Schiff offered one explanation for a Wednesday’s curious rally in stocks after the Fed minutes set the stage for a rate increase.
Schiff said the terrorist attacks in Paris “make it likely that we’ll get more [quantitative easing] in Europe and therefore maybe the Fed won’t move [to raise rates],” Schiff said. “I think it is still the easy money that is propping up the market…It’s all about cheap money and QE and if we lose that the market’s are going down,” he said.
Prior signs that the Fed would normalize rates have resulted in tantrums and selloffs in a market some argue has been underpinned by record-low interest rates. The Dow Jones Industrial Average DJIA, -0.20% soared nearly 250 points Wednesday. The bulk of its gains came in the last two hours of trading after the Fed’s meeting minutes were released at 2 p.m. Eastern.
Schiff’s dogged but prescient calls ahead of the 2008 financial crisis earned him plaudits on Wall Street as one of the few able to see a global economic crisis brewing. Back then, Schiff was largely ignored. This time he’s having a similar Cassandra-like effect on market participants.
His latest comments echo a series of earlier screeds against the Fed, which he has criticized for mismanaging monetary policy.
His bearish take on the stock market is perhaps best exemplified by his bullish call for gold: $5,000 an ounce.
Schiff hasn't set a timetable for his gold prognostication. It settled at $1,068.70 an ounce on Wednesday, putting the precious metal near its lowest settlement in more than five years. Gold’s best level was around $1,891 per ounce back in Aug. 22, 2011, according to FactSet data.