Euro Pacific President Peter Schiff Predicts Soaring Gold Prices
When domestic and global events predict potential financial situations, investors tend to purchase gold. Prices of gold are recovering, despite Europe’s credit crisis, US’s budget problems and the ongoing disturbances in the Middle East. Gold futures have dropped below $1,700 an ounce, after prices peaked to cross $1,900 in June 2011.
Goldman Sachs has warned about the “growing downside risks†in gold and has cut its 12-month price prediction down by 7.2% to $1,800 an ounce. Goldman Sachs also believes that “the cycle in gold prices is near an inflection point.â€
Peter Schiff, President of the Euro Pacific Capital, differs on this point. He claims that the elements that are putting downward pressure on gold prices are not permanent and the yellow metal could even surge to $5,000 or more per ounce in the foreseeable future.
Schiff believes that the decline in the precious metal’s price is due to US investors looking for profits before the capital gains tax rises. European investors, on the other hand, are selling off their gold with the rising confidence in the European economy. In addition, hedge funds and other institutional advisors are selling off in a bid to position themselves for the New Year.
In an interview to The Daily Ticker, Schiff said “Even if you consider all those factors, the price of gold has barely gone down. The uptrend is still intact and gold is going a lot higher particularly if we avoid the fiscal cliff.â€
It is to be noted that in case the America is unable to avoid the “fiscal cliffâ€, the economy is likely to spiral into a recession, which would lead to a decline in the demand not only for gold but other commodities as well. There also are some experts who believe that a stable or even strong economy could also lead to a dip in demand for gold, with a concomitant rise in the demand for the US dollar.
According to Peter Schiff, “We’re asking the world to give us money indefinitely so that we can live beyond our means.†He believes that “When the world figures this out and decides it doesn’t want to play this anymore, it’s going to mean a much bigger drop in the dollar. The fed will have to print even more money to keep interest rates artificially low and [gold] prices will skyrocket.â€