Expect More Inflation but Don’t Expect the Fed to Fight It – Ep. 485

* Earlier today the Federal Reserve Open Market Committee, (FOMC) began their 2-day meeting * It concludes tomorrow and at 2:00 they will announce their decision on interest rates * Nobody is anxiously awaiting that announcement * Although there were plenty of fools a few months ago who actually believed the Federal Reserve would be raising interest rates, in fact they thought they were going to raise them in March and then, when they didn't there were a lot of people who still thought they might do it in April * But some of these fools still believe the Fed is going to hike rates later in the year - maybe June * Maybe June, September and December * There are still people, like Goldman Sachs, who are looking for 3 rate hikes this year * I was on a panel months ago with Jim Rickards, whom I have a lot of respect for, and back then he argued with me, because he believed the Fed would raise rates 2 if not 3 times in 2016 * I said the Fed would not raise rates at all * Today I posted an interview that he gave on Bloomberg - now Jim Rickards says Janet Yellen has gone super-dove and she is not going to raise rates * The reason Jim Rickards disagreed with me on the panel a couple of months ago is that, although he agrees with my thoughts on the economy, is that he thought the Fed would not recognize that the economy is very weak, rather that it believes the economy is still recovering * He thought the Fed would raise rates anyway, which would cause a recession, cause the Fed to abort the increases, go back to zero and to QE4 * I said, I think we are going to skip all the rate hikes and go directly to rate cuts and QE4 * And now I think Jim has joined me in that perspective * The question is: Will the Federal Reserve actually admit that the economy is that weak, or just not raise rates, which is tantamount to an admission of weakness * We are going to get the first official look at Q1 GDP on Thursday * There's a good chance that we will print a negative number * And even if we don't print a negative number, it will be a single digit number less than 1 * And by the time they revise it the following month to incorporate all the bad news that comes after Thursday, I think they will revise it negative * Which means we're in a recession * If Q1 is negative, and I don't believe we will get a bounce-back in Q2 * I think Q1 is the high water mark and it's down hill from here * I think Q2 will be weaker regardless of how weak Q1 is, because we borrowed growth from Q2 because we had the warmest winter in 120 years * Companies are now winding down their bloated inventories that they built up the last couple of years * And because the trade deficits are getting bigger and not smaller * So we have a lot weighing down GDP in Q2 in an already weak economy * By the way, the Atlanta Fed revised up their Q1 GDP number from .3 to .4 * Why did they do that?  This is the second time the Atlanta Fed has upwardly revised their estimate, despite the fact that the economic data has gotten worse since their last estimate * If the data gets worse, why would you revise your forecast up? * To me something's going on, maybe it's the boys at the New York Fed putting pressure on Atlanta to be more optimistic, but we'll see, because we will get the first official numbers on Thursday * Let me go over some of the economic data that has come out just since my last podcast * On Friday last week, we got the PMI Flash Index for April - not a Q1 number * One of the first numbers for Q2 and it ain't pretty - the consensus was for an improvement * March was 51.4, and 52 was expected - we got 50.8 - much weaker than the Atlanta Fed thought * New Home Sales missed; they were looking for 522,000, Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

26 Apr 201630min

* I recorded my last podcast on the afternoon of April 19, and I wanted to announce that later that evening, my first daughter was born - we named her Lilyan Ruth after both of our maternal grandmothers - so we now have Lilyan Ruth Schiff, she was 7 lbs 2 oz. of pure cuteness! * If you just looked at the close of the gold and silver market, you wouldn't know that much went on, gold closed up under $5 - silver was up about .04, but you wouldn't know that earlier in the morning gold was up better than $25, we did trade back above $1270 * Silver made a new high for the year - silver was up about 75¢ early in the morning, in fact I think it made its peak during the Draghi press conference * We were above $1760 and then, just around 9am or so, there was a huge seller in the gold and the silver market and the whole complex went negative and we managed to close slightly positive on the day, but we had a huge sell-off intra-day following a big rally * That doesn't mean the top is in - I think it's interesting; we just got a huge correction out of the way and the price went up - we flushed out a big seller and now that seller is out of the market and this market is still going a lot higher * I put an article on my Facebook page about how gold stocks are way up this year, and they are way up this year, but the article basically said, "Don't buy", because gold is going to sell off. * I'm seeing a log of mainstream articles now about why you should not jump on this bandwagon, how dangerous the gold market is * And all this is just music to my ears.  If you are bullish on gold, this is exactly what you want.  You want everybody to be skeptical. * You want this wall of worry, that gold and silver are going to climb, and we're going to climb with it while everybody else is worried about the crash, because they still don't get it. * They're still talking about how the Fed is going to raise rates, and how that's bad for gold * It's not bad for gold - it all depends on how the Fed raises rates * If the Fed raises rates Paul Volker style, really jacks them up there, yeah, that will be bad for gold * But they're not going to do that.  If they raise rates, slowly, which is the only way they can do that if they even raise them, they will be slower than Greenspan was * When Greenspan raised rates, that was great for gold, because he was very slow * Well, Yellen is going to be even slower * So if gold did well under Greenspan, it will do even better under Yellen hikes, if we even get hikes * If we even get hikes.  We could get cuts, QE4, negative rates * If the Fed raises rates a little bit, that's bullish for gold; if they don't raise rates at all, even more bullish for gold, or they cut rates, and gold goes ballistic * Either way, gold stocks are going up * Meanwhile Wall Street is looking at amazement at the rally and it wouldn't dawn on them to participate * The mainstream investment world is not on board.  The train has left - there's nobody on it * Eventually they're going to buy, just like they piled in to the gold trade when it was 17-18-1900, that's when the big firms started finally noticing it * Eventually they are going to realize... I think it is going to take Yellen admitting the economy is weak, of the Fed actually cutting rates, but by then the prices are going to be much higher than they are now and we keep getting bad economic news * But I want to talk first about the Draghi press conference * Mario Draghi of the ECB, leaving interest rates unchanged, and continuing their QE program * The euro initially rallied, even during the Q&A, but then at the end, the euro turned around with the gold market, and the euro ended up unchanged Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

21 Apr 201628min

* Hi-Ho Silver! Seems to be the rallying cry for the day * The last podcast I recorded I talked about the breakout in silver and I actually regretted the fact that I didn't get a chance to talk about silver during my CNBC interview * On my last podcast I mentioned how strong silver had been looking and it held up extremely well in the gold selloff during the prior few days * Sure enough, we had a big breakout again today * Silver was above $17 earlier today, the first time it has been that high all year * Gold is still well below the highs, it needs to rally about $30 to get back to its high for this move * I mentioned on the last podcast that I though the strength in silver was a good leading indicator for both gold and silver * And I talked about all the traders who have been shorting silver, that had been a popular trade when the gold and silver ratio was breaking down, I thought that it made no sense to short silver * To me it was a much better trade to buy silver when it's as cheap as it's ever been relative to gold * This is good constructive action, in fact, the gold stocks are at new highs for the year * The GDX, as I speak, is up 4% on the day; it's above $23 - this is the high for the year * The juniors, GDXJ, that index is up over 6% -  today! This is a new 52-week high Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

19 Apr 201621min

* This is another week of bad economic data that most people have ignored * The stock market was up this week; the Dow closed up 1.8% on the year * I don't know if the Dow was rising in spite the bad news or because of it * The bad news means the economy is weak and corporate earnings are not there, and there are high multiples * But of course, if the economy is weak, that takes the Fed out of the rate hiking game and I think puts it into the rate cutting - QE4 game * So the market is caught between the opposing forces of cheap money and falling earnings on the back of a weak economy * Gold was actually down on the week; it started off the week strong, then Thursday it got hit pretty good and today it recouped some of its losses * But the standout was silver *  Silver was up almost 6% on the week; this is a new high * Silver closed at the highest close of the year * In fact, silver was strong with gold on Monday and Tuesday and when gold sold off on Wednesday and Thursday, silver really held up * That's a good sign for both gold and silver * I was on CNBC.com this week and I meant to say something about silver * They're not even talking about silver in the mainstream media so they're missing an even bigger move * They're acknowledging that gold's going up but they're not even looking at silver * I mentioned on an earlier podcast that a number of people are shorting silver and buying gold because they saw the breakout to new highs on the gold/silver ratio and they wanted to jump on that trad * I thought that was the wrong thing to do * To me, seeing new highs in that ratio in favor of silver made me want to buy silver, since it's as cheap as it's been relative to gold * If you like gold, just buy it; don't short silver because you could turn a winning trade into a losing trade Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

15 Apr 201628min

* The dollar index traded below 94 for a good part of the day, but it did manage to close up at 94 even, down just .20 * Gold was up another $19 * Silver really shined brightly today, up .54, just below $16/oz. * Mining stocks, of course, were on fire; GDX was up just under 6% on the day, GDXJ up just under 7% * This followed a spectacular day for the mining stocks on Friday * In fact, even though gold itself was down a couple of bucks, we had a huge up day in the gold stocks * Between  Friday and today, I think this is the biggest two back-to-back gains for gold stocks all year * The catalyst was the Atlanta Fed Q1 GDP estimate downgrade all the way down to .1 * If you remember, from listening to my podcasts, the very first time the Atlanta Fed came out with its upward revision, with a lot of fanfare, to 2.7%, I said that that was all political and that they would have to walk that back all quarter long, and now they have eliminated the entire estimated gain * A fair estimate might have been -.1, but President Obama is still saying we have the strongest advanced economy in the world * I don't know what his definition of "strong" or "advanced" is, but we might have one of the weakest of the advanced economies * It's just that nobody wants to accept that fact yet * Here's where it really gets interesting: CNBC was very dismissive of the weak economic numbers * They are characterizing the weak Q1 as similar to previous years' weak Q1, where the weather pushed back some economic activity to Q2, causing rebounds * They said the same thing is going to happen this year.  No it's not. * This year is different from last year * First, let's talk about inventories: February and January Wholesale Trade Inventories have been revised down from +.3 to -.2 * Last year, companies were still building up inventories, believing in the recovery narrative, boosting GDP * The inventory unwind that I have been talking about for the last year is just beginning * It started in Q1 of this year, and this inventory sell-down is going to subtract from GDP * Here's another factor: the weather * The weather for the last two first quarters was very cold, pushing economic activity to Q2, helping Q2 to rebound * That's not what happened this year.  The first quarter of this year was the warmest in over 120 years * So obviously there was no economic activity pushed forward due to weather, if anything, the weather might have pulled some activity from Q2 to Q1 * As weak as Q1 was, it might have been weaker if cold weather had suspended some economic activity * The third difference is the trade deficit, which is rapidly growing this year * I think the growing trade deficit will continue to put a drag on Q2 GDP * The inventory liquidation will continue to be a drag on Q2 GDP * What that means is had the government properly seasonally adjusted Q1 for the unusually warm weather, I think Q1 GDP would be a lot lower * Q1 will be a contraction, and we are going to fall from there * If that is true, then we are in a recession * I think this recession will be longer in duration that the preceding one * The question is: What is the government going to do about it? * There was a meeting today between President Obama, Joe Biden and Janet Yellen * They have to figure out how to throw the economy a lifeline without admitting that it is drowning * The first thing the Fed can do is signal that they are not going to raise rates - change their forward guidance * By just not raising the rates, the specter of a hike remains * The question is what story will they use in order to not damage Obama's recovery narrative and Hillary Clinton's campaign? Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

11 Apr 201624min

* Today is the Wisconsin Primary but Donald Trump has been getting a lot of flack in the media over the last couple of days about his comments about the U.S. economy, particularly in the financial media because Donald Trump has now predicted a "very massive recession" in the U.S. * He didn't just say a recession, he's predicting a massive recession * Most of the pundits on television don't see any recession at all - not even a mild one * So here you have Donald Trump saying, not only is the recession going to be massive, it's going to be very massive * The media is all over Trump: "What is he talking about? The economy is in great shape! He's peddling all kinds of fiction! We have this massive economic growth!" * the President television today taking credit for this great economy with all these years of jobs * Of course what the President doesn't admit to, is, it's not job creation - it's job destruction * We're destroying full time jobs, the by-product of that destruction is that we create a bunch of part-time jobs that people don't really want but that's all they can get * Yet the President is taking credit for that * It's like setting a fire and taking credit for putting it out * That's what the Federal Reserve did with the 2008 Financial Crisis * Let's look at some of the economic news that came out over the past couple of days that resulted in the Atlanta Fed reducing its Q1 GDP estimate - yet again - to .4 * In last Friday's podcast I said that I thought they would be revising it down, and based on the numbers that just came out, they did * One if the reasons the Atlanta Fed cited for the revision was yesterday's release of February Factory Orders * They were expected to be down 1.6; instead it came out as -1.7, which was not that big a miss unless you consider the previous downward revision, which means it dropped from a lower level * That took something out of the GDP numbers as did the very bad auto sales that I did mention in Friday's podcast * Apparently the worse-than-expected trade deficit that came out today didn't even factor into their thinking, and I don't know why, because we were expecting $46.2 billion and instead we got $47.1 billion * That's a pretty big miss, and they took January's estimate which was originally $45.7 billion and raised that to $46.2 billion * We are still expecting the March number which will be factored into Q1 GDP, so I think the Atlanta Fed is still not low enough * Remember, too, one of the things that's helping the Q1 GDP is that most of the country had an unseasonably warm winter, because bad weather is factored into the estimate * Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

5 Apr 201632min

* Well, it's April Fool's Day today and there certainly were a lot of fools out on Wall Street buying all the nonsense about the better than expected Non-Farm Payroll numbers * Many of those fools were also fooled into thinking that these supposedly good jobs numbers puts a June rate hike back on the table * In fact, these April Fools were out in force in March when several Fed officials were talking about the possibility of April being a live meeting, and they bought it; Janet Yellen potentially set them straight a few days ago, but then again they hear some numbers that they think are better than expected, and they think, "Aha! The Fed is about to raise rates." * When are they going to wake up and realize that none of these numbers matter - it doesn't matter what they are, better than expected, worse than expected, the Fed can't raise rates * If the Fed could raise rates, they would have already done it. * Yes, they did raise rates in December, they didn't want to raise rates, they did it anyway, and look what happened * Maybe you can think of that rate hike as a trial balloon, but it was the Hindenburg of trial balloons, it blew up, and there's no way the Fed wants to launch another one * The first quarter came to an end yesterday and the U.S. stock market actually managed to gain * It was up about 1%, but the year started off as the worse year in the history of the stock market * Back in February, U.S. stocks had the weakest beginning of the year in the history of the stock market - going all the way through the great depression * That happened because the Fed raised rates * Do you think they want to take that chance again? * Why did the market recover?  Because people then believed that the Fed was not going to be raising rates, in fact, the weakness in the market is one of the reasons they believe that * So the market going down helped the Fed to change its tune, enabling the market to go back up * Now they're not going to take another chance to have to save it again * Next time it goes down, it keeps on falling * Beneath the surface, there was a lot of carnage in the market - there were a lot of stocks that got taken out and shot * Some big hedge funds had horrible results in the first quarter * Hedge funds were on the wrong side of so many macro trades this quarter * For example, the U.S. dollar had its worse quarter in over 5 years * You remember, that was one of the most crowded trades out there at the end of last year * Everybody with a hedge fund was long the dollar and short the euro, short the yen, short the aussie, short the Canadian, you name it they were short * Some of these guys were short the Chinese yuan - the yuan had a pretty good quarter - the strongest quarter in 2 years * Everybody who was long the dollar and short another currency got killed in the first quarter * The only people who lost more money than the ones shorting were the people shorting gold Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

1 Apr 201624min

* All the talk last week in the financial media was the fact that several Federal Reserve officials had given speeches somehow putting April back on the table as a live FOMC meeting, where the Fed might raise rates * In fact, even earlier this week, even yesterday, an official from the Federal Reserve Bank of San Francisco commented that the Fed should continue with rate hikes because the economy is strong and the data is on target * I did not buy those comments for one second - my last podcast was titled, "Fed Bankers Bark But Won't Bite", and my commentary was titled, "Two Down and Two to Go" meaning that the Fed had already dispensed with two of the 4 rate hikes telegraphed for 2016 and they would take the other 2 rate hikes away * So, as everybody else was anticipating rate hikes, I was saying, not only are they not going to raise them in April, they are not going to raise them at all in 2016 * What happened today? Janet Yellen gave a speech to the Economic Club of New York, one of the most dovish speeches, if not the most dovish she has ever given * As a result of the speech, the price of gold was up about $20 on the day; we closed above $1240 * In fact a couple of days ago, we had gotten nearly down to $1200 * That shows you the strength of this bull market in gold, despite the talk of a rate hike in April, and despite the rally in the dollar, gold held its position above $1200 * To me, that's very bullish, the question when will all the bears throw in the towel? * Goldman Sachs is still looking for gold to hit $1000 - $900 * They're still looking for a strong dollar and a bunch of rate hikes * Although Goldman Sachs is not as bearish on gold as Harry Dent * Harry Dent called for $700 gold when I debated him on Friday's Alex Jones show * That was a good debate, and you can check it out on my YouTube channel * The dollar was down across the board today * The dollar index barely held on to the 95 handle, it closed at 95.15, off not quite a full percentage point on the day * Aussie dollar very strong on the day, up 1.4% * New Zealand dollar was the big winner on the day; that currency was up a full 2 percentage points on the day against the U.S. dollar * The Dow Jones liked the dovish news coming from the Fed; up just under 100 points * One of the reasons it wasn't up more is because of the financials in the Dow weighing it down * The NASDAQ was up 79.8 - that's a 1.7% increase * The NASDAQ was standing still compared to the gold stocks - the GDX up 5.77% * The GDXJ, the juniors, were up even more - about 6.3% today * That's where the action was and I think it will continue to be, based on Janet Yellen's Dovish remarks * I still don't think the conventional wisdom appreciates the extent of these dovish remarks * Let me go over her remarks; she started with a pretty upbeat assessment on the economy * She said the labor market is looking good, consumer spending is looking good, the housing recovery continues - she went over all these positives * She did list some minor negatives: Manufacturing and Net Exports, but she blamed all that on the strong dollar * She did also mention that capital spending and business investment was lackluster, noting in particular weakness in layoffs in the energy sector * But overall she was still upbeat on the economy * In fact, she admitted that the Fed's assessment of economic growth, inflation, and unemployment were exactly the same on December 2015, when they raised rates, and in the March meeting, Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

29 Mars 201641min