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Peter Schiff - Silver Will Eventually Trade Over $200

With continued volatility in gold and silver, today King World News interviewed Peter Schiff, CEO of Europacific Capital. When asked about the action in gold Schiff stated, “This had been the longest winning streak for gold since 1980 as far as consecutive up days. I think more importantly the Dow Jones broke down Monday to less than 7.8 ounces of gold, that’s the first time it has been below 8 ounces in this entire bull market.

So the Dow is even lower today in terms of gold than it was in March of 2009 when the index was at 6,500. That shows you how much real value is being lost nominally even as the market goes up. That bodes very well for gold as an asset class, as an inflation hedge, that not only is it rising, but it is rising relative to stocks.”

Schiff continues:

When asked if summer strength in gold was a prelude to further gains for the rest of the year Schiff responded, “I think so, we held some key lows, especially in silver where silver held up and never got down to $30. That used to be the resistance before it broke up and moved up to $50. $50 is now the over head resistance and we will take that out before the end of the year. Who knows how much higher gold is going to be by then. I think eventually silver north of $200 with gold over $5,000 makes a lot of sense.

There is just so much demand even in a seasonally slow period and I think now that the Federal Reserve has put QE3 on the table, that really is going to supercharge the gold rally. I believe they will actually launch QE3 by the fall of this year in response to weakening economic data. The unemployment data is going to inch back up, maybe closer to 9.5% and that’s going to be a danger zone.

There is going to be a lot of pressure on the Fed to do something and of course when they do something they are doing harm, not good because all they are doing is throwing gasoline on a fire when they are printing more money. We are going to get the QE and I think that is going to be like a turbo charge for the gold and silver market and we will be off to the races.”

When asked about recent strength in the gold shares Schiff responded, “Yeah and they are still really, really lagging. Take the HUI, that index is at roughly 570, that index was at 610 back in April of 2011 and at that time gold was no higher than $1,530’s to 40’s. We are higher than that now, yet the gold stocks are considerably lower. What that tells me is that there is more fear in this market than there is greed. There is skepticism that the gold price is going to fall.

Look at Barrick Gold, it is trading at 10.8 times earnings, Newmont 13.5 times earnings. These are pretty low multiples given the trajectory of the price of gold. These stocks are not expensive, they are cheap on an earnings basis. That’s because the market is looking into the future and assuming that prices are going to fall, even though they have clearly been on the rise.”

When asked about the economy Schiff stated, “The US economy is going to continue to stagnate, the government is poisoning it with stimulus. The government is preventing a real restructuring and lasting recovery or real recovery from taking place.”

The KWN audio interview with Peter Schiff is available now and you can listen to it by CLICKING HERE.

Eric King

KingWorldNews.com

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