Peter Schiff

Gold Rebounds After Sunday’s Flash Crash — Price Slide Blamed on Thin Trading Conditions, Leverage, Covid

09/08/2021 by Idelto Editor

The price of an ounce of gold dropped dramatically this week, slipping under the $1,700 handle to $1,688 per ounce on August 8. On Monday, gold regained some of the losses jumping 2.36% back above the $1.7K region to $1,727 per ounce of fine gold.

Gold’s Volatile Movements This Weekend Blamed on a Number of Elements

While bitcoin (BTC) prices are up more than 4% on Monday and over 16% during the last week, the value of gold has been dropping lower in fiat value. On August 6, 2021, the price of gold per ounce was trading for just over $1,800 per unit and slid to $1,688 per unit two days later losing 6.22% in value. The precious metals (PM) news outlet Kitco said the drop was due to an “overnight flash crash in gold and silver prices.” The report blamed the crash on “summertime doldrums” and “thin trading conditions.”

Moreover, the Delta Variant strain of Covid-19 has caused alarm across markets, Kitco’s Jim Wyckoff details. Peter Brandt, a veteran futures and FX trader since 1975, discussed gold’s action on Sunday. “I’ve seen similar price action to $GCF $SIF many times over the years. This has all the fingerprints of a bank/brokerage house conducting forced liquidation upon a huge leverage speculator,” Brandt tweeted. The trader added:

The leverage in the futures market for trading Comex (CME) Gold is about 15 to 1. Thus, a leveraged position can get into serious trouble with the type of decline experienced on Friday — resulting in forced liquidation on Sunday’s open.

Peter Schiff Knocks Bitcoin While Gold Is Down, Analyst Sees Gold on Road to Recovery

Of course, given the fact that bitcoin (BTC) was rising in contrast to gold prices, Peter Schiff didn’t sound too pleased about the market action. “Bitcoin rising as gold falls doesn’t mean [it has] replaced gold as an inflation hedge,” Schiff said. “Gold is down as traders mistakenly think the Fed will successfully fight off inflation by tapering QE and raising interest rates. Bitcoin doesn’t trade like gold because it’s not digital gold,” the economist and gold bug added.

A few crypto fans made fun of Schiff on Twitter. One example is when the Ethereum proponent Anthony Sassano said: “ETH and BTC pumping on news that Peter Schiff got liquidated due to the massive gold dump.” Fxstreet analyst Anil Panchal explained on Monday that “XAU/USD looks to recapture $1750 on its road to recovery.” Similar to the Kitco report, the Fxstreet analyst also discussed the rise of Covid infections and China’s inflation. However, in contrast to Wyckoff’s report, Panchal views these events as having bolstered gold’s rebound.

“It should be noted that China’s upbeat inflation data and Australia’s easy covid infections, after refreshing multi-day high, also back the gold’s bounce,” Panchal said on Monday.

What do you think about gold prices and the recent gold and silver flash crash? Let us know what you think about this subject in the comments section below.

Fed’s Vice Chair Says Tapering May Happen in 2021, Senator Joe Manchin ‘Alarmed Over Record Amount of Stimulus Injections’

06/08/2021 by Idelto Editor

Fed's Vice Chair Says Tapering May Happen in 2021, Senator Joe Manchin ‘Alarmed Over Record Amounts of Stimulus Injections’

The U.S. central bank’s vice chairman Richard Clarida explained on Wednesday that the Federal Reserve could begin tapering large asset purchases this year. Also, that the first interest rate hike since the onset of Covid-19 could happen in 2023. Meanwhile, despite members of the Fed saying inflation will be transitory, corporate bosses from some of the largest institutions are complaining about rising inflation.

Looming Jobs Report, Richard Clarida Say Taper Could Happen This Year

At the end of 2019, the Federal Reserve and numerous central banks all around the world started initiating monetary easing practices. Since then, the Fed’s monetary supply has ballooned after the onset of Covid-19, eclipsing decades’ worth of money creation in less than a year. The U.S. central bank kept the monetary spigot on and has yet to shut it off, while the cost of goods and services in America has risen dramatically.

Furthermore, while the real economic situation is felt by renters, landlords, and businesses that were forced to lockdown, Wall Street is in the midst of one of the largest bull runs ever. This week Nasdaq and S&P 500 are set to smash record highs once again and economists believe the stock market is not situated in reality.

On July 29, Bitcoin.com News reported on the recent Federal Open Market Committee’s (FOMC) meeting and members of the Fed explained the monetary easing would continue and interest rates would remain at near zero. “I think we’re some way away from having had substantial further progress toward the maximum employment goal,” the U.S. central bank chairman Jerome Powell remarked on July 28.

The jobs report from the Bureau of Labor Statistics was published on Friday, and analysts believe the report may make the Fed act sooner. Before the labor report was published, Michael Hewson, an analyst at CMC Markets told Barron’s on Friday that investors have been speculating on the outcome of the labor statistics.

“There has been plenty of speculation about the importance of today’s jobs report in terms of the timing of a possible tapering of asset purchases,” Hewson said. “As well as when to expect a possible rate hike, whether it be early 2023, or late 2022. The reality is, whatever today’s number is, the picture is unlikely to be any clearer after the numbers drop,” he added.

Tapering could happen this year, according to statements from the Fed’s vice chairman Richard Clarida. Vice Chair Clarida explained in a recent interview at the Peterson Institute for International Economics that curbing back large asset purchases stemming from QE (quantitative easing) may happen in 2021. The Fed’s vice chair also noted that it was possible the central bank could lift interest rates by 2023.

Clarida further hinted toward assessing U.S. labor statistics and whether or not they have improved enough to taper monetary easing policy. “I think we’re going to know more about the labor market over the next several months than we do right now,” Clarida stressed. The Fed’s vice chair added:

The recovery and expansion following the pandemic are unlike any we have ever seen, and it will serve us well to remain humble in predicting the future. Commencing policy normalization in 2023 would, under these conditions, be entirely consistent with our new flexible average inflation targeting framework.

On Friday morning, the Bureau of Labor Statistics published the jobs report which noted employers added 943,000 positions in July. 10-year Treasuries and equities markets saw mixed signals and overseas markets were also quite neutral when the U.S. labor statistics were revealed. The Bureau of Labor Statistics indicates a much stronger labor market than the months of May and June.

Corporate Bosses Fret Over US Inflation, Senator Joe Manchin Criticizes Fed’s Monetary Easing Policy

Americans and the country’s corporate bosses have been worried about rampant inflation rising too fast for the Fed to control. In another report published by Reuters, it shows there’s a significant disconnect between the Fed’s opinion of inflation and those seeing it in the market.

“The bosses of top multinationals are fretting about rising inflation but the very people responsible for keeping price growth in check – central bankers – seem unfazed,” Reuters reporters Francesco Canepa and Mark John wrote on Friday.

West Virginia senator and democrat Joe Manchin wrote a letter to the Fed and explained the central bank needs to stop its easy money policy as soon as possible.

“With the recession over and our strong economic recovery well underway, I am increasingly alarmed that the Fed continues to inject record amounts of stimulus into our economy,” Manchin wrote. “I am deeply concerned that the continuing stimulus put forth by the Fed, and proposal for additional fiscal stimulus, will lead to our economy overheating and to unavoidable inflation taxes that hard-working Americans cannot afford,” Manchin stressed in his letter.

Gold bug and economist Peter Schiff agreed with the West Virginia senator but said he underestimates the issue with inflation. “Yes, senator Joe Manchin is right,” Schiff tweeted on Friday. “But he’s grossly underestimated the inflation problem, and the Fed’s ability to turn off the monetary spigots. The inflation train has left the station and if the Fed tapers it will be the markets and the economy that derail,” Schiff added.

Despite people fretting about inflation and the Fed’s monetary easing, the U.S. central bank has not shut the money spigot off. Northman Trader’s Sven Henrich said on August 3, “looks like the Fed’s balance sheet is expanding again” and three days later he wrote that the “Fed’s balance sheet has increased by $14B in the past week.”

What do you think about the Fed possibly tapering this year? Are you worried about rising inflation? Let us know what you think about this subject in the comments section below.

Easy-Money Policy Continues: Fed Plans to Keep Purchasing Assets, Interest Rates to Stay Near Zero

29/07/2021 by Idelto Editor

Members of the U.S. Federal Reserve discussed the possibility of economic measures and actions at the Federal Open Market Committee’s (FOMC) meeting on Wednesday. The Fed said that right now the central bank is not considering cutting back large asset purchases just yet, and the central bank also plans to keep interest rates at near-zero. Speaking about the dollar’s dwindling purchasing power, Federal Reserve chairman Jerome Powell said that “inflation could turn out to be higher and more persistent than we originally expected.”

The Federal Reserve Will Continue Monetary Easing Practices and Keep Interest Rates Low

Americans are getting more concerned about inflation as the days pass and the recent outcome of Wednesday’s FOMC meeting was not very reassuring to economists and financial analysts.

Prior to the meeting on Wednesday, market observers thought the central bank might start announcing the tapering back of quantitative easing by curbing the multi-billion-dollar bond and mortgage-backed securities (MBS) purchases that take place every month. Moreover, people are expecting the Fed to raise interest rates again as the central bank has kept them suppressed near zero.

BREAKING: Fed Chair Jerome Powell now says “Inflation could turn out to be higher and more persistent than we originally expected.”#crypto #btc

— Giorgi Kvesitadze (@GiorgiKvesitad1) July 28, 2021

The outcome of Wednesday’s meeting shows that members of the Fed such as Jerome Powell, John Williams, Thomas Barkin, Raphael Bostic, Michelle Bowman, Lael Brainard, Richard Clarida, Mary Daly, Charles Evans, Randal Quarles, and Christopher Waller are not ready to act.

The Fed will not raise rates it said, but noted that economic recovery was getting closer. The U.S. central bank also said it wasn’t going to taper large asset purchases, as Chairman Jerome Powell says the Fed is not quite ready. Moreover, when the bank does start tapering, the Fed plans to taper bond purchases first, before it starts easing up on MBS purchases.

“There is little support for [the] idea of tapering [mortgage-backed securities] earlier than Treasurys,” Powell said on Wednesday. The FOMC statements noted that since December, the economy has “made progress toward these goals, and the committee will continue to assess progress in coming meetings.” The FOMC’s post-meeting statement said:

The sectors most adversely affected by the pandemic have shown improvement but have not fully recovered. Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

Criticism Toward the Fed’s Lack of Decision Making Grows Louder, Fed Won’t Stop Easy-Money Practices Until ‘Substantial Further Progress’ Is Made

Of course, a great number of American journalists pressed the members of the Federal Reserve for answers about rising inflation. Economist and gold bug, Peter Schiff, said that Fed chair Jerome Powell “dodged” these questions.

“Powell conveniently dodged answering the question about his willingness to raise interest rates to fight inflation even if the labor market hadn’t fully recovered,” Schiff tweeted after the meeting. “That’s because stagflation has arrived, and the Fed can’t acknowledge that predicament without making it worse,” he added. Schiff continued his scathing review of Powell’s statements by saying:

Powell said the Fed won’t even consider if higher inflation isn’t transitory until after the economy reaches full employment, whatever that means. Since we’ve entered stagflation, full employment will never exist. Inflation will keep rising until a dollar crash makes it worse.

The macroeconomist and analyst from northmantrader.com, Sven Henrich criticized the Fed’s lack of action as well. When Henrich was asked why the Fed didn’t plan to taper MBS purchases, he said: “Because they are scared of the market reaction. There is zero economic justification to keep piling $40B a month into MBS in a housing market that’s been rising over 20% YoY to record prices. None.”

Henrich further said that he suspects there will be a time when the Fed regrets not tapering. However, the economist added:

They will never admit it of course for the Fed does not admit errors.

For now, market observers will have to wait, as Schiff noted the meeting on Wednesday ended with “a whole lot of talk, and no action.” The easy-money policy has been steady since March 2020, as the U.S. central bank has purchased $40 billion in MBS and $80 billion in Treasury securities ever since then. Powell and the rest of the FOMC members wholeheartedly believe until “substantial further progress” is made, the monetary easing will continue, despite criticism from the press and market observers.

What do you think about the Fed’s decision to do nothing and continue the massive quantitative easing and suppressing interest rates at near-zero? Do you think the Fed will regret these decisions or do you think the central bank’s moves are necessary? Let us know in the comments section below.

New York Fed Survey Shows Inflation Expectations Highest Ever Recorded

13/07/2021 by Idelto Editor

American inflation expectations have surged according to the results of the latest New York Federal Reserve Survey of Consumer Expectations. The presumed inflation rate tapped the highest point since 2013 and alongside the forecast of lower purchasing power, consumer debt and fears of a housing bubble in the U.S. are on the rise.

New York Fed’s Consumer Expectations Report Expects Inflation to Be 4.8% Over the Next Year

U.S. citizens are worried about inflation after the government locked down the nation for more than a year and the Federal Reserve increased the M1 supply by 30%. Inflation has been so bad in recent times, American supermarkets are buying up to 25% more supplies to get ahead of inflation and higher supply chain costs that could arise.

From 2020 up until today, bacon is up 14%, bread is up 7%, milk increased by 8%, and oranges are up 8% as well. There’s been a significant rise in lumber costs, the cost of gas has jumped, and the real estate market is frothy from the likes of hedge funds and Wall Street types.

Though the members of the U.S. Federal Reserve remarked inflation will only be “transitory,” the New York Fed said in its latest Survey of Consumer Expectations that inflation is expected to be 4.8% over the next 12 months. This metric is the highest level recorded since 2013 and the perception of an American’s state of personal finances has degraded.

“Perceptions about households’ current financial situations compared to a year ago deteriorated, with more respondents reporting to be worse off compared to a year ago,” the report notes. The New York Fed’s survey adds:

In contrast, respondents were slightly more optimistic about their households’ financial situations in the year ahead.

American Consumers Are Borrowing More, Uncertainty Range Around Next Year’s Housing Market the Highest Ever

Consumers surveyed by the New York Fed also had shown that the rate of borrowing either one or more types of credit has jumped to 45% in February 2021 from 35% in October 2020.

“The increase was broad-based across loan types and credit score groups, although it was largest for mortgage refinance applications,” the Survey of Consumer Expectations report notes. Despite the rising number of Americans looking for credit, the overall rejection rate for credit jumped to the highest recorded rate since October 2018.

Meanwhile, as stimulus money has run out, Peter Schiff’s web portal schiffgold.com published a report on how “Americans are whipping out their credit cards.” The Federal Reserve data from the report shows that consumer debt jumped 10% in May and the report stressed that “Americans collectively now owe $4.28 trillion in consumer debt.”

The numbers stem from debt instruments such as student loans, credit cards, and auto loans. The data does not include mortgages and the report shows that consumer debt figures increased by $35.3 billion in May.

The economist and gold bug Peter Schiff doesn’t believe the U.S. central bank will be raising interest rates anytime soon with the economy’s foundations solidified by borrowing.

“The reason that they are not going to fight inflation in the future is the same reason they’re not fighting it now — because they can’t do it without collapsing the economy,” Schiff said.

The New York Fed’s latest Survey of Consumer Expectations also shows that Americans may be concerned about the U.S. real estate market as consumers disclosed that home prices will remain seeing a steady increase at 6.2% per annum, but doubtfulness surrounding that outlook was the highest the New York Fed survey has ever recorded.

Americans are noticing that there are buyers out there today trying to bid on properties they have never seen or visited. In April, 47% of the homes listed in the U.S. moved to pending in less than seven days.

What do you think about the New York Fed’s latest Survey of Consumer Expectations hitting records in this series? Let us know what you think about this subject in the comments section below.

Gold Spikes Higher as Fed’s Minutes Report Looms, Central Bank Bullion Purchases Begin to Swell

06/07/2021 by Idelto Editor

After a long break, monthly purchasing data shows that central banks are buying gold again. The World Gold Council says throughout March and April, the organization recorded a higher level of central bank monthly gold purchases and the latest data from May shows the exact same trend.

Gold Rises After Data Shows Central Bank Gold Purchases Trend Higher

The price of gold per ounce is hovering just above the $1,800 zone, after seeing some fresh gains following the weekend. Gold’s value jumped above its 100-day moving average and is changing hands for the highest price in two weeks. In late June, gold dipped to a two-month low and since then, the precious metal has gathered 3% in gains.

On Wednesday, the Federal Reserve plans to release the Federal Open Market Committee (FOMC) minutes from the latest committee meeting and the outcome could shake markets. The mid-June gold price drop took place when the Fed revealed its hawkish interest rate changes and the U.S. dollar gathered some strength.

One reason why gold may be gaining on the dollar is because some of the world’s central banks have been actively purchasing gold since the start of the year. Central bank gold purchases are much higher than in 2020 already. After the Covid-19 outbreak and throughout 2020, central bank gold purchases were cut in half in comparison to the two previous years.

Today, data from the World Gold Council (WGC) shows higher levels of gold purchased by central banks throughout March and April. Kitco statistics also show that in May, the world’s central banks purchased “56.7t during the month, down 11% M/M but 43% above the YTD monthly average.”

The chief precious metals analyst at HSBC, James Steel, told Bloomberg this week that the central banks moving into gold is a positive trend. “If a central bank is looking at diversifying, gold is a marvelous way of moving out of the dollar without selecting another currency.” Steel further said that bullion purchases by central banks will likely continue. The HSBC precious metals analyst stressed that because crude oil prices have risen dramatically, it has amplified central bank bullion buys.

Countries purchasing large quantities of gold for central bank reserves include Ghana, Turkey, Serbia, Thailand, Brazil, India, and Kazakhstan. This past week, Serbian President Aleksandar Vucic explained why the National Bank of Serbia was increasing gold purchases.

“Long term, gold is the most significant guardian and guarantor of protection against inflationary and other forms of financial risks,” Vucic told the press. Serbia’s central bank said it intends to add to its 36.3 tons and increase to 50 tons of gold.

Crude Oil Taps a 2021 Price High, Physical Gold Demand Resurfaces

Kitco statistics for May indicate that Thailand was the biggest buyer of gold bullion, as the country captured 82% of the month’s net gold purchases worldwide. The same month, Brazil increased gold reserves for the first time since 2012.

Gold bug and economist Peter Schiff agrees that crude prices have risen significantly in recent times. “In case no one in America is paying attention to the oil market on a Federal holiday,” Schiff said on Monday. “The price just hit a new high for the year of $76.39.” Schiff continued:

We are about 50 cents from hitting the highest price since Nov. of 2014. Low oil prices were transitory. Get ready for much higher prices.

American investors are anticipating this week’s minutes report from the Federal Reserve in order to get a clearer view of what the U.S. central bank will do next. Joseph Stefans, head trader at MKS (Switzerland) SA says demand for physical bullion has reappeared in recent times.

“Physical demand has begun to resurface a bit, U.S. real yields continue to drift lower, which has brought some dollar selling to the market,” Stefans noted on July 6. Gold is trading 0.83% higher than yesterday’s $1,791 per ounce price at $1,806 per ounce on Monday morning. A few other analysts believe it’s still too early to get clarity on gold’s future performance before the Fed’s minutes.

“It seems like the gold price has bottomed out recently after its mid-June sell-off. However, it’s still too early for a clearer picture ahead of the Fed minutes,” Alexander Zumpfe, a senior trader at refiner Heraeus Metals Germany GmbH & Co. KG. told Bloomberg on Monday.

What do you think about gold’s recent performance and central banks regaining their appetite for it? Let us know what you think about this subject in the comments section below.