“The ‘wealth effect’ from rising home prices combined with the similar influence of rising stock prices creates an aura of recovery. In fact, this week’s revisions to first quarter GDP revealed that consumer confidence and spending are up despite real discretionary per capita incomes plunging at a 9.03% annualized rate. That is worse than the largest plunge during the 2008-2009 crisis (7.52%). Additionally, the household savings rate fell to an abysmal 2.3%, the lowest since the 3rd quarter 2007. Debt-financed consumption supported by inflated asset prices is what led to the financial crisis of 2008. It’s amazing how willing we are to travel down that road again.
Of course rising asset prices are completely dependent on continued Fed support. As we have seen time and again, whenever the Fed even hints at tapering its massive QE programs the stock market sells off. The housing market is even more dependent on that support. Given the risks, it is arguable that no private market for home loans would even exist without government intervention. The bubble that popped in 2008 consisted mainly of government-guaranteed mortgages. This time, the mortgages are not merely government-guaranteed, but government owned.”
Friday, May 31, 2013
The Great Reflation
Wednesday, May 29, 2013
Are We Seeing Another Housing Bubble?
Peter Schiff, CEO at Euro Pacific Capital weighs in on the housing numbers out of the U.S.
Friday, May 24, 2013
The Biggest Loser Wins
“While the world’s economies jockey one another for the lead in the currency devaluation derby, it’s worth considering the value of the prize they are seeking. They believe a weak currency opens the door to trade dominance, by allowing manufacturers to undercut foreign rivals, and to economic growth, by fighting deflation. On the other side of the coin, they believe a strong currency is an economic albatross that leads to stagnation. But the demonstrable effects of currency strength and weakness reveal the emptiness of their theory.
A country that attracts investment from abroad (through stable and fair governance, low taxes, a growing economy, and a productive labor force) and produces goods that are in demand on the global stage will generally see a rising currency. In essence, this is the reward for a job well done. Strong currencies then help nations stay strong by conferring greater purchasing power to its citizens and businesses, which keeps input costs low, thereby enhancing international competitiveness. Strong currencies also encourage savings, keep real interest rates low, lower capital costs, and allow for greater productivity and higher real wages.”Read full commentary
Tuesday, May 21, 2013
GoldSeek Radio - May 17, 2013 [ft Peter Schiff & Chaplain Lindsey Williams]
Peter Schiff was on Gold Seek Radio last week to discuss the latest
correction in the gold price and to review the overall state of the
global gold market.
“I don’t see any evidence that the investors are leaving the [gold] market… It’s the speculators that are being flushed from the market and how is that a bad sign? That’s always been a good sign, when you take the froth off the bull market, because weak players are flushed out… So to me, this has all the look of a correction of a bull market… “
Friday, May 17, 2013
Peter Schiff: Currencies, Not Gold, Are the Real Risk (Video)
Today, CNBC’s Futures Now spoke with Peter Schiff about the disparate
performance of paper versus physical gold in the first quarter of the
year. Peter also addressed the plight of fiat currencies in the face of
an international currency war and how this is also a bullish indicator
for gold.
“I would say that speculative demand is what went down. I think a lot of people who came late to the gold rally were speculating in gold. They were simply buying it because the price was rising, they wanted to hop on that train… So I think the speculators have been flushed from the market in this pullback, but the investors – they’re still there. Because all the reasons that they’ve been buying gold for the past ten or twelve years, those reasons have never been stronger.”
Tuesday, May 14, 2013
Peter Schiff: Gold Is at a Steep Discount
Gold’s Struggles
After starting 2013 at $1,650 per ounce, gold has fallen more than 12% in just the last four months. This downward slope isn’t an entirely new trend, prices are down 23% after hitting all time highs in the fall of 2011. Combined with equity markets enjoying some of the best returns since the recession, investors have lost interest in gold in favor of more risky equities, making it hard for the commodity to gain any traction.
One of the most obvious signs of this change in taste has been the massive outflows from the SPDR Gold Trust ETF, which has fallen from the second largest ETF by assets to third after $14 billion in outflows this year. In fact, the once infallible fund is getting a run for its money from fourth-place iShares Emerging Markets Fund.
Schiff’s View
Schiff, president of Euro Pacific Capital and noted gold bug, believes that we are in for a bullish long-term trend for the precious metal, pointing to loose monetary policy and constant money printing as the source of future market instability. He has even found the silver lining in the most recent gold price drop, stating that “these momentary panics allow us to buy their (fair-weather investors’) gold at steep discounts.”
It is important to note that Schiff does not believe that gold is the right investment for everyone, but he believes that those who have abandoned gold after the most recent scare lack a “clear concept of the monetary transformation taking place” and that in the long term this yellow metal remains a powerful play.
Read original article here
Monday, May 13, 2013
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