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Peter Schiff on Gold Prices

Written By Brian Hicks

Posted May 10, 2013

Euro Pacific Capital CEO Peter Schiff certainly has a strong reputation as one of the world’s most knowledgeable investors, so it should come as no surprise that many people are interested in what he has to say about gold.

While gold has gotten a bad rap as of late, Schiff’s advice for investors is casting a much more positive light on the metal.

gold barsAccording to Schiff, gold is not in nearly as rough shape as many people have made it out to be. While prices have been declining as of late, Schiff gave a very telling interview on CNBC stating that the market continues to remain bullish and likely will for the foreseeable future.

Schiff bases the fact that gold has been suffering lately on the effect of the stimulus, saying that it has created an illusion that many American simply can’t see past.

“People think the U.S. economy is recovering,” says Schiff, alluding to the notion that this “recovery” is really no more than the Fed trying to print money as fast as it can in order to reach inflation goals and keep the economy from collapsing.

Schiff says that this has caused the attention of many investors to move away from gold and instead towards stocks, although this isn’t necessarily a reason to view gold in the negative light that many people do these days.

Giving Gold a Bad Name

There’s no getting around the fact that gold has gotten a bad name recently. Take one look at how the metal has declined in the past few months, and it becomes obvious as to why one might have negative outlooks on the gold’s future. 

In Schiff’s eyes, however, the drop that has been seen is nothing in comparison to what has happened in the past, and it has little to no influence on the future of the metal.

The price of gold has risen and fallen throughout the years; the recent fall is really nothing new in the grand scheme of things. Because many Americans believe that the economy is improving, however, some are looking towards stocks as more effective investments.

It’s easy to see where this might come from, but the fact that the market has been bullish as of late has more to do with the effects of the stimulus than anything else. Schiff, for example, thinks that rising prices in stocks are likely due to the fact that more money is being printed by the Fed, and they aren’t a clear indication of an improved economy.

Nevertheless, gold has indeed seen a slump lately – one of the largest that has occurred in years. It has a lot of investors re-thinking how they should be dealing with their wealth, which Schiff thinks is perhaps a bit dramatic given the circumstances at hand.

“I think gold is going to go higher than $5,000,” says Schiff. “And you think gold is falling quickly now—wait till you see how fast it rises.” 

A Strong Future

The price of gold is certainly down at the moment, so it should stand to reason why many are nervous over how it might perform in the future. According to Schiff, however, the effect that the stimulus has had on gold is something that isn’t likely to continue for a long period of time, especially given the fact that so many investors are hoping for gold to improve. 

Typically, gold is purchased as a method of hedging inflation, which is one more reason why prices could increase sooner rather than later. If the stabilization methods the Fed is implementing in order to improve the U.S. economy begin to slow down, gold numbers are sure to increase.

Add to this the fact that production and mining costs have been going up lately, and it should come as no surprise why Schiff and many other key investors still hold strong feelings for the future of gold.

A positive future could help prices reach higher points than ever in the past, and now may be the perfect time for those who are interested in gold to take the plunge and start stocking up on their fair share.


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