How to Play Schiff’s $5,000 Gold Prediction

Peter Schiff is a household name in the investing world, as he is well-known for his bold statements on the global economy and where he thinks markets are headed next. Schiff is vehemently opposed to stimulus packages as well as the massive deficit that seems to only grow by the day in the states. As such, Schiff was recently quoted as predicting gold to hit $5,000/ounce, a massive increase from its current levels. Though he was unable to quote a specific time frame for when gold will see this rapid jump, he has sound reasoning behind his theory on this precious metal [see also Four Commodities To Buy Before Roubini’s “Perfect Storm”].

First things first, the constant quantitative easing programs and “Operation Twists” that Bernanke & Co. are pumping into the economy are a recipe for disaster. Schiff likens it to a heroin addiction as he claims that the markets are literally surviving on the stimulus and once it erodes away, we will fall back into a recession. “The Fed saying we’re only going to do QE if the economy needs it is like a heroin addict saying he’s only going to take more heroin if he needs it” says Schiff. And he has quite a valid point, what will come of markets when the Fed is unable to ride to the rescue? Surely there will come a time when printing more money simply is not an option.

Schiff feels that our last recession was actually cut short by the stimulus packages and that the deeper, underlying issues are still looming. His theory seems to suggest that we need to rise from the ashes, and hit rock bottom before we can proceed as an economy. One thing that Schiff is sure of is where gold is headed, up. A minimum price point of $5,000 in the coming years as the dollar loses value and our economy spirals into the doldrums yet again [for more on gold, subscribe to our free newsletter].

Investing For $5,000 Gold

For those who feel that Schiff is correct in his rather extreme prediction, or is at least headed in the right direction, we outline several ways to make a play on this precious metal.

  • SPDR Gold Trust (GLD): By and large the most popular gold fund in the world, GLD is home to over $60 billion in assets and tracks physical gold bullion. This fund is popular both for “buy and hold” investors given its physical structure, but also to traders as it has a very active options market. Be warned, however, that a number of investors feel that GLD is no more than a paper asset and is not worth their money.
  • Physical Bullion: Working off of the notion that GLD is a phony, physical gold is most certainly your next best bet. Though  it will not have nearly the same liquidity, physical bullion can be safely stored by its owners, ensuring that they know exactly how much of the precious metal they own. Take a look at American Gold Eagle coins if you are just getting started with physical investing, as these will probably be the best for you price range [see also Three Reasons Why Gold Is Overvalued].
  • Market Vectors TR Gold Miners Fund (GDX): Schiff also noted that equity investments with commodity exposure will prove to be strong allocations in coming years. This ETF invests in a handful of gold miners in order to offer an equity spin on this coveted safe-haven asset.

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Disclosure: No positions at time of writing.

This entry was posted in Actionable Ideas, Asset Allocation, Commodity ETFs, Gold, Hard Assets, Precious Metals and tagged , . Bookmark the permalink.

Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

23 Responses to “How to Play Schiff’s $5,000 Gold Prediction”

  1. [...] Equity markets ended the session in green territory yesterday as investors focused on better-than-expected earnings from IBM instead of worrisome data on the home front. Weekly jobless claims came in at 386,000 versus the expected 352,000, while existing home sales also disappointed as the figure in at 4.37 million versus the expected 4.55 million. Amidst the mildly-bullish sentiment on Wall Street, crude oil futures took off; prices for the fossil fuel soared close to 3% on the day, settling just above $92.50 a barrel as the closing bell rang [see also How To Play Schiff's $5,000 Gold Prediction].  [...]

  2. [...] all of the colorful predictions for where gold’s price is headed, like Peter Schiff’s prediction of $5,000/oz, there stands a man with a bearish sentiment – Jim Rogers. In a recent interview, Rogers [...]

  3. [...] As such, day traders have embraced these financial instruments as viable tools for achieving cheap and incredibly liquid exposure to any corner of the market. Whether its buying into a leveraged NASDAQ fund before Apple reports earnings in anticipation of a blowout quarter or selling gold after pessimistic FOMC minutes, ETFs have rightly earned the respect of many seasoned day traders [see also How to Play Schiff’s $5,000 Gold Prediction]. [...]

  4. [...] they can be excellent sources for traders and investors to share ideas with one another [see also How to Play Schiff’s $5,000 Gold Prediction].Below, we outline the top 25 gold forums to help give you a leg up when it comes to making an [...]

  5. [...] investors utilize gold for its safe haven behaviors, its speculative power, and its high liquidity given its popularity. Some use futures contracts for gold exposure, while others prefer stocks. But recent years have [...]

  6. [...] The world of investing is largely shaped by the varying economic schools of thought that individuals fall under. One of the best-known of these groups is the Keynsian school, which promotes a more hands-on government that has more control over a particular economy. Another big name in the world of economics is those that associate with the Austrian school of thought, which promotes a laissez-faire government that has little influence on the developments around it. As the years have gone on, the Austrian way of thinking has become incredibly popular, and has shaped a number of investors’ capital allocations [see also How to Play Schiff’s $5,000 Gold Prediction]. [...]

  7. [...] 0.40%. The yellow commodity has been surging in popularity in recent years as the precious metal soared past $1,900/oz. while analysts and investors speculated about where the asset was headed. For many investors, GLD [...]

  8. [...] bold predictions concerning the precious metal, including his firm belief that it is headed towards $5,000 per ounce. Now, Schiff has stated that Draghi’s most recent comments paint a bullish picture for gold, [...]

  9. [...] for fiat currencies in recent years and his love for gold. He has even gone as far as to put a price tag of $5,000/oz on the precious metal in the not-so-distant future, as he feels that our mounding debt and QE [...]

  10. [...] Schiff is no stranger to voicing his opinion. Whether it is his prediction of gold hitting $5,000 per ounce, or urging the U.S. to return to a gold standard, Schiff has no problem with the spotlight and his [...]

  11. [...] may be a good time to take some gains. And in light of QE3, $1,700 ounces of gold don’t seem nearly as expensive as they did several months ago. Market weeks such as this one are generally poor ones to overhaul [...]

  12. [...] “The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end” [see also How to Play Schiff’s $5,000 Gold Prediction]. [...]

  13. [...] across the globe. Whether it was the California Gold Rush in the mid 1800′s or last years shocking new highs for the metal, gold has been at the forefront of investing for quite some time. But among gold [...]

  14. [...] the globe. Whether it was the California Gold Rush in the mid 1800′s or last year’s shocking new highs for the metal, gold has been at the forefront of investing for quite some time. But among gold [...]

  15. [...] will always have analysts calling for $5,000 gold and $100 silver but the short term is nearly impossible to predict. To better assess the situation, [...]

  16. [...] 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]. [...]

  17. [...] since the announcement of QE3 and the impending fiscal cliff. Some have called for gold to surge to new historical highs, while others are not quite so sure. But one thing is certain, gold is getting handsomely [...]

  18. [...] in various quantitative easing, money printing and stimulus measures, the long-term picture for higher gold prices is certainly rosy; however, the short term has not shined as bright. Since October, the SPDR [...]

  19. [...] two years, a drop of 25%. But it was not that long ago that analysts and investors were not only touting gold as a good investment, but gold miners were seen as a great opportunity for those looking for an [...]

  20. [...] especially looking back on the gains that certain assets have made. It is relatively easy to make a bold call on a specific asset, but it is much more difficult to follow through with the trade and exit the [...]

  21. [...] But investigators now feel that the prices of gold and silver were manipulated alongside this scandal that has been developing for a number of years. In fact, a formal investigation of silver manipulation has been in progress over the last two years in the U.S. but despite evidence of such actions, there have been no outcomes. Chris Powell, Secretary and Treasurer of the Gold Anti-Trust Action Committee told CNBC in June that “as central banks are interested in supporting government bonds and the dollar and keeping interest rates low, they continue to manipulate the gold market” [see also How to Play Schiff’s $5,000 Gold Prediction]. [...]

  22. [...] Trading: This blog is focused on trading as a whole but will include futures trading advice and actionable [...]

  23. [...] when it would hit its bottom and when it was time to buy back in. Everyone from Jim Rogers to Peter Schiff had their predictions of where gold was headed and just how low it would go, but the fundamentals [...]

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