Despite a ho-hum performance year to date for gold, Peter Schiff, chief executive officer at Euro Pacific Capital, is still betting on gold’s eventual climb to $5,000 an ounce.
Schiff’s persistent call is more than 300% higher than the Thursday’s settlement at $1,225.20 an ounce on Comex, which marked the highest close for the yellow metal since mid-February.
Gold is roughly 3% higher year to date, but the precious metal seems light year’s away from the all-time highs near $1,900 reached in 2011.
Still, gold’s performance hasn’t been particularly exciting in recent months. Prices GCM5, -0.07% tallied declines for the last three months in a row. They logged declines last year and the year prior.
Gold’s sluggishness makes Schiff’s dogged call on gold all the more notable.
Over the years, he’s reiterated his long-running gold-price forecast, which has yet to come to fruition. Lately, however, he’s sounding even more bullish.
“There really is no limit to how high gold prices can rise,” he told MarketWatch in a phone interview recently.
FactSet
Hemming in gold and supporting the dollar DXY, -0.15% is the “false perception” that the Federal Reserve will raise interest rates, claims Schiff, who is known for his criticism of the U.S. central bank.
U.S. economic data has been “awful” and despite that, the Fed hasn’t changed its stance, he said. “We got a lot of weak economic data in the first quarter” and it’s going to be a “very weak” second quarter.
The nation’s economic growth slowed to a crawl in the first quarter, with gross domestic product expanding by a meager 0.2% annual pace.
The Fed is still “posturing” as if it’ll soon raise interest rates, but it won’t, Schiff predicts.
“We’ll always have to do [quantitative easing] to offset the damage from the previous QE,” said Schiff, who argued that the Fed has made “
“It’s like trying to put out a fire with gasoline. That’s all the Fed has—gasoline,” he said. “And everyone expects the fire to go out. It can’t go out.”
In other words, the central bank will continue to print money and gold will keep rising.
Schiff made this exact point about a year ago.
“You need to be long gold and there is going to be a huge payday,” Schiff said. “Ultimately,” gold will see $5,000 an ounce and it “could go higher.”
Though gold has been range bound since about mid-2013, Schiff said the turning point for the metal would be a close above the high it saw in January. Gold futures peaked at around $1,300.70 that month, according to FactSet.
“That’ll change the current dynamic,” Schiff argues.
And how can investors best position themselves for the rally he expects in gold?
Schiff, who co-manages the EuroPac Gold Fund EPGFX, +0.00% said investors can get a lot of leverage to the gold price in gold stocks. The fund has a 4.1% total return year to date, but is down 22.57% since its inception in July 2013.
“I think the upside in gold stocks is phenomenal from here,” Schiff said
mistakes” and has done a “horrible job” with monetary policy.
Myra P. Saefong -Marketwatch – May 15, 2015