Peter Schiff: Comments, charts for the podcast..., Keeping track of his podcasts & opinions Options

[DrBubb]

I'm looking forward to hearing the interview with Peter Schiff, which should be up on CW Radio on the next day or two.

Meantime, Dominic has done a three-way interview with Campbell Smyth in Perth, Australia, David Skarica in Nassau, Bahamas, and myself, here in Hong Kong. And the subject was the dollar.

Here's the chart that was refered to in the 3-way (4-ways, with Dominic):

The trade-weighted dollar($USD) this past week fell below $82.00


A test of key support at $80-81 looks very likely. This is what we discussed on the 4-way talk.

I find the timing very interesting:

+ China was attacked for dumping by the US, about a week ago
+ The G-7 Group of top countries has been meeting while this drop was going on,
+ China's Premier Wen Jiabaou was in traveling in Japan, trying to warm relations between China and Japan, the two countries which hold the largest amount of dollar reserves.

It is not hard to imagine that China is allowing the dollar to fall, to "send a message" to the USA, about who really controls the exchange rate.

- - -

Here's the "gold Bug's index" /HUI, banging against the ceiling, as if it wants to breakout



But will it? Or, might it be doing a brief false breakout, to suck in the last bull?

Some clues might come from:

+ GDX (the gold stock etf), which has volume: GDX-1 year
+ GLD (the gold etf) : GLD-1 year

...more about this later

[HollandPark]

Goldseek believes a breakout in HUI has a good chance to hold

Gold & Silver

The first chart up is the Hui Index with the price action of physical gold overlaid on top of it. As can be seen the two follow one another fairly closely.



There have been times in the past where the two have not traveled in the same direction, or at least in the same time frame; and there will be times in the future when they do not track one another.

Next is the chart of the Hui compared to Gold. The chart shows that since March the trend has been up and in favor of the gold stocks over the physical metal. This is viewed as a constructive indicator for the overall precious metals complex.



Next is the Hui Index by itself. The chart shows that horizontal resistance at around 360 has been broken above, with the index closing at 364.47. This is a very positive occurrence, especially if the break holds.

As of now we are not calling it a break out – but a break. We want to see the follow through with a two day close above this level, and prefer a weekly close above as well. When this level acts as support, as opposed to resistance, we will be convinced and undaunted, and will act accordingly. Until then we wait and watch.


@: http://news.goldseek.com/GoldSeek/1176735600.php

[HollandPark]

THE DOLLAR is now at USD-81-ish

On gold seek, they are talking about targets like USD-55 or USD-45,
and they said Peter Schiff has a target of a 50% drop in the dollar

[consa]

More from Peter Schiff:-


Perched Precariously on a Precipice

The dollar is no longer responding to traditional stimulants. This week, despite the apparently "hawkish" tone in the recently released Fed minutes, and trade deficit figures that were slightly less horrific than expected, the dollar nevertheless declined against just about every currency on the planet. As a result, it now teeters dangerously close to the edge of a very large precipice. Looming large is the 80 level of the U.S. Dollar Index which has stood as long term support for almost thirty years. This week, the Index broke below 82, and is sinking fast. When this critical level is breached, look out below. Without any support beneath it, the dollar could literally fall off a cliff.

The trajectory of the dollar is linked to America’s economic status in the world. Last week we learned, thanks in part to the strengthening euro, that the market capitalization of European shares now exceeds the market capitalization of American shares for the first time since before the First World War. At the current rate of appreciation, European shares will have a market cap 50% greater than American shares by the end of the decade. However, should the dollar decline turn into a free fall, this could happen much sooner.

For individual currencies, the British pound warrants particular attention as it approaches the significant two-to-one level against the dollar. The pound currently trades for about $1.99, and has not meaningfully breached $2.00 since the early 1980's. The euro, currently trading above $1.35, is bumping against its all time high of just under $1.37 against the dollar. The Australian dollar has already hit a new 17-year high and is perhaps a harbinger of things to come. The sole laggard among major currencies has been the Japanese yen (and to a lesser extent the Swiss franc), which has been held down by the infamous carry trade. When it unwinds (which would clearly be evidenced by a break below the 110 level), buckle your seat belt as all that will stand between the dollar and oblivion will be the Bank of China.

On that note, yesterday the Bank of China quietly dropped the bombshell that its foreign currency reserves, which had just passed the $1 trillion benchmark a few months ago, had swelled in the first quarter of 2007 to more than $1.2 trillion. At this rate, China will amass more than $2 trillion dollars in reserve sometime next year. I can only imagine how low the dollar would already be were it not for the massive foreign aid provided by the Chinese.

So far the Dollar Index has tested the 80 level five times in the past: 1978, 1990, 1992, 1995, and 2004. On several of those occasions it took massive, coordinated interventions by all the world’s central banks to rescue the dollar. However, given the enormity of today’s imbalances and the sheer number of dollars in foreign hands, such a bailout seems unlikely.

Perhaps the most significant warning sign is the break out in the price of gold. This is the first time the Dollar Index has hit this level with gold trading above $400 per ounce (although it might have been slightly above that level in 2004). Of course gold was considerably above $400 per ounce in 1980, but it was only about $200 per ounce in 1978. Though the dollar was under pressure in 1980, the index itself only fell to about 85. Currently, spot gold is trading at about $680 per ounce.

The strength in gold is also a good indication that this time around the U.S. dollar can count on little help from its friends. Rising gold prices reveal the suspicion with which many now view fiat currencies and central bankers’ resolve to keep them sound. Therefore, foreign central banks will be reluctant to take actions to further weaken their own currencies, ushering in greater domestic inflation and calling into question the soundness of their own respective monetary policies. Low gold prices gave cover to such inflationary interventions in the past, but today’s rising prices urge caution. As a result, the chances that the dollar can dodge another bullet are increasingly remote.

Despite the impending gravity of this situation, few show any worry. Perhaps the dollar will bounce from these levels and will buy us a little more time, but how much? When the support ultimately gives way all hell will break loose. A sharp decline in the Dollar Index below the 80 level will likely take down the bond, stock, and real estate markets as well. Since a lower dollar will exert additional upward pressure on already rising consumer prices, the ensuing combination of rising inflation, higher interest rates and lower asset prices will be a toxic mix.

For a more in depth analysis of the U.S. economy and why the dollar is in so much trouble, read my new book “Crash Proof: How to Profit from the Coming Economic Collapse.” Click here to order a copy today.

More importantly make sure to protect your wealth and preserve your purchasing power before it’s too late. Discover the best way to buy gold at http://www.goldyoucanfold.com , download my free research report on the powerful case for investing in foreign equities available at http://www.researchreportone.com , and subscribe to my free, on-line investment newsletter at http://www.europac.net/newsletter/newsletter.asp

[No6]

Even the BBC is reporting the "strong" pound against the dollar today. Almost touching £1/$2.

[bandwagon]

The Schiff interview should be really good.
I would have liked to ask him when he thinks the US will enter recession.

From my own research an economy usually enters recession about a year after the credit cycle turns, and the US credit cycle has turned.
So it can't be too far away.

Anyways, today Sterling passed the $2 mark, for the first time since Black Wednesday in 92.

http://news.bbc.co.uk/1/hi/business/6562743.stm

Interesting times...

[notanewmeber]

nice show.

Peter was good on the show - the arguments are drummed into me now and this podcast adds to it.

And i particularly liked the RGM mining interview. Whos the wise guy who spent 40K pounds worth of the shares today?

The skipe chat at the end was a bit over my head. But i ll listen to it a few times slowly.

[UNSHURE]

nice show.

Peter was good on the show - the arguements are drummed into me now and this cast adds to it.

And i particularly liked the RGM mining interview. Whos the wise guy who spent 40K pounds worth of the shares today?

The skipe chat at the end was a bit over my head. But i ll listen to it a few times slowly.

Yes, it was both interesting and entertaining to here the Peter Schiff interview. He is very clued up about the US housing market and money supply growth. I particularly liked the question about what he would do if he became chairman of the Fed. It would also be an interesting manifesto for one of our political parties to take up: abolition of income tax; abolition of free health care; serious reductions to spending on the military; allow a recession and take the pain now. Any takers?

He seems to think that the US situation is unique. That the US is in a much worst situation than most other countries. The UK could look just as bad in a few months time if the Housing market turns. I think that there are a lot of striking similarities between the UK and US economies. In fact, the UK might even be in a worst situation. Similarities include 'Balance of Payments Deficit'; creeping inflation; excessive growth in the money supply; Overpriced Housing market; decline in manufacturing; over-reliance on services and housing market; spending the way out of recession; reliance on cheap imports from Asia; Sub-prime loans; debt bubble;....

There were a few surprises though. His lack of knowledge of the UK economy , and housing market, was very evident. I think that he learned more about the UK economy from Frizzers than we learned from him. At the end of the interview, he seemed a bit taken aback that the UK had similar problems to the US but the currency and housing market seemed strong.
At the beginning of the interview, he even said that he had a small amount of money invested in UK Commercial property.

I can't wait for the next one. These interviews are great. Bob Hoye, Bob Chapman? An interview with Dr Bubb about the UK Housing situation would be good also.

[Cuthbert Calculu...]

Yes, I'll get all these guys eventually.

I'm working on two major coups at the moment, actually three. One looks like it in't working out, the others ... we'll wait and see.

[DrBubb]

He seems to think that the US situation is unique. That the US is in a much worst situation than most other countries. The UK could look just as bad in a few months time if the Housing market turns. I think that there are a lot of striking similarities between the UK and US economies. In fact, the UK might even be in a worst situation. Similarities include 'Balance of Payments Deficit'; creeping inflation; excessive growth in the money supply; Overpriced Housing market; decline in manufacturing; over-reliance on services and housing market; spending the way out of recession; reliance on cheap imports from Asia; Sub-prime loans; debt bubble;....

I agree.
The UK property bubble may be bigger than in the USA.
I think the "boom marketa" in London and Southeast England is a bigger percentage of UK wealth, and a bigger contributor to a HPI bubble in the UK, than the boom markets like LA, Miami etc are as a percentage of the US market.

Also the ratio between average price and average incomes is higher. If interest rates ultimately go higher, then the fall in the UK may be bigger than the average fall in the US.

Also, the UK economy has benefitted from massive job increases in the state sector. I read somewhere that 25% of the working males are employed by the govenment, and an amazing 50% of working females. How sustainable is that. In a recessionm, if the private sector gets slimmed down, perhaps because housing experinces a sharp downturn, the importance of the state sector will become even bigger. This is a cancer the US does not have to the same degree

[UNSHURE]

I agree.
The UK property bubble may be bigger.
I think the "boom market" in London and Southeast England is a bigger percentage of the UK situation, than the boom markets like LA, Miami etc are as a percentage of the US market.

Also the ratio between average price and average incomes is higher. If interest rates ultimately go higher, then the fall in the UK may be bigger than the average fall in the US.

Also, the UK economy has benefitted from massive job increases in the state sectot. I read somewhere that 25% of the working males are employed by the govenment, and an amazing 50% of working females. How sustainable is that. In a recessionm, if the private sector gets slimmed down, perhaps because housing experinces a sharp downturn, the importance of the state sector will become even bigger. This is a cancer the US does not have to the same degree

Northern Ireland has had rapid HPI in the last year. Together with London, this has distorted the National Statistics. The BBC/Landregistry have a utility that shows price increases/falls by region or town for the last quarter and last year.

http://news.bbc.co.uk/1/shared/spl/hi/in_d...tml/regions.stm

For the last quarter, the UK regions, quarterly increase/decrease are as follows:


Greater London -2.7%
South East -1.2%
South West -0.1%
Northern Ireland 36.6%
East Anglia -0.6%
West Midlands -0.9%
East Midlands 0.1%
Wales 1.5%
Yorks & Humber 0.9%
North West 0.4%
North 0.1%
Scotland 0.8%

It looks very likely that interest rates will go up in the near future and I cannot see how we are going to avoid our own sub-prime crises. AMB-Ambro have issued a warning that UK house prices are overpriced by50% and credit has started to tighten. Many Banks and Building Societies are withdrawing fixed rate mortgage deals.

Public Sector Employment is now taking a hit also. Particularly in the NHS. Many of the Health Trusts have gone overbudget and are having to reduce staffing levels. Some by as much as 20%. The local evening paper reported, last year, that the Burnley and Pendle Trust were even removing many of their light bulbs to save on energy costs.

[DrBubb]

Public Sector Employment is now taking a hit also. Particularly in the NHS. Many of the Health Trusts have gone overbudget and are having to reduce staffing levels. Some by as much as 20%. The local evening paper reported, last year, that the Burnley and Pendle Trust were even removing many of their light bulbs to save on energy costs.

it will be hard- and a bit cruel- to let publiuc sector workers go in a recession.
But the efficiency of the economy is not helped by having so many on the public payrolls

the bloated public sector will be an albatross around Gordon Brown's neck

[Starcrossed]

The 'Precipice' article above is the most interesting and lucid analysis of the dollar crisis I have read.

It led me to wonder why the importance of this has not been noticed in the media etc. My suggestion is that after 10+ years of growth in the US and UK, there is a general feeling of complacency. People have forgotten that economies can go down as well as up. Intrigued, I looked up some basic historical data.

A cursory look at 1982 when the dollar was last at comparable levels shows for the UK:

Inflation 8.6%

3 million unemployed for the first time ever

17% Interest rates

Now I'll be honest and say that I don't understand the correspondence between these statistics and the $2 pound. Are there any lessons to be drawn out here?

[DrBubb]

Welcome, Starcrossed.

You will see that threads move a little more slowly here, but they do move.

A key section of the "precipice article":

"Perhaps the most significant warning sign is the break out in the price of gold. This is the first time the Dollar Index has hit this level with gold trading above $400 per ounce...

The strength in gold is also a good indication that this time around the U.S. dollar can count on little help from its friends. Rising gold prices reveal the suspicion with which many now view fiat currencies and central bankers’ resolve to keep them sound. Therefore, foreign central banks will be reluctant to take actions to further weaken their own currencies, ushering in greater domestic inflation and calling into question the soundness of their own respective monetary policies. "

= = =

The UK may have problems slowing the rise in the Pound (against the dollar).
Because the UK really does need to raise rates, or inflation will get away.

Last time around, the UK needed to cut rates, to get its economy moving - it's a different scenario

[UNSHURE]

Yes, I'll get all these guys eventually.

I'm working on two major coups at the moment, actually three. One looks like it in't working out, the others ... we'll wait and see.

Bob Chapman made some intriguing comments on Goldseek radio this week. He claimed that he had some inside information from one of the corporations that exert a great deal of influence on the world economy (assuming these exist?). He claimed that the thinking from these 'powers that be' is that, in the course of the next two years, global liquidity will dry up or household and firms will cease to lend and borrow. In short a 1930's style depression would ensue.

He claimed that the clue to this is 'Private use of money and credit'. Apparently, this is just as important an indicator as M3. He said that, this credit crunch will be easy to spot and that we should be able to spot it several months in advance. The sign will be that the M3 money supply (US presumably) will contract for 3-4 months.

He also said that, when this credit crunch is imminent, the strategy to take would be to liquidate everything except for Gold Bullion Coins; good quality gold shares; and Swiss Francs.

He also made some comments about the UK economy and Housing market. In particular, causes of HPI being caused by 'Planning legislation restricting building' and 'Overseas investment into UK property'. Particularly around the City of London but also in the UK in general.

He said that the UK economy is in a unique situation at the moment and is in danger of hyperinflation.

He also said something that would partly contradict what Peter Schiff was saying last week and something that I expressed concern about in the threads above. Namely that, when the US dollar goes down the pan, the rest of the world will also be affected for a time. It might not be a good idea to be overexposed to equities in any country.

Only time will tell whether these forecasts he is making is correct, but he does seem to have some good knowledge of the UK situation.

[DrBubb]

turk's chart

from his "dollar in freefall comment":
http://goldmoney.com/en/commentary.php#current

many observers think the dollar may bounce (back to the redline at the top of the channel perhaps), before breaking the support. Others think a more important reversal upwards is about to happen.

if jim turk thinks we will go straight through support (without the central banks mounting a huge support operation) he is in the minority. If that were to happen, i think some key supporters like china or japan would have to be pushing it, rather than supporting it. occasionally, the minority view is right. let's see if this is one of those occasions.

[Rikk03]

The article in this overnight news article really shows that potentially UK is due a far bigger correction

http://www.housepricecrash.co.uk/pdf/abn-a...13-apr-2007.pdf

[DrBubb]

SChiff really gets it !

Here on this Goldseek interview he talks about where things are headed:
http://news.goldseek.com/GoldSeek/1177945200.php (2nd hour)

When the Dollar starts to fall, bond rates will soar, and the US will go into a depression

A 50% decline in the dollar is possible, even probable, he says.
And look what happens:
The Dollar will lose the most value against Asian currencies.

Some people think if the US goes into recession, prices will come down. Many prices will not.
Because as the US dollar loses value, Asian currencies will rise. The Chinese will consume more,
as the US consumes less. Chinese exports will soar in cost, as US consumers have to compete
with Chinese consumers with their stronger currency. The loss of purchasing power (and living
standard) ion the US will be matched by a gain of purchasing power in China.

(let me go on):
When the US dollar price of oil more than doubles to $200, it will rise alot less in Rmb terms.
The Chinese will be better able to afford to import oil, while the US economy is devastated by
high oil prices. During the US depression, some Chinese, who are serving their own consumer
economy, will be enjoying properity. Look for Chinese to be buying up cheap real estate,
and buying closed factories in places like Detroit, where their resurgent currency will go a long
way when prices are low, even in weak dollar terms. Maybe you will see a Chinese billionaire
buying GM or Ford.

[DrBubb]

SCHIFF PODCASTS ...

The latest : Oct.16th : http://www.europac.net/Schiff-FBN-10-16-07_lg.asp
"What will send oil to over $150 a barrel, is when China stops surpressing the Yuan.
Then US$ oil prices will climb, and buyers in Asia buy more oil with their strong currency."

More interviews,
HISTORICAL- years old (May 2002), but just added to YouTube Sept.2007:
P.Schiff pt.1 : http://www.youtube.com/watch?v=8Cz-6tYHK8I
P.Schiff pt.2 : http://www.youtube.com/watch?v=yFQruE4gF04
P.Schiff pt.3 : http://www.youtube.com/watch?v=GItNd-Ttw-s
P.Schiff pt.4 : http://www.youtube.com/watch?v=Ylj6D9hBy60
Amazing how well these have aged

"The recession has not started yet" he said in 2002.
When the dollar falls, there will be a big rise in inflation.
Meantime, the US no longer has its manufacturing base, and relies on imported goods,
and imported capital.

"It will take a long time to tear down some of these malls, and replace them with factories."

"A giant bubble in search of a pin. The most likely pin is the dollar."

"The reason I know the earnings are real, is the companies are paying dividends."

"The main reason I am there (in overseas investments) is to be out of the dollar."

[DrBubb]

Why a Weak Dollar Hurts U.S. Manufacturers

The vast majority of economists are currently hailing the freefall of the dollar as a windfall for American business. While some domestic manufacturers may enjoy some initial benefits from a weaker dollar, they will ultimately suffer many adverse consequences as well. More importantly, the dollar’s demise is a disaster for American consumers.

A cheaper dollar helps domestic manufacturers because it makes local costs, such as wages and rents, decline in relation to the costs borne by international competitors. While this is true, it also means that American workers and landlords see a corresponding decline in the real values of their pay and rent. Given that such declines negatively impact living standards, such developments hardly seem worth celebrating.

Too often overlooked however is how the weakening ollar also works to increase costs for domestic manufacturers. A falling dollar raises the costs of raw materials, such as oil and metals, while simultaneously decreasing the relative costs that foreign competitors pay for the same supplies.

But it is not just raw materials prices that rise. Perhaps even more important will be the prices of foreign-made components that are used in American factories. In fact, many American “manufacturers” are really nothing more than assemblers of imported components. For example, take a domestic golf club company that supposedly manufactures clubs in the good old U.S.A. Such a company might import the heads from China, the shafts from Indonesia, and the grips from Mexico. The only thing the American company actually does is put the pieces together. So as the dollar loses value, the costs of importing all of the components will rise, making the finished product more expensive for Americans.

/more: http://www.europac.net/externalframeset.asp?id=10379