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Peter Schiff continues: 

“If we get involved in a bigger war there, it’s easier to blame the higher prices on the war and on speculators.  The real reason oil is going higher is we have such a big deficit that the Fed is monetizing.  The money is losing value and prices are going up, particularly for things like gasoline.

It’s also inflation that’s really driving the move into the stock market.  Although some people may be under the impression the economy in America is getting better, before too long those hopes will be dashed.

Most of the data I’m seeing is a function of spending more money.  The more money we spend, the deeper the hole we dig for ourselves because we are borrowing that money.  We are not restructuring the economy along the lines that would allow for a lasting recovery....

Continue reading the Peter Schiff interview below...


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Schiff also said this is the what the Fed fears:  “Maybe we are at a top and we could be looking at a big drop in the bond market and a big rise in rates, This is what the Fed is really afraid of.  

I think that’s why that element (higher interest rates) was missing from the stress test.  The Fed asked the banks to stress test for a big drop in the stock market and real estate market, but ignored the possibility of a big drop in the bond market.  I think the Fed understands that’s the real threat and the banks aren’t positioned to withstand a big increase in interest rates.

This is why the Fed may be forced to step up QE if the bonds really weaken.  The way the Fed will try to prevent weakness in the bond market will be to buy the bonds.  How does the Fed get the money to buy the bonds?  It prints it.  If it prints the money that’s good for gold, silver, commodities and ultimately it makes stocks go up as well.”

Schiff had this to say about Europe and the gold market:  “I think a lot of people were very bearish on Europe and some of those bearish bets are being unwound.  But right now all of the central banks are too loose and people all around the world are going to need to protect themselves with things like gold. 

By the way, we’ve seen a much bigger drop in gold stocks than we have in gold.  If you look at the HUI (Gold Bugs Index), it’s trading at levels we haven’t seen since gold was under $1,100.  You have had a better than 50% rise in gold during a time period where gold stocks have not gained at all. 

There are a lot of bargains to be had in the mining sector.  That’s where I would be concentrating right now.  I would just favor the miners because they are at historically cheap valuations relative to the metal they are producing.”

Peter Schiff: CEO of Europacific Capital and author of

“The Real Crash: America's Coming Bankruptcy ---

How to Save Yourself and Your Country”

Just released, to order from Amazon CLICK HERE.

© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

Eric King

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