Gold Plunges : Peter Schiff “It’s going to be a ‘horrible Christmas’ “

Well , a horrible Christmas for the folks who followed Peter Shiff’s constant refrain to buy gold.

( as opposed to AMP advice to sell at $1800 .


USD/t oz. 1,086.30 -17.90 -1.62% DEC 15 11:24:10
JPY/g 4,286.00 -38.00 -0.88% OCT 16 11:23:43
USD/t oz. 1,089.56 -14.36 -1.30% NA 11:49:12
EUR/t oz. 1,014.24 -0.04 0.00% NA 11:49:50
GBP/t oz. 730.31 +4.41 +0.61% NA 08:28:35
JPY/t oz. 134,191.44 -210.72 -0.16% NA 11:48:54
INR/t oz. 72,028.75 -709.10 -0.97% NA 11:49:20


The Grinch has nothing on Peter Shciff .

On CNBC’s “ Futures Now ” Thursday, thecontrarian investor said that while Americans are wrapping presents this holiday season, they should instead brace themselves for “a horrible Christmas” and possible recession.

“I expect [job] layoffs to start picking up by the end of the year,” Schiff said, pointing to retailers as the first victim. “Retailers have overestimated the ability of their customers to buy their products. Americans are broke. They are loaded up with debt,” he said. “We’re teetering on the edge of an official recession,” and “the labor market is softening.”

For Schiff, there is no one else to blame but theFederal Reserve . As he sees it, the central bank’s easy money policies have created a bubble so big that any prick could send the U.S. economy spiraling out of control. And that makes the possibility of hiking interest rates slim to none.

Read More Oil driving markets, not Fed: Cashin

“The Fed has to talk about raising rates to pretend the whole recovery is real, but they can’t actually raise them,” said the CEO of Euro Pacific Capital. “[Fed Chair Janet Yellen ] can’t admit that she can’t raise them because then she’s admitting the whole recovery is a sham and that the policy was a failure.”

Related Quotes

According to Schiff, the recent rally in the dollar (Intercontinental Exchange US: .DXY) is “the biggest bubble that the Fed has ever inflated” and “it’s the only thing keeping the economy afloat.” The greenback hit a three-month high this week after Yellen said a December rate hike was a “live” possibility.

Read More Sorting out the influence of the strong dollar on revenues

“[The inflated dollar] is keeping the cost of living from rising rapidly and it’s keeping interest rates artificially low. It’s allowing the Fed to pretend everything is great,” Schiff said. “Eventually the bottom is going to drop out of the dollar and we are going to have to deal with reality,” he added. “That reality is we are staring at a financial crisis much worse than the one we saw in 2008.”

Schiff, a longtime Fed foe, has been doubting a rate hike for some time. And while his predictions for a stock market and dollar crash have yet to pan out, he has maintained his stance that the Fed’s hands are tied.

Correction: This article has been revised to reflect Schiff said the bottom will drop out of the dollar.

Get your tax haven planning in gear for 2016 Read more at




U.S. Housing -: No Recovery ? – A Subsidized Bounce

Wipe our Debt
Wipe our Debt (Photo credit: Images_of_Money)

October 21

Instead of actual responsible behavior of paying down debt, the primary if not only reason there has been any “deleveraging” at all at the US household level, is because of excess debt which became insurmountable, not because it was being paid down, the result of which is that more and more Americans are simply handing their keys in to the bank and walking away, and also explains why the US banking system is now practicing Foreclosure Stuffing, as defined first here, as the banks know too well, if all the housing inventory which is currently in the default pipeline were unleashed, it would rip off any floor below the US housing “recovery” which is not a recovery at all, but merely a subsidized bounce, as millions of units are held on the banks’ books in hopes that what limited inventory there is gets bid up so high the second housing bubble can be inflated before the first one has even fully burst.


The Automatic Earth

Naturally, two concurrent housing bubbles can not happen, Bernanke‘s fondest wishes to the contrary notwithstanding, especially since as shown above, US households do not delever unless they actually file for bankruptcy, and in the process destroy their credit rating for years, making them ineligible for future debt for at least five years.

It is thus safe to say that all the other increasingly poorer US households [..] are merely adding on more and more debt in hopes of going out in a bankrupt blaze of glory just like everyone else: from their neighbors, to all “developed world” governments. And why not: after all this behavior is being endorsed by the Fed with both hands and feet.

The following graph from TD Securities ( through Sam Ro at BI ) makes a good case for the “subsidized bounce” definition Durden applies to the present US housing market. It’s no secret there’s a huge shadow inventory overhanging US housing, and now it comes out that those great new home numbers are not what everybody would like to think they are.


The Automatic Earth

Many more houses are built than sold. And get shoved on top of the pile that’s already there, both the shadow inventory and the out of the closet one. Which begs the question: how long does a home stay in the “new” category? Does it take 1 year of staying empty for it to move to “existing”? 2 years, 3 years? 5? For one thing, builders and developers certainly have a huge incentive to continue to advertise it as new.

A graph from the same source:


The Automatic Earth

How this constitutes a recovery I just can’t fathom. I think that is just something people would like so much to see that they actually see it. Moreover, there remains the issue that it’s very hard for most to comprehend what debt deflation is, what its dynamics are, and what consequences it has.