New Gold Highs maybe by year end, says Peter Schiff

By Dominique de Kevelioc de Bailleul

Here it comes—another gold rally, according to Euro Pacific Capital CEO Peter Schiff.

A still unresolved Eurozone mess, now taking its toll on French banks, fresh and disastrous inflation numbers from the US and UK today, firming oil prices, and a COT gold report indicating that all speculators have been flushed from the flash crash in gold in early September as we move into the juicy November to April seasonal buying period in gold, all point to a nice set up for a gold rally, Schiff reckons.

“I’m bullish in general and think the dips are a good opportunity to buy. This recent dip is a good example,” Schiff told King World News. “I think we are going to make new highs in the gold market, maybe even before the end of the calendar year, which would imply a pretty big move to the upside for gold.”

And, if Schiff is right, a nice rally, too, from the 17.6 percent gain so far in the gold price since the close of last year, to match last year’s 29.7 percent gain in the metal from the close of 2009 to Jan. 1, 2010, would keep the gold-and-guns Americans from joining in on #OWS protests, as well as maintain gold’s 11-consecutive-years run of positive returns firmly intact.

“We would be talking about a move of more than $250 to hit new highs,” Schiff added.” The size of a move Schiff has proffered calculates to a 35.8 percent return for gold during the calendar year 2011, a move sure to please that 1 percent—not that 1 percent of Americans who have all the money, the 1 percent of Americans who own gold.

For now, the Fed and Washington politicos are not in immediate danger from the mostly peaceful mob scattered across America, so they think. But another coordinated attack on gold before year end by the crony capital criminal enterprise, then all bets may be off. Those Swamp People of Louisiana won’t be huntin’ down gators in Pat Buchanan’s Bayou, they’ll be huntin’ down those fat cats wearing them gator loafers at the Dallas or Atlanta Fed.

It’s quite apparent that the lucrative cash for gator skins business sure isn’t going to local dentists; it must be going into gold, instead. And if there’s any question upon whom blame should be cast for Great Depression II, a recent poll conducted by The Hill revealed a majority, 56 percent, indeed, know who the scoundrels are—they are those in Washington (including the Fed)!

Schiff said that the lull in the gold action during the past six weeks is quite normal, considering the take down by the cartel on Sept. 6 and the liquidations and margin calls it caused through hedge fund redemptions and shallow-pocket specs not able to come up with the needed cash to hold positions. The weak hands and Johnny-come-latelys got hurt, for sure, and may not be back for a while. But there’s more going on in all markets, not just the gold market, according to Schiff.

“The market is moving sideways despite all of the volatility. The markets will be more directional at some point,” Schiff continued. “A lot of the volatility has to do with the fact that people can’t make up their minds as to what is going to happen. So they are selling one day and buying the next. It’s panic selling, followed by panic buying.”

But another frequent guest of KWN, Jim Rickards, senior managing director at Tangent Capital Markets, shed some light on the subject of volatility with listeners of Eric King’s frequent broadcast. Rickards offered his take on what foreign buyers—who’ve procrastinated moving capital into gold since the Lehman meltdown days—are thinking.

“I actually had a very interesting experience this week with a foreign entity that is [now] looking at the gold market,” Rickards told KWN listeners on Monday. “What happened was they were interested in buying gold, but they were kind of slow moving and they said they missed the rally. I said to them, ‘No you didn’t. That was a nice pop but gold has way further to go. Gold is going to go into the thousands of dollars an ounce.’ It is not too late to catch the main spike that’s coming.”

Rickards experience jibes with recent Fed data which show a reversal in trend by central banks from moving into dollars to, now, moving out of US dollars—at a critical time when the Fed needs more participation into Treasuries from overseas, not less. If the sudden collapse of the Dexia despite a clean bill of health from the European stress tests didn’t get the attention of the big money that politicians are hiding the real damage, maybe the same hide-and-go-seek with tier-1 capital played by US Fed primary dealers here in the US will.

Due to changes in financial reporting rule, FASB 157, and opaqueness offered up by the BIS though its collective reporting of tier-3 assets, today’s bank balance sheets have turned financial reporting into a complete joke. Opaqueness of the impact from central bank currency manipulation on markets following the Plaza Accord of 1985 was responsible for the 1987 stock market crash, according to Princeton Economics founder and president Martin Armstrong.

The US dollar has held up during the crisis in Europe, so far. But Bloomberg News and Zerohedge.com have reported an alarming rate of capital outflows out of the US Treasury market by foreigners of the past couple of months. Whether Schiff will be right about the dollar earlier than he expects is unclear, but that day is coming—and the move will be fast, he said.