Economist Peter Schiff has made a notable assessment regarding the price of gold per ounce. Schiff argued that the $5,000 level, which is being discussed in the markets, could be seen much sooner than expected.
Speaking to Kitco News, Schiff interpreted recent movements in the U.S. bond market as a significant threshold for gold. Noting that U.S. 10-year Treasury yields have reached a 22-year high of 5.35 percent, Schiff stated that the selling pressure in the bond market is still in its initial stages.
According to Schiff, the decline in bond prices could increase the pressure of losses on investors' portfolios while strengthening the search for a safe haven. For this reason, he stated that capital exiting bonds could shift toward precious metals such as gold and silver.
Reminding that rising interest rates traditionally put pressure on gold, Schiff is of the opinion that this relationship may function differently under current market conditions. Schiff stated that short-term pullbacks in gold are caused by the sudden reactions of large-scale algorithmic trading to interest rate hikes.
Evaluating the "$5,000 in one year" scenario that came up at the annual gold market conference in London, Schiff cited past rapid price movements as examples and said that reaching this target could take even less time.
Schiff also pointed to the importance of physical gold purchases by central banks. It was noted that the People's Bank of China added 23 tons of gold to its reserves in September, and according to World Gold Council data, global central banks purchased a net 39 tons of gold in August.
News Source: 12punto
