Renown and rather outspoken investor Peter Schiff has taken a shot at the Fed in his most recent statements, as he accuses them of trying to inflate the economy. To be specific, Schiff thinks that Bernanke and company want to inflate the housing bubble, which burst in 2007 and had a devastating impact on our economy. “But you can’t blow up a bubble that has already burst. It has too many holes” said Schiff [for more inflation news and analysis subscribe to our free newsletter].
The Fed has taken quite a lot of heat this year, as Bernanke’s most recent open-ended QE3 policy has shaken up the financial world. There are those who feel that this method may just keep us afloat as the recovery picks up steam. But the majority feel that QE3 won’t help the economy, and will only hurt us in the long run. The earnings from Q3 haven’t exactly helped Bernanke’s cause for recovery, as bellwethers from around the country have missed or provided weak guidance.
Schiff’s lashing of the Fed is nothing new, as he has been vocally opposed to QE3 all along, saying that investors need to own real assets like gold and silver to protect themselves against inflation that will have to hit at some time or another. These most recent comments, however, are a guideline for what investors may want to avoid, as Schiff clearly holds a bearish outlook on the housing sector. Should he be correct in his predictions, there are a number of commodities that could feel the pinch. Below, we outline three commodities to keep an eye on if Schiff’s housing prediction plays out [see also How to Play Schiff’s $5,000 Gold Prediction].
- Timber/Lumber: Many have predicted timber to be one of the best performing assets in the coming years, as it already has a strong track record. Should housing lose steam this will be one of the hardest commodities hit.
- Copper: Though copper has uses outside of the housing/construction industry, it is easily its biggest price driver as this reddish-brown metal makes an appearance in everything from plumbing to electrical wiring.
- Steel: Another key component in the housing sector, keep a close eye on steel as well as iron ore (steel’s main component).
Disclosure: No positions at time of writing.