bounce in especially gold stocks…

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