Gold Price Firm, is an “Endless Stream” of QE Ahead?

GOLD PRICE NEWS – The gold price turned modestly higher on Friday as the U.S. dollar relinquished its earlier gains against a basket of foreign currencies.  The spot price of gold fell to as low as $1,606.87 per ounce in overnight trading, but later climbed to $1,629.65 – representing a gain of $11.49, or 0.7%.  With today’s gain, the gold price looked to close at its highest level since May 7th.

Silver bounced back from earlier losses alongside the price of gold, rising from an intra-day low of $27.53 to near unchanged at $28.15 per ounce.  Gold and silver shares once again outperformed the precious metals, as the Philadelphia Gold & Silver Index (XAU) rose 0.7% to 158.59.  In doing so, the XAU extended its weekly gain to 5.5% and reached its best level since July 6th.

Among gold mining shares, Barrick Gold (ABX) and Kinross Gold (KGC) were two of the largest advancers.  ABX rose by 0.8% to $34.42 while KGC jumped by 2.0% to $8.22 per share.  Silver stocks did not fare as well, however, as Pan American Silver (PAAS) and Silver Wheaton (SLW) each dipped by 0.2% to $15.80 and $30.46 per share, respectively.

While the spot price of gold was on pace for its sixth consecutive daily advance, each of the gains was less than 1%.  As such, the gold price has only been able to climb to the top end of the trading range it has now occupied since early May.  Furthermore, the yellow metal remains over 15% below its all-time record high of $1,923 per ounce – reached in September of last year.

Peter Schiff, head of Euro Pacific Capital and a long-time gold bull, discussed his latest thoughts on the gold price in an interview this week with King World News.  “I think that what’s going on is that most mainstream investors, who invest other people’s money, see gold as a bubble and are waiting for it to burst,” Schiff contended.  “People think the price of gold is going to go down.  They think the Fed is done easing.”

“Everybody is waiting for the other shoe to drop for the price of gold,” Schiff added.  “If you look at the price of gold stocks, p/e multiples, the assumption must be that earnings are going to fall sharply.  That’s based on the idea that gold prices are going to go down.”

Schiff went on to poke holes in that argument, predicting instead that central banks will continue to flood the global economy with unprecedented amounts of monetary stimulus.  The Federal Reserve is “Going to to keep on ‘fixing’ us with more and more damaging doses of QE.  We’re going to get it (QE).  The Fed knows it’s coming, it just doesn’t want to admit how weak the economy is.”

“The minute QE goes away and interest rates rise, the party is over, the whole thing collapses,” Schiff continued.  “The Fed knows that.  So they have to look for more excuses to keep supplying more QE, and keep interest rates at zero…So we know we’re going to have an endless stream of quantitative easing.  We’re going to have more QE’s than Rocky movies.”