Peter Schiff Takes-on FX’s John Taylor; Commodities, PMs, Stocks “Go Higher”

Everyone’s favorite Wall Street irritant is out with his latest call for the gold and silver price—as well as calls for every other anti-dollar trade, for that matter.  Euro Pacific Capital’s Peter Schiff recommends loading up on your favorite precious metal because the launch in stocks, oil, and even, the euro!, is about to begin.

“You’ve got the euro now at about 1.39, and I think you’ve got a head and shoulders bottom in the euro,” Schiff told King World News yesterday.  “Our short-term target for the euro, maybe, by year end, will be up near 1.48.”  The implications, suggested from Schiff’s bullish call for the euro, at this critical time are enormous.

For the watchful of those very best in the forecast of currency moves, you should recognize Schiff’s ‘in your face’ dual with famed FX’s currency guru John Taylor, whose forecast for a move down to euro 1.20 on its way to parity with the dollar is nothing more than heresy to the Schiff thesis.

Schiff continued, “I think that’s [euro bullish move] 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.”

He added, “Certainly I think there is too much pessimism on the euro and what was going to happen to the euro visa vis the dollar.  The euro is also rallying now as the stock markets are rallying and in fact the dollar is selling off against all of the currencies in the world, not just the euro.”

Reminiscent of the-fight-to-be-right in July between heavyweights Goldmoney’s James Turk of Spain and Thailand’s bon vivant Marc Faber on the outlook for precious metals for the historically-weak summer season, Turk had slammed Faber to the mat as gold soared 30% leading into Labor Day—though Faber did recover nicely after that, as September ushered in the hair-raising decline in gold to the $1,500 and $1,600 range—a range that Faber was looking for before considering buying more metal for himself.

Back to today’s match up: As Schiff looks for renewed dollar weakness against the euro, the venerable Taylor sees nothing but disaster for the euro going into 2012.  Schiff expects $2,000 gold ahead, while Taylor anticipates $1,000 gold, first, before a 1976-like comeback in the yellow metal takes it to record highs in the longer term.  Read more about John Taylor’s summer interview.  His call for a top in gold at $1,900 on its way to a fall, back to $1,000 in Apr.-May 2012, is an eery one, to say the least.

“I would be surprised to see the euro hold above $1 through this crisis,” Taylor told Bloomberg Television’s Michael McKee on Oct. 11 (reported by BusinessWeek). “It’s not over. The banks are going to be in trouble when Europe goes into a recession next year.”

Schiff, the energetic 48-year-old makes up for his noticeably diminished appearances on widely-watched CNBC and Bloomberg TV by popping his head everywhere else, it seems, from broadcasting his own YouTube radio show to appearances on Russia Today, then over to The Keiser Report and King World News, and back again, littering articles and interview segments on, and every financial news outlet hungry for some good copy on the way.  Get my next ALERT 100% FREE

So, for now, Schiff sees the reflation trade going into the Fed’s FOMC meeting, scheduled for Nov. 1 & 2, and beyond the meeting.  A full-blown QE3, he said, is a done deal; it’s only a matter of when, not if.

“ . . .  China is going to print more money, the U.S. is definitely going to print more money,” Schiff surmised.  “We have QE3 coming up.  Part of the reason for the sell off in August was because the markets were disappointed that we weren’t getting QE3.”

“Then we had ‘Operation Twist’.  People were disappointed that there wasn’t more but I think more is coming,” Schiff added.  “That’s not good for the economy, it’s not good for the average American who is going to see his cost of living go up, but it’s going to be good for nominal stock prices and that’s what I think we are seeing in this rally.”

It’s difficult to know whether Taylor would expect a squiggle up in the euro to test the high of 1.50, as Schiff suggests, before it crashes to parity with the dollar some time in 2012.  It’s unlikely Taylor would be comfortable at that point with his call, maybe.

But, what Schiff is really saying is: the U.S. dollar is about to test the level of the abyss at USDX 72 at a time when the U.S. recession deepens (if the Economic Cycle Research Institute and John Williams of are to be entrusted with such calls).  A sustained drop below 72 for the U.S. dollar could unravel into another Lehman-like chaotic mess and to who knows what in the deleveraging of the banking system on both sides of the Atlantic.

It should be noted, too, that all through the Keystone Cops antics in Europe, the lies, rumor milling by FT and CNBC’s Steve Liesman, the failed EFSF, as well as the Berlusconi sideshow, the dollar really hasn’t made a meaningful bounce of the USDX 72 lows as one expects it would.  Schiff may be onto something.