For those waiting to seize another drop in the price of silver, Euro Pacific Capital CEO Peter Schiff believes today’s bargain basement price won’t get any cheaper and that full-pricing of $50 in the white metal is coming—maybe within 60 days.
Speaking with King World News’ Eric King, Friday, Schiff warned procrastinating silver bugs, “We are going to eventually go through $50 [silver], so buy it now.”
The gold price, he expects, will reach $2,000.
Schiff’s latest advice comes on the heals of last week’s bold call, of which, he said a renewed drop in the U.S. dollar was imminent and a rally in the precious metals would ensue for the remainder of the year. And if Schiff turns out to be right in the face of a teetering EU and the backdrop of FX Concept’s Founder John Taylor’s mid-summer call for a big dollar rally for the second half of 2011, clearly many traders will be knocked off guard.
Moreover, and for what it’s worth, especially during a period of overactive central bank intervention in the currency market, Schiff’s outlook for a declining dollar for the remainder of this year is consistent with the dollar’s 40-year seasonal pattern of weakness against major competing currencies during the months of November and December—a period, too, when precious metals have historically been inversely strong.
“Our short-term target for the euro, maybe by year end, will be up near 1.48,” Schiff told listeners of the KWN Oct. 25 broadcast. “I think that’s going to catch a lot of people off guard who were writing the obituaries for the euro, to see the euro approaching the 1.50 level. The dollar index should be headed back down to the 72 level.”
Friday’s big move in the euro and nearly equal move down in the USDX did, indeed, take euro shorts by surprise and aided further the move higher with an onslaught of short covering in the Forex throughout the trading day Friday.
One currencies trader, Jim Rogers of Rogers Holdings, was taken aback by the surprise deal struck in Europe, the impetus of the euro move.
“Never in a million years did I expect them to impose a haircut of 50% [on Greek bondholders], this shows at least somebody is starting to accept reality,” Rogers said in an interview with UK-based Investment Week.
“There has been a major overhang, so we will see the easing of some pressure, but the problem will come back because the Western world still has not dealt with its debt,” he said, apparently agreeing with Schiff insofar as the flight back out of the dollar may still have some legs left in it.
Mostly buried beneath the news out of Europe, however, was the story of the yen cracking a post-WWII high against the dollar as well as the dollar falling significantly below strong support at 76 on the USDX.
“Today the dollar is at an all-time record low against the Japanese Yen,” Schiff said, Friday. “So you have a weak dollar, you have bond prices now headed lower, commodities up, stocks up, kind of across the board. The message is get out of paper, get into stuff and the worst paper is dollars.”
But the BOJ didn’t miss the move and took violent exception to a strong yen. At the open of Monday’s trading in Tokyo, massive BOJ intervention dropped the yen 382 points to the dollar within 30 minutes—severely punishing the longs to a six-standard-deviation bloodbath, further making it clear that attempts at refuge from the dollar to the Japanese currency won’t be tolerated. As precious metals price dropped against the dollar, gold and silver rose against the yen.
The move by the BOJ comes atop China’s central bank re-pegging of the renminbi to the dollar, Swiss intervention in early September to weaken the franc, and the BOE move to weaken pound sterling. Now, it may be the dollar’s turn, according to Schiff. Get my next ALERT 100% FREE
He expects the decline of the USDX will logically come from further strengthening in the euro, sterling and CAD, with another assault (3rd time) on the all-time support low of 72 USDX expected this year, or at the latest sometime in 2012.
USDX composition (weighting)
Japanese Yen (13.6%)
Pound Sterling (11.9%)
Canadian Dollar (9.1%)
Swedish Krona (4.2%)
Swiss Franc (3.6%)
“I think we will come pretty close to hitting $2,000 on gold this year,” Schiff reckoned. “It would be hard for gold not to be above $2,000 in 2012. I really think it would be unlikely that we wouldn’t see prices north of $2,000 next year.”
He continued, “The dollar is headed right back to the lows and I think it will take out the lows. If it does break to new lows, that’s when we might see another crisis because then we might start to see the world questioning the viability of the U.S. economy….”