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well no surprise that gold has used lower in the wake of a Fed interest rate hike but what may be concerning even more concerning for gold investors out there is that the precious metal is down eleven percent since the presidential election this as the Fed takes a more hawkish stance on lifting interest rates in 2017 it's prompting analysts out there to turn bearish on the commodity altogether and that includes trader tim knight who said recently that he believes it's going to be a miserable 2017 for the yellow metal it's just about the only asset that's reliably down every day so does he have a point I tossed that question two euro pacific capital CEO peter schiff a known gold bull here's his take not really and I think you know he's completely wrong but I like to see that negativity out there I mean gold has gone down quite a bit since the election but I mean if you go back over the last 15 years Gold's had a pretty good track record and it's interesting that the reason that so many people have turned bearish on gold is because they believe that we're going to have more inflation under Donald Trump that we're going to have larger deficits as a result of tax cuts and increased government spending and that because of the higher inflation the Fed is going to get more aggressive and raise interest rates and somehow the increase in interest rates is what's going to be bad for gold this is ridiculous higher inflation is good for gold and even if the fed is raising rates slightly even if it manages the three hikes that people think are coming next year remember they were Telegraph ting for hikes this year and they only gave us one in December and they're actually the Fed is actually less optimistic on the economy now than they were a year ago if you look at their gdp forecast I even doubt we're going to get those hikes but even if we do I think inflation is going to rise much faster than interest rates and so real interest rates are going to fall and that's when gold shines brightest when you have inflation that is not being fought aggressively like during the bush term when Greenspan was raising rates every quarter every time they met and gold prices went from under three hundred to a thousand or if you go back to the 1970s when the Fed was behind the curve on inflation and goal went from 350 to 850 or for thirty-five dollars an ounce to 850 while the Fed was raising rates so I think the idea that higher inflation is bad for gold is preposterous I think they're right we're going to get more inflation but it's not a negative for goal if a huge positive and the markets were wrong about gold at the end of last year and sold it off when the Fed raised raised rates it bottomed out in January and then having to run I think we're going to have another big run next year but I think next year we're going to finish the year strong as opposed to have this Trump related fell off well a lot of people look at this Peter and they say just because you know the Fed wrongly predicted for hikes we only got one eye just because that didn't work out doesn't mean that that's what we're going to see in 2017 they would argue we're on to new times they're looking at the data out there they're looking at GDP showing you know solid growth over three percent or looking at corporate profits continuing to rebound so how can we confidently buy into the theory that we are on to a gold bull run or do you not necessarily think that's the case anymore well first of all GDP growth for this year is going to end up below two percent I and the Fed is only forecasting 2.1 for next year and I think they're too optimistic so we're not getting three percent we'll be lucky if we get two percent we may not even get that we could be on the cusp of recession right now it wouldn't surprise me to have a recession early in the first year of the Trump term and I think the reason that the Fed waited until December to raise rates by a quarter is because in contrast to their claims to have confidence in the economy they have no confidence in the economy that's why they waited so long and that's why they raised interest rates so little remember when Alan Greenspan cut interest rates to one percent in the aftermath of the tech bubble bursting and September 11th he brought interest rates to one percent because he was so worried about the economy now the Fed is supposedly so confident and they can't even raise interest rates of a half this is a complete bubble that the Fed has blown you know Trump was right when he was a candidate it's a big fat ugly bubble it's even bigger fatter and uglier now and it's not just the stock market and by the way the bond market bubble has already burst and how interest rates are rising and that is going to compound the problems for an already weakening economy so if the economy was weak last year it's going to be even week or next year now you've expressed some concern in the past for the impact of a Fed rate hike on the housing and auto sectors more specifically what do you see is the vulnerability there well these these sectors are completely dependent on cheap money I mean people buy houses based on their monthly mortgage payment and fixed rate mortgages the 30-year fixed rate is basically gone for about three and a half percent when Trump was elected to four and a half percent now it can be over five percent by the time he's inaugurated and it can easily be close to six you know next year I mean nobody could afford these rates we already have homeownership near 60 or low because people can't afford the low rates we have obviously they're not going to afford the higher rates that we have now or the race that we're getting in the future so you're going to see a drop there you're going to see a complete end of the refi market so that lifeline is gone people were able to rely on lowering their payments with reef eyes nobody could do that anymore and I think now with a higher cost to borrow money to buy houses real estate prices are going to start to fall so that means more foreclosures again so that's a problem and the auto bubble this has all been about 0% down letting people roll the negative equity and their trade ins it would even bigger loan with cheap money it's been about Lisa's and extending the payments this is a huge subprime bubble and the air is already coming out of that so all the things the government propped up with cheap money are going to topple as you take the cheap money away okay when I interviewed you back on Election Day you talked about how traders had decided a trump win with bad for stocks good for gold that was certainly the consensus at the time but as the opposite had turned out to be true investors are seemingly bullish on a trump economy so worthy what are your thoughts there because it sounds to me that you're you're bearish on the economy but you do seem to be a little bit more upbeat about Trump can you be bullish on Trump Barrett on the economy where do you stand well first of all that was the original reaction right i mean as soon as Trump won the stock futures were down but it whatever eight other points goal was up 60 bucks so that knee-jerk reaction was there but if you remember I said I didn't understand why people thought that Trump was worse for the stock market than Clinton because I said Trump is promising things that would normally be good for the stock market like less regulation and lower taxes but the problem is the stock market is already overvalued it's a bubble and so just because we're going to get some tax cuts and regulatory relief does it undo that bubble I mean it helps but it's not going to justify the inflated valuations and of course as interest rates go up that automatically bring stock values down but I think it's also interesting that the same stock traders that were so worried about what would happen in the market of Trump one humidity one now we just started buying because all they want to do is justify a move up believe me had Clinton won they would have said oh we dodged a bullet let's buy stocks you know we dodged Trump you know this market is feeding on itself you know it's like a horse with its mouth but it keeps on going people are ignoring that the things that they think are going to happen or impossible they think oh now we're going to get fiscal stimulus so we don't need monetary stimulus you know if we get the physical stimulus we need monetary stimulus more than ever to make it possible there is no way to finance these deficits yeah unless the Fed steps up and does it now of course this is a mistake they shouldn't do it that's why we're in so much trouble but I don't think there's any way Trump can fix these problems they are unfixable we can't stop the bubble from popping nor should we try you know that I was elected and I was saying I thought he would get elected because the economy is so messed up hello sector is more specifically what do you see is the vulnerability there well these these sectors are completely dependent on cheap money I mean buy houses based on their monthly mortgage payment and fixed rate mortgages the 30-year fixed rate is basically gone for about three and a half percent when Trump was elected to four and a half percent now it could be over five percent by the time he's inaugurated and it can easily be close to six you know next year I mean nobody can afford these rates we already have homeownership near 60 or low because people can't afford the low rates we have obviously they're not going to afford the higher rates that we have now or the race that we're getting in the future so you're going to see a drop there you're going to see a complete end of the refi market so that lifeline is gone people were able to rely on lowering their payments with reef eyes nobody can do that anymore and I think now with a higher cost to borrow money to buy houses real estate prices are going to start to fall so that means more foreclosures again so that's a problem and the auto bubble this has all been about 0% down letting people roll the negative equity and their trade ins and it would even bigger loan with cheap money it's been about Lisa's and extending the payments this is a huge subprime bubble inflation the Fed is going to get more aggressive and raise interest rates and somehow the increase in interest rates is what's going to be bad for gold this is ridiculous higher inflation is good for gold and even if the fed is raising rates slightly even if it manages the three hikes that people think are coming next year remember they were telegraphing for hikes this year and they only gave us one in December and they're actually the Fed is actually less optimistic on the economy now than they were a year ago if you look at their gdp forecast I even doubt we're going to get those hikes but even if we do I think inflation is going to rise much faster than interest rates and so real interest rates are going to fall and that's when gold shines brightest when you have inflation that is not being fought aggressively like during the Bush term when Greenspan was raising rates every quarter every time they met and gold prices went from under three hundred to a thousand or if you go back to the 1970s when the Fed was behind the curve on inflation and goal went from 350 to 850 or from $35 announced 50 while the Fed was raising rates so I think the idea that higher inflation is bad for gold is preposterous session right now it wouldn't surprise me to have a recession early in the first year of the Trump term and I think the reason that's a Fed waited until December to raise rates by a quarter is because in contrast to their claims to have confidence in the economy they have no confidence in the economy that's why they waited so long and that's why they raised interest rates so little remember when Alan Greenspan cut interest rates to one percent in the aftermath of the tech bubble bursting and September 11th he brought interest rates to one percent because he was so worried about the economy now the set is supposedly so confident and they can't even raise interest rates above a half this is a complete bubble that the Fed has blown you know Trump was right when he was a candidate it's a big fat ugly bubble it's even bigger fatter and uglier now and it's not just the stock market and by the way the bond market bubble has already burst and so interest rates are rising and that is going to compound the problems for an already weakening economy so if the economy was weak last year it's going to be even week or next year now you've expressed some concern in the past for the impact of a Fed rate hike on the housing and ox well no surprise that gold has moved lower in the wake of a Fed interest rate hike but what may be concerning even more concerning for gold investors out there is that the precious metal is down eleven percent since the presidential election this as the Fed takes a more hawkish stance on lifting interest rates in 2017 it's prompting analysts out there to turn bearish on the commodity altogether and that includes trader tim knight who said recently that he believes it's going to be a miserable 2017 for the yellow metal it's just about the only asset that's reliably down every day so does he have a point I tossed that question two euro pacific capital CEO peter schiff a known gold bull here's his take not really I mean I think you know he's completely wrong but I like to see that negativity out there I mean gold was gone down quite a bit since the election but I mean if you go back over the last 15 years Gold's had a pretty good track record and it's interesting that the reason that so many people have turned bearish on gold is because they believe that we're going to have more inflation under Donald Trump that we're going to have larger deficits as a result of tax cuts and increased government spending and that because of the higher I think they're right we're going to get more inflation but it's not a negative for goal that's a huge positive and the markets were wrong about gold at the end of last year and sold it off with a Fed raised raised rates it bottomed out in January and then how do you run I think we're going to have another big run next year but I think next year we're going to finish the year strong as opposed to have this Trump related sell off well a lot of people look at this Peter and they say just because you know the Fed wrongly predicted for hikes we only got one eye just because that didn't work out doesn't mean that that's what we're going to see in 2017 they would argue we're on to new times they're looking at the data out there they're looking at GBP showing you know solid growth over three percent or looking at corporate profits continuing to rebound so how can we confidently buy into the theory that we are on to a gold will run or do you not necessarily think that's the case anymore well first of all GDP growth for this year is going to end up below two percent and the set is only forecasting 2.1 for next year and I think they're too optimistic so we're not getting three percent we'll be lucky if we get two percent we may not even get that we could be on the customers
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