Stimulus

Peter Schiff Bullish On Foreign Stocks, Gold, And Silver

Euro Pacific Capital CEO/Chief Global Strategist Peter Schiff appeared on the FOX Business show Countdown to the Closing Bell last Wednesday. Host Liz Claman asked Schiff, who correctly-predicted the housing market crash and 2008 economic crisis, about where he was investing these days. He replied:

Well, my strategy has been the same for quite some time because I understand the problems that underlie the U.S. economy, how the Federal Reserve is exacerbating them in the name of trying to solve them, and so I want to invest abroad. We still favor equities, but I look at international equities. I look at value. I look at good dividends. And I want to own companies that are not dependent on the consumer…

A map was subsequently displayed that showed “Peter’s Global Area Picks”- Australia, Chile, China, Denmark, Hong Kong, Mexico, New Zealand, Norway, Peru, Singapore, and Sweden.

Claman also brought up precious metals in the discussion. Particularly, silver. From their exchange:

CLAMAN: Let’s put up the miners, because you feel that the miners now have an opportunity to really rise. Silver below $20 an ounce these days. That seems to me like a good buy because it’s so cheap.
SCHIFF: Well, it did get as high as $50 a couple of years ago. But it started the rally from below $4. So, we’re in a big bull market. We’ve been pausing for the last couple of years. But I think it’s the pause that’s going to refresh. I think what drove the metals market lower in 2013 was the false belief in a U.S. recovery, and the idea the Fed was through with QE, and that we were on the verge of a tightening cycle. None of that is true. We are slipping back into recession. Janet Yellen is going to launch an even bigger round of QE than what Bernanke launched. And this is going to be very bullish for gold and silver. But it’s not going to be bullish for the U.S. economy.


“Safeguarding Your Portfolio By Investing Abroad”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Peter Schiff On Direction Of Interest Rates, Housing, And Gold

Last Friday, “crash prophet” Peter Schiff added a new entry to his YouTube video blog- The Schiff Report. The CEO/Chief Global Strategist of Euro Pacific Capital warned viewers that the Federal Reserve is bluffing about raising interest rates. Schiff- who correctly-called the bursting of the housing bubble in addition to the 2008 economic crisis- also touched on the direction of the residential real estate market and gold. On interest rates and housing, he pointed out:

The risk is that the Fed doesn’t tighten at all, which is exactly what’s going to happen, because they can’t tighten. If the Fed actually tightens, the recovery is over. The recovery that is supposedly giving them the confidence to raise rates- it can’t exist if they raise rates. In fact, if the Fed could raise rates, they would have already raised them. I mean, it’s been over five years. They’re still at zero. And they’re saying rate hikes are a year way maybe. Why? If the economy is recovering, why can’t the Fed raise rates? Because if the Fed raised rates, we’d be right back in recession. Because it’s a phony recovery. That’s what people have to understand. It’s not real. It’s only here as long as the Fed can artificially sustain it, which she might. The minute they raise interest rates, that party’s over. The stock market’s going down. The real estate market’s going down.

And by the way, we had a plethora of negative numbers all week for the housing market. You could put a fork in this phony housing recovery, because it’s done. The market is going down. Housing prices are heading back down. Housing activity is slowing. I think a lot of layoffs are coming in construction because this market’s grinding to a halt…

The Fed is bluffing. This is all bark and no bite. It is impossible for the Fed to raise interest rates. If they could do it, they would have already done it. If they raise interest rates now, they destroy the very recovery that the low interest rates created. The problem is, if it isn’t a real recovery, it’s phony. If it was real, it wouldn’t need the Fed to support it. The only reason it does need the Fed’s support is because it’s imaginary. It’s phony. Because the actual economy is getting worse.

What the Fed is doing to goose the stock market, and the real estate market, to create this phony wealth effect, is undermining legitimate wealth creation. All the money we’re borrowing to spend is interfering with legitimate, genuine economic growth. And we’re just digging ourselves into a bigger and bigger hole…

The problem is, we’re going to have the next recession, and the Fed’s still going to be at zero. They’re still going to have this bloated balance sheet. And again, it’s not that the Fed is never going to raise rates. They’re just not going to do it voluntarily. They’re not going to do it as a decision. They’re not going to do it until they have to. And it’s not going to be a strong economy that’s going to force them to raise rates. Because I don’t care how strong the economic data is- they ain’t going to raise rates. And it doesn’t matter how bad the inflation data is- they’re still not going to raise rates. They’re not going to raise rates until the dollar collapses. Until foreigners no longer want to hold the dollar, because they understand the predicament that the Fed is in. They understand that it is QE forever. That it is all just talk. There is no exit strategy. There never was. Because exit is too painful. This is the end game of QE. This is the all in. This is the overdose.

On gold, Schiff predicted:

Janet Yellen is not going to wage war against inflation. She has already surrendered to inflation. It’s just that a lot of people haven’t figured that out yet. So, because people think that Janet Yellen might raise interest rates sooner rather than later because of inflation, they sold gold. If they knew the truth, that Janet Yellen isn’t going to care about the inflation, that’s she’s just going to let it get worse because she is too afraid to challenge inflation for fear of what it will do to the economy, to the stock market, to the housing market, the job market. So she is going to allow inflation to not only continue, but accelerate. And that is what’s good for gold.


“Ending QE is Bad, Not Ending it is Worse”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Jim Rogers On Coming Fed Moves, Investing Opportunities

I just got finished reading an interview of well-known investor, author, and financial commentator Jim Rogers by The Economic Times (India) a short time ago. Published yesterday, the former investing partner of George Soros shares his thoughts on a number of topics, including:

• Investing opportunities during wartime (commodities, including crude oil, gold)
• Federal Reserve coming moves (continued tightening, then full-reverse)
• Crude oil price movement (higher and in a holding pattern)
• Gold price movement (suspected buying opportunity in next year or two)
• Other investment opportunities (industrial metals, natural gas)

Lots of good insights dragged out of Mr. Rogers by the Times crew, which you can read all about on their website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Peter Schiff On Gold: ‘We’re Going To Have A Big Rally Probably Beginning Here In The Second Half Of 2014’

It’s been a little over a month since I last blogged about “crash prophet” and head of Euro Pacific Capital Peter Schiff. But tonight, I’ll be talking about the first-ever installment of Peter Schiff’s Gold Videocast (which replaces the monthly Peter Schiff’s Gold Newsletter). Schiff, who also heads up Euro Pacific Precious Metals, told videocast viewers on July 9:

I think that the sellers have been exhausted in the gold market, and the buying continues. And when we run out of sellers- again, there’s only one direction for the price of gold. And I think once all of these speculators that have been shorting gold discover that their premise is wrong- that we’re not going to get this vibrant recovery. And that we’re not going to get less QE, we’re going to get more. That we’re not going to get rate hikes, but the Fed is going to keep interest rates at zero in order to prop up this phony, bubble economy that they’ve inflated. You’re going to have to see this mad rush from all the short sellers who are going to be anxious to buy back their money losing positions. But that’s going to be a lot more difficult, because there’s not going to be a lot of gold around. Because a lot of the gold that was liquidated in the second half of 2013 is not going to be available for sale in the second half of 2014. That gold was probably purchased by entities that never intend to sell it.

So I think we’re going to have a real short squeeze and we’re going to have a big rally probably beginning here in the second half of 2014. But maybe gathering momentum as the year comes to a close.

Schiff, who is credited for calling the U.S. housing bust and 2008 economic crisis, added:

I expect the price of silver to rise. Other precious metals- platinum- and commodities in general are all responding to the inflation that the Fed is creating to prop up this phony economy. All the while denying that inflation is a problem.


“Gold Videocast: Gold’s 2014 Half-Time Report”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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2.9 Percent GDP Contraction Casts Doubt On Sustainability Of Economic ‘Recovery’

Remember that U.S. GDP “hiccup” from the first quarter?

It’s been revised. And let me just tell you, barf-o-rama baby. Barf-o-rama.

From a Reuters piece on the CNBC website earlier today:

The U.S. economy contracted at a much steeper pace than previously estimated in the first quarter, but there are indications that growth has since rebounded strongly.

The Commerce Department said on Wednesday gross domestic product fell at a 2.9 percent annual rate, the economy’s worst performance in five years, instead of the 1.0 percent pace it had reported last month.

While the economy’s woes have been largely blamed on an unusually cold winter, the magnitude of the revisions suggest other factors at play beyond the weather

(Editor’s note: Bold added for emphasis)

Wow, did I just read that last part right? Usually the MSM plays along with that oft-used weather excuse as bad government economic reports are concerned.

The general feeling I’m getting tonight from mainstream media outlets is one of “don’t worry, be happy.” Of course, damage control is in overdrive. Jeffry Bartash reported on the MarketWatch website:

The revised GDP report briefly stunned Wall Street and clearly unsettled the White House. President Obama’s chief economic adviser, Jason Furman, cast doubt on the report and argued the economy is much stronger than the first-quarter contraction implied.

Investors, for their part, shrugged off the backward-looking report. The economy appears to have rebounded in the second quarter and economists polled by MarketWatch predict growth will turn positive again, with a 3.8% increase…

(Editor’s note: Bold added for emphasis)

3.8 percent increase in GDP in the second quarter? After revisions? It will be interesting to see if they’re right.

Personally, I feel that abysmal first quarter GDP report is a worrisome sign the sustained economic “recovery” we keep being told about is getting long in the tooth.

“Taper” to go full reverse soon, like “crash prophet” Peter Schiff has been predicting?

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

“Bad to worse: US economy shrank more than expected in Q1.” Reuters. 25 June 2014. (http://www.cnbc.com/id/101787838). 25 June 2014.

Bartash, Jeffry. “Economy’s stumble in first quarter historic.” MarketWatch. 25 June 2014. (http://www.marketwatch.com/story/us-growth-contracted-29-in-first-quarter-2014-06-25). 25 June 2014.

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Peter Schiff: ‘We Have An Entire Economy That Is Supported On A Foundation Of Bubbles’

Tonight I watched Peter Schiff’s presentation at the MoneyShow Las Vegas back on May 12, 2014. The CEO and Chief Global Strategist of Euro Pacific Capital shared his current assessment of the U.S. financial landscape in “Too Big to Bail: Why the Next Financial Crisis Will Be Worse Than the Last”- as well as where he thinks we’re heading. Schiff warned attendees:

There is no economic recovery in the United States at all. There is no evidence of an economic recovery. The U.S. economy is in far worse shape than it was on the eve of the 2008 financial crisis. We have never been in as worse shape as we are right now. But they say, “Whoa! But the stock market went up.” Yeah, of course the stock market went up. You print enough money, you can make the stock market go up. Yes, the Federal Reserve succeeded in reflating the stock market bubble. But that’s all that it did. That isn’t evidence of a strong economy. Stock prices went up from 2002 to 2007. Does that mean we had a sound economy? No. We were on the verge of a complete implosion. The main difference though between the stock market bubble that we have today and the one that blew up, let’s say, in 2000, is that fewer individuals are participating. This is the bubble for the 1 percent. This is for the hedge funds, the private equity guys… The overwhelming concentration of buyers are very wealthy people. The average American is not participating in the stock market to the extent that he was in the 1990s. And so the Fed is not getting the boost to consumption that you would normally have from the wealth effect because a lot of people aren’t feeling the effects of the wealth because they don’t own stocks.

The same thing is happening in the real estate bubble, which the Fed has managed to reflate. The difference again between the real estate bubble we have now and the real estate bubble that popped in 2007 is again- the average American isn’t participating. Home ownership rates are at 19-year lows. You have hedge funds and private equity companies that are buying up real estate. Last month, I think 43 percent of all the properties purchased in America were purchased for cash. These are not typical Americans buying houses to live in. These are investors buying houses to flip, buying houses to rent out. This is not a healthy market. It is an extremely speculative real estate market thanks to the Federal Reserve.

So the Federal Reserve has managed to reflate two bubbles simultaneously.

And of course, the biggest bubble of them all is the bubble in the bond market.

So we have an entire economy that is supported on a foundation of bubbles…


“Peter Schiff at Las Vegas Moneyshow 2014”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Peter Schiff Warns Of Coming Inflation, Accompanying Propaganda

“Crash prophet” Peter Schiff sees inflation getting worse in America. And with it, Washington, the Fed, and the mainstream media spinning rising prices as something that’s beneficial for the general public. The Euro Pacific Capital CEO and Chief Global Strategist added a new entry Tuesday on his YouTube video blog The Schiff Report, and warned viewers of the following:

It’s going to get worse. And, what is the Fed going to do about it? Because the problem is, no matter how high that inflation number gets, they can never admit it’s a problem. Because if they admit that it’s a problem, they’ve got to do something about it. But they can’t do anything about it. Because if they want to fight inflation, what tools do they have? Just one. They’ve got to raise interest rates, which means they’ve got to end quantitative easing. And in order to raise interest rates, they’ve got to start selling their bonds and their mortgages back into the market. That will collapse the real estate market, collapse the stock market, send the economy into a sharp recession, and bring about a financial crisis worse than 2008. So because they can’t do that, they can’t do anything. So they’re going to have to tolerate inflation, no matter how high it gets. They’re going to have to convince us that it’s good for us, no matter how high it gets. They’re going to say, “Oh, well, maybe it’s transitory,” “It’s because of the weather,” “Oh, you know, we had such low inflation for so long, we need a few years of higher inflation to even it all out.” Who knows what kind of excuses Janet Yellen is going to come up with to rationalize why whatever the inflation number is- no matter how high it is- it’s always going to be a good thing?

But I wonder if the media- if the guys at Bloomberg or the guys at The New York Times or the AP or the Financial Times- will ever see through this charade. Will they ever see through this smokescreen and come out and call the Fed out on this? Will they ever say, “You know what, we’ve got too much inflation- this is not good. Do something about it.” And when the Fed doesn’t do something about it, that’s going to be a big problem for the dollar. Because that’s when people realize that this is QE Infinity, that inflation is never going to stop, that the dollar’s value is going to erode away in perpetuity. That’s when the bottom drops out of the market. That’s when the real crisis comes in. Because now the dollar really starts to cave, and puts more pressure on the bond market. That means the Fed has to print a lot more money. A lot more dollars that nobody wants to buy the Treasuries that nobody wants to keep the market from collapsing. That accelerates the inflationary spiral, and puts the Fed in a real box. Because then, it just can’t print the dollar into oblivion. It can’t turn it into monopoly money. Then it has to slam on the breaks. Then it has to really jack up interest rates. Not just a few hundred basis points- ten percent, fifteen percent, twenty percent. Paul Volcker style. Of course, the medicine won’t go down nearly as smoothly as it did back then. Not that it was so great tasting- we had a pretty bad recession in 1980. But that’s nothing compared to what we’re going to go through, because we have a lot more debt now than we had then- it’s not even close. We don’t have the viable economy. We don’t have the trade surpluses or the current accounts surpluses. And we don’t have a federal government that has a long-term financing on the national debt. It’s all financed with T-bills. And we have all these adjustable rate mortgages. We have all these corporations, individuals that are so levered-up. We’ve got all these student loans and credit card debt. We have all this stuff that we didn’t have back in the 1980s that we’re going to have to deal with- thanks to the Fed.


“Media Reports Rising Food Prices as Positive News”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Peter Schiff Predicts Future Fed Moves

Peter Schiff of Euro Pacific Capital released a new entry Monday on The Schiff Report YouTube vlog. The “crash prophet” talked about a number of financial topics, including future activity by the U.S. central bank. Schiff predicted:

I think that with the weakening in the stock market, the softness we’re seeing now in the real estate market- with the fact that we’re going to be getting weaker jobs numbers in the spring that cannot be rationalized away based on the weather- the Fed is going to have come forward at some point and acknowledge which should have already been obvious. That they were mistaken. They were overly-optimistic on their assessment of the economy. That for whatever reason they’ll come up with an excuse to save face- they can blame it on some external factor- but the Fed is going to have to come out and they’re going to have to halt the tapering process, and ultimately reverse it.

How much time there will be between the pause and the reversal?

I don’t know. I don’t think it will be more than a couple of meetings, at best. But that’s what’s coming….

Schiff, who correctly-called the U.S. housing bubble and subsequent burst along with the 2008 global economic crisis, went on to speculate what all this might mean for gold and stocks.


“Warmer Weather’s Failure to Stoke Jobs Chills Stocks”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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Peter Schiff: No Recovery, Just An Illusion Of Prosperity

I first started paying attention to Euro Pacific Capital’s Peter Schiff just prior to picking up his book Crash Proof: How to Profit From the Coming Economic Collapse (now Crash Proof 2.0, second edition) shortly after its early 2007 release. While some of the calls he made in that controversial text are still playing out, others have already come to fruition.

Subsequently, Schiff has been given credit for correctly-calling the U.S. housing bubble and its burst, and the 2008 global economic crisis.

Being one of Survival And Prosperity’s “crash prophets,” his latest investment recommendations are chronicled on this blog. As are his economic analyses and forecasts as well.

Here’s a recent breakdown of what Schiff sees going on with the U.S. economy and larger financial system, courtesy of a March 21 commentary entitled “Debt and Taxes” that’s posted on his Euro Pacific Capital website:

The last few years have proven that there is no line Washington will not cross in order to keep bubbles from popping. Just 10 years ago many of the analysts now crowing about the perfect conditions would have been appalled by policies that have been implemented to create them. The Fed has held interest rates at zero for five consecutive years, it has purchased trillions of dollars of Treasury and mortgage-backed securities, and the Federal government has stimulated the economy through four consecutive trillion-dollar annual deficits. While these moves may once have been looked on as something shocking…now anything goes.

But the new monetary morality has nothing to do with virtue, and everything to do with necessity. It is no accident that the concept of “inflation” has experienced a dramatic makeover during the past few years. Traditionally, mainstream discussion treated inflation as a pestilence best vanquished by a strong economy and prudent bankers. Now it is widely seen as a pre-condition to economic health. Economists are making this bizarre argument not because it makes any sense, but because they have no other choice.

America is trying to borrow its way out of recession. We are creating debt now in order to push up prices and create the illusion of prosperity. To do this you must convince people that inflation is a good thing…even while they instinctively prefer low prices to high. But rising asset prices do little to help the underlying economy. That is why we have been stuck in what some economists are calling a “jobless recovery.” The real reason it’s jobless is because it’s not a real recovery! So while the current booms in stocks and condominiums have been gifts to financial speculators and the corporate elite, average Americans can only watch from the sidewalks as the parade passes them by. That’s why sales of Mercedes and Maseratis are setting record highs while Fords and Chevrolets sit on showroom floors. Rising prices to do not create jobs, increase savings or expand production. Instead all we get is debt, which at some point in the future must be repaid

(Editor’s note: Bold added for emphasis)

“Which at some point in the future must be repaid”

Good luck trying to get your average American in 2014 to wrap their head around that crucial concept.

Once again, I agree with Schiff’s observation of what is going on all around us.

“Illusion of prosperity” is a fine choice of words here, and makes sense that I find a fine economic blog by the same name good reading.

As certain as the “Big One” will eventually hit California, so must our nation’s “financial reckoning day” arrive for all this debt we’ve accrued for some short-term “prosperity.”

You can read Schiff’s entire commentary on the Euro Pacific Capital website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Peter Schiff: Gold Fundamentals ‘Great Right Now’ As U.S. Recovery A ‘Myth’

Euro Pacific Capital’s Peter Schiff appeared on the CNBC show Futures Now on March 20. The financial commentator and author talked about a number of issues, including the Federal Reserve, gold, and inflation. On gold, Schiff told viewers:

The fundamentals have favored higher gold prices all along. The fundamentals for gold were great at the beginning of 2013. They were great at the end. They’re great right now. It’s just that most people don’t understand how great they are. They believe the myth of the U.S. recovery. They believe that the Fed can actually unwind its balance sheet, that it can end QE, that it can raise interest rates, and that the economy is going to keep on expanding. None of that is going to happen. It’s all fantasy.

We’re going to have QE Infinity. There is massive inflation. And it’s going to manifest itself in substantially higher gold prices.

The ensuing short debate between Schiff and economist/investor/hedge-fund manager Mark Dow about inflation was also interesting to watch. Perhaps those two can set up something “official” down the road.


“Mark Dow vs. Peter Schiff on Gold, Inflation, Fed”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Record Net Worth Result Of Fed Blowing Bubbles In Housing, Stocks?

I was surfing the Internet last night when I read something about Americans’ net worth making a comeback. Neil Shah reported on The Wall Street Journal website Thursday:

Americans’ wealth hit the highest level ever last year, according to data released Thursday, reflecting a surge in the value of stocks and homes that has boosted the most affluent U.S. households.

The net worth of U.S. households and nonprofit organizations rose 14% last year, or almost $10 trillion, to $80.7 trillion, the highest on record, according to a Federal Reserve report released Thursday. Even adjusted for inflation using the Fed’s preferred gauge of prices, U.S. household net worth—the value of homes, stocks and other assets minus debts and other liabilities—hit a fresh record…

(Editor’s note: Italics added for emphasis)

I can’t say I’m surprised to hear of this rebound in net worth. After all, Euro Pacific Capital’s Peter Schiff has been warning for a couple of years now that the Federal Reserve is inflating new asset bubbles via tremendous amounts of stimulus (quantitative easing) to spark some sort of economic recovery in the wake of the bursting of the housing bubble and global financial crisis that reared its head in the fall of 2008. I blogged back on September 18, 2012:

In his September 14 entry on the The Schiff Report YouTube video blog, Schiff, who correctly-predicted the bursting of the U.S. housing bubble and 2008 global economic crisis, explained to viewers what QE3 was really about:

This is the plan that Ben Bernanke has. Ben Bernanke’s plan to revive the U.S. economy, and create jobs, is to inflate another housing bubble. That’s it. That’s what the Fed’s got. That’s what it came up with. As if the last housing bubble worked out so well for the economy, that the Fed wants an encore…

How is another housing bubble going to solve anything. Now one thing that Ben Bernanke hasn’t figured out yet- it ain’t gonna work. No matter how much he tries, no matter how much air he blows in to that housing market, he’s not going to reflate that bubble. There are simply too many holes in it, and there is no precedent for relating a busted bubble. More likely, all that cheap money is going to go someplace else…

Schiff asserted the Federal Reserve was trying to inflate another housing bubble.

Instead, there’s suggestions both housing and the stock market look “frothy” these days.

Suppose the Fed did in fact want to inflate new asset bubbles. If the central bank aimed to spread the wealth around in an attempt to jump-start the economy, it doesn’t seem to be happening. Shah noted in that WSJ article:

But the rebound, while powerful, has been tilted in a way that limits the upside for the broader U.S. economy and is increasingly leaving behind many middle- and lower-income Americans…

That means that even as wealth increases, it’s increasingly going to the affluent.

In addition to the affluent, much of the wealth surge is going to older Americans. Both groups are less likely to spend their gains and more likely to save, Mr. Emmons said. Meanwhile, sheer demographics—the retirement of the baby boomers and America’s aging population—are increasing the ranks of the nation’s savers.

The upshot: While American households overall are getting wealthier, the benefits for the economy may prove limited until such improvements reach more people.

(Editor’s note: Italics added for emphasis)

“The benefits for the economy may prove limited until such improvements reach more people.”

I fear another financial crisis will have paid us a visit before such prosperity is achieved.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Shah, Neil “U.S. Household Net Worth Hits Record High.” The Wall Street Journal. 6 Mar. 2014. (link). 7 Mar. 2014.

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Peter Schiff’s Investment Advice Before The Fed Reverses, Increases QE

While I’m jonesing for a new entry on The Schiff Report YouTube video blog, I did watch Euro Pacific Capital CEO and Chief Global Strategist Peter Schiff on CNBC’s Closing Bell on January 28. Schiff, who correctly-called the U.S. housing bust and 2008 global economic crisis, told viewers the U.S. economy is actually doing “lousy” and that he thinks the Federal Reserve will reverse course on quantitative easing this year, increasing the levels of “stimulus.” When asked what one should do with their money, Schiff advised:

You should be buying gold. You should be buying mining stocks. You should be investing abroad. You should be getting out of the U.S. dollar. Because ultimately, that’s going to be the big casualty here. When the Fed surprises everybody and does more QE, and people realize the box that we’re in- that it’s QE Infinity, that there is no exit strategy, that exit is impossible, that it’s ever larger doses of this monetary heroin- the bottom is going to drop out of the dollar. You know, an economy that lives by QE dies by QE. We better be prepared for that.


“Yellen Will Reverse Taper and Increase QE”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Jeremy Grantham: Farmland And Forestry Favorite Long-Term Resources

One “crash prophet” post down, one more to go tonight (I’ll update the “Crash Prophets” page once I’m done with both). Next up is Jeremy Grantham. He’s out with a new quarterly investment letter? Nope. But I did manage to catch an interview with the British-born investment strategist that was published on The Globe and Mail (Canada) website on January 30. From their exchange with Grantham, co-founder and chief investment strategist of Grantham, Mayo, Van Otterloo & Co. (GMO):

How do you play this sort of environment?

There is no easy answer, and anyone who thinks there is one is either ignorant or a crook. If you get out too soon, you’ll be victimized as an old fuddy-duddy. If you stay in too long, you’ll be just another trend-follower. But we know what the Fed does, and we know what [incoming Fed chair] Janet Yellen thinks. She says the market is not badly overpriced, which means she’s not going to get disturbed if it were 20% or 30% higher. Consequently, I don’t think that is unlikely.

Is this bubble-and-bust cycle one that can and should be avoided?

Of course it can and should be avoided. But by appointing Janet Yellen, you know there is no inclination on the part of officialdom to change the game. Bernanke and Yellen are guaranteed extensions of what I think of as the Greenspan experiment in stimulus and relatively lax regulation. It is a totally failed experiment, with enormous pain. Will they never learn?

“It is a totally failed experiment, with enormous pain. Will they never learn?”

Back around Thanksgiving, I pointed out the following in Grantham’s last investment letter (covering Q3 2013):

In “Ignoble Prizes and Appointments,” Grantham predicted yet another market “bust” shortly. Grantham wrote:

But back to Yellen, who has happily gone along with the failed Fed policy of hoping madly for a different outcome despite repeating exactly the same thing. The past consequences of this strategy have been so dire on two occasions and threaten to be just as bad again sometime within two or three years.

(Editor’s note: Italics added for emphasis)

Getting back to that Globe and Mail piece, there was this investing nugget:

What’s your favourite long-term resource?

Forestry and farmland, if you can find those properties that have the least overpricing. They would tend to be overseas, in reasonably stable countries. Unless I could get a share in the Moroccan government’s phosphate enterprise, in which case I would do it with a quarter of my net worth and feed it to my grandchildren.

Grantham, whose individual clients have included Secretary of State John Kerry and former Vice President Dick Cheney, talked about his “feeling about the state of the world,” environmental issues related to investing, stock picking, and timber as well in the remainder of the discussion, which you can read in its entirety on The Globe and Mail’s website here.

By Christopher E. Hill
Survival And Prosperity (survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Peter Schiff Bullish On Emerging Market Stocks, Gold

Peter Schiff appeared on the Fox Business Network show Markets Now on December 26. The CEO and Chief Global Strategist of Euro Pacific Capital discussed the Federal Reserve and its announced “tapering” of its $85 billion bond-buying program. Schiff, like fellow “crash prophets” Marc Faber and Jim Rogers, believes the U.S. central bank will eventually reverse course on cutting back stimulus. He told viewers:

The Fed, I don’t believe, is going to carry out the taper talk. Maybe it will begin it, but it’s certainly not going to follow through. And I think it will reverse course, and ultimately be buying a lot more mortgages and Treasuries each month than it’s doing right now. And that’s because without the support of the Fed, long-term interest rates are heading a lot higher, and our economy is too broke to afford it. The highest rate we can really afford is zero at this point. And the markets haven’t figured this out yet- that we have a phony recovery. It’s a bubble masquerading as a recovery.

When asked where people should be putting their money then, the CEO of Euro Pacific Precious Metals recommended:

I’m not bearish on stocks. I’m bearing on the U.S. dollar. I’m bearish on paper. People just assume I’m all gloom and doom. So, I think the stock market’s going down. If the Fed did the right thing for the economy, and let interest rates go up, the stock market would come crashing down. But, I don’t believe the Fed is going to do the right thing. They’re going to keep doing the wrong thing. This bubble is too big to pop. The Fed knows it. So they’re going to keep on supplying air. So yes, stocks are going to go up, but the dollar is going to go down a lot more in real terms. And yes, gold is going to go up. If you really want to invest in the stock market, look around the world. There are much better opportunities in foreign stocks, in the emerging markets, that hasn’t been the place to be in 2013, but it probably will be the place to be in 2014 and going forward.


“The Fed knows this bubble is too Big to Pop”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Jim Rogers: Fed Will Reverse Taper, Leading To ‘Disaster In The End’

Well-known investor, author, and financial commentator Jim Rogers was recently interviewed by BBC News. The interview was published on their website on December 24, and in it, Sharanjit Leyl asked the former investing partner of George Soros what effect “tapering” would have on the U.S. economy. Rogers explained:

It will not have much effect on the economy. It will have an effect on the financial markets, and therefore, indirectly on the economy. What will happen is, they will taper. They will do some more. Eventually the markets will get scared. They will go down all over the world. And then the bureaucrats and the academics at the Fed will panic, and they will start printing money again. And everybody will say, “Phew! It’s okay.”

Leyl asked the Singapore-based investor, “Will it be okay though?” To which Rogers replied:

No. Sharanjit, it’s a disaster for the world. It’s unmitigated disaster. This is the first time in world history- recorded history- that all the major central banks in the world are printing staggering amounts of money at the same time. There’s an artificial sea of liquidity out- look out the window. You’ll see the ocean of liquidity rising, rising, rising. This is going to be a disaster in the end.


BBC News Video

Rogers mentions 2015, 2016 in the interview. On December 5, I blogged that he appeared two days earlier on The Lang and O’Leary Exchange, a Canadian business news television series which airs weekdays on CBC Television and CBC News Network. The CEO of Rogers Holdings and Beeland Interests warned host Amanda Lang:

Well, eventually Amanda, when the next big collapse comes- and we’ve had them every four to six years since the beginning of the American republic and the Canadian republic- you’re going to see serious, serious problems. The next correction when it comes- because the debt is so very very high. You know, 2008 was worse than 2002 because the debt was so much higher. You wait until 2015 or 16, Amanda. The debt has gone through the roof. The next one is going to be very bad. Be very careful. Be prepared, be worried, and be careful.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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