Jim Rogers & Peter Schiff Agree, U.S. Treasury Crisis in 2013

Commodities guru Jim Rogers and Euro Pacific Capital CEO Peter Schiff have recently gone on the record that the next harrowing event in the ongoing global financial crisis will most likely take place after the presidential election, with the crisis in Europe spreading to Japan and the U.S. Treasury market sometime in 2013.

In recent weeks, the 69-year-old Rogers has said politics and the natural downside of the ‘business cycle’ will determine the timing of the next big drop in most financial assets. Sign-up for my 100% FREE Alerts

“This is an election year in the United States, as you well know, and there are something like 40 to 45 elections over the next 12 months, including France, U.S., Germany,” Rogers told Opalesque Radio.  “So we have a lot of elections, a lot of politicians who want to be re-elected.  So there’s going to be a lot of good news.

Rogers added, however, historical data show that the ebb and flow of business activity suggest to him that the rebound from the crushing lows of corporate profits, stock prices and GDP during the 2008-9 economic and financial collapse has run their course.

As negligible as the rebound of the economy has been, with GDP still not back to the peak of $13.1 trillion for 2008, the time has come for the next leg down, according to him.

“The overall situation is getting much worse because the debt is going through the roof for all of us,” he continued. “You should be worried about 2013, 2014, but overall, 2012 won’t look so bad.

“In America, we’ve had an economic slowdown, or recession, every 4 to 6 years since the beginning of the Republic.  So you can do the addition, by 2013 or 2014 we’re going to have another . . . we’re overdue for another recession.  And if it comes, the markets are anticipating that . . .”

Within the context of the so-called two-year ‘recovery’ that still has yielded less U.S. GDP for 2011 than was achieved for 2008, along with higher overall debt at the federal level, the downside to the U.S. dollar, and by implication a U.S. Treasuries sell off, could be severe, Rogers has said in previous interviews.  He still holds to that thesis.

“There’s going to be more currency turmoil in the next year or two. . . as these imbalances are sorted out,” he concluded.

Though Rogers didn’t mention his short position of U.S. Treasuries during the Opalesque interview, he did announce earlier in the year that he has taken a short position on U.S. Treasuries debt, citing limitations to the upside in prices (lower rates) while the Fed maintains its dominate position as the ‘buyer of last resort’, and due to waning demand, to outright decreased holdings, from foreign buyers.

Echoing Rogers’ outlook of the U.S. Treasury market is Peter Schiff.  In a telephone interview with financial publication Forbes, he said ultra-loose monetary policy at the Federal Reserve only serves to exacerbate the snap back to the imbalances Rogers spoken about in the Opalesque Radio interview.

“The more you delay it, the bigger it will be,” Schiff told Forbes, Tuesday, “so we need to raise interest rates during the recession to confront the inefficiencies.”

“We consume more than we produce and we borrow abroad, but we are never going to be able to pay them back,” Schiff continued, a conclusion that appears to have been drawn as well by the nations responsible for driving global growth for more than a decade, the BRICS.

Heads of state from the nations of Brazil, Russia, India, China and South Africa signed an agreement in New Delhi, Thursday, making way for a credit facility as a means of extending credit between the five-nation block in their own currencies, thereby bypassing the U.S. dollar for international trade.

The fourth BRICS summit is the latest in a rapid trend by developing nations to disengage from the dollar/euro reserve currency protocol.  In addition to the agreement, the five-nation block also called for reforms to the World Bank and International Monetary fund (IMF).

Since as early as 2000, Schiff has warned that the world’s producers of goods and raw materials will one day stop extending credit to the debtor nations as the debt levels become unserviceable.  That means it’s inevitable that the U.S. dollar falls further and interest rates rise to reflect the added risk of holding U.S. Treasuries.

At that time, few in mainstream media (MSM) took Schiff seriously, while some scorned him, when he warned of a dollar collapse.  But today, he has been partially vindicated.  Gold has risen sharply against the two reserve currencies, the U.S. dollar and euros, since 2000.

However, contrary to what Schiff’s pundits now say, the worst has not passed; there’s much more currency debasing to come, including a U.S. Treasury market collapse.

“All of the people who were 100% wrong [back in ‘08] are saying that everything’s okay [now],” Schiff said.  “I am telling them they didn’t solve the problem and are making it so much worse.”

According to Schiff, the U.S. Treasury market is set for a big fall in 2013, and he expects to be right once again. Sign-up for my 100% FREE Alerts

Expect $85 Silver, says Legendary Market Technician

As Asia continues to report soaring CPI statistics, with Vietnam’s 22% inflation rate as the most recent evidence of the Fed’s QE2 “liquidity” rippling through the world’s economies, legendary technician Louis Yamada told King World News (KWN) the precious metals are set to takeoff again as a result of Bernanke’s monetary actions.

Yamada’s fame as the market technician with a track record of “getting it right,” began as director and head of technical research at Smith Barney (now of Citigroup (NYSE: C)).  After being voted as the leading market technician in 2001-2004, she went off to found her own research group, Louis Yamada Technical Research Advisors, in 2005.

“Gold continues to be in an uptrend in our work,” Yamada told KWN.  “You had a little bit of a consolidation, seasonality would suggest a rise into the fall. The primary support level remains at $1,475 … Our next target is $2,000, and we did a gold special in our last piece that suggested from a very long-term perspective … we could see $5,200 on gold.”

Yamada is the latest of a raft of highly credible analysts, money managers and bullion dealers coming out during the past two weeks to tell KWN and other news organizations of the imminent explosion in the price of precious metals.  James Turk, Jim Sinclair, John Taylor, Ben Davies, John Embry, Peter Schiff, and Jim Rogers (who announced he is adding insult to injury to the U.S. dollar fiasco by shorting U.S. Treasuries) have all advised to go long the anti-dollar trade.

The lone hold-out of considerable import to the precious metals market is Marc Faber, the favorite go-to guy for the most steamy of quotes and anti-establishment rhetoric of all hard money advocates.  His forecast for this summer is for the monetary metals to succumb to the 30-year track record of weakness and relatively thin volume.

As gold makes new highs above $1,600 and silver makes its way past $40 amid a fierce “250 million ounces of silver in 1 minute” smack down attempt by the cartel last week, according to Precious Metal Stock Review’s Warren Bevan, the majority of our favorite talking heads, so far, have it right, and Marc Faber has it wrong.  But the summer isn’t over yet, and Faber hasn’t budged from his forecast for the metals.

Yamada, who, incidentally, didn’t offer a time frame for her targets for the gold and silver price, said her next target for silver is for a double “over time” from the $40 print.

“We hit part of our silver targets at $50, (expect) $65, even $80, $85 over time,” speculated Yamada in the KWN interview.  “We had an 88% rally in a very short period of time from January and a one third retracement, 34% down, so that was pretty normal. We saw some support at $33 and would loved to have seen it go sideways a little bit longer to be honest with you,” noting considerable dollar weakness in light of the  sovereign debt crisis with the PIIGS of Europe has revealed the dollar’s diminished status as the world’s safe haven currency.

“I think that one of the observations that one has to take into consideration is that with each of the Euro financial crises and our own financial crisis in 2008 to 2009, the dollar has rallied less!” she said.

“In other words you had a rally in 2009 that carried 25%,” Yamada explained.  “Then, in early 2010, the rally was only 19%.  And the second one in 2010 was only 7%.  And this time, you haven’t even seen 7% with the crisis that has evolved.  So that suggests to us that it (the dollar) is becoming less and less considered a really safe haven.”

While the systemic problems with the euro and dollar come fully into focus, we should be mindful of U.S. Treasury Secretary Tim Geithner’s recent comment on Meet the Press of July 10, when he said, for a lot of people, “it’s going to feel very hard, harder than anything they’ve experienced in their lifetimes now, for a long time to come.”  Bloomberg reported that Geithner may step down from the head of the Treasury.

As of 12:36 in New York, gold trades at $1,612.79 and silver at $40.05.