Gold continues to hit new historical highs! Some even shout out a $10,000 target

SchiffGold Chairman, Founder and Chief Market Strategist of Europe Pacific Asset Management, Peter Schiff, said that if US Vice President Harris wins the November US election, the price of gold could reach $10,000 per ounce.

Schiff said, "If Harris is elected president, we won't have a chance to do the right thing. Debt will grow exponentially... We will reach $40 trillion. If we add $4 or $5 trillion in debt each year, it is easy for the national debt to reach $50 trillion in her first term. She will try to blame all the problems caused by the government on capitalism, and then try to change the ideology."

Schiff stated that the decline of the US dollar as the world's reserve currency will be one of the driving forces for gold to reach $10,000.

According to Schiff, it is hard to imagine the US dollar maintaining its global reserve currency status during Harris's term in office. "Our creditors will inevitably conclude that we cannot repay the debt, the numbers are too big, the US government cannot fulfill its commitments," he said.

On Monday, during the Asian session, spot gold broke through the previous high, hitting a record high of $2,588.95 per ounce, with an intraday increase of 0.4%.

Default vs. Inflation

Schiff explained that default would be better than inflation for the US.

He said, "Default is the best way to get out of this debt situation. But if we 'dishonestly default,' politicians will blame it on inflation. From the perspective of creditors and everyone else holding dollars, inflation is worse than default. People lose more money in inflation than in default. If the US government defaults, it won't default completely, the repayment rate could be 30%. Then we can reduce the debt to a manageable level, but inflation could wipe out over 90%, even possibly 99%. Who knows if we will experience hyperinflation."

Schiff pointed out, "A gold price of $10,000 is only 4 times the current price. From 2001 to 2011, the price of gold increased by more than this number. And now gold has just started to rise again, we have broken through all resistance. You will see a significant increase in the price of gold, the increase will be equivalent to the initial increase from $300 to $1900, a 6-fold increase. But you will find that this growth will be completed in a shorter period of time."

The Fed Should Pay Attention to the Gold Price Level

Schiff added that the Fed should take signals from the gold price, not the macro data it focuses on, and pointed out that the Fed will make a major mistake this week Schiff said, "The Fed claims to be data-dependent, but the data it relies on is irrelevant because it is false and often revised. The most important data point is the price of gold, which recently hit a historic high."

In the weeks leading up to the monetary policy meeting on September 18th, the spot gold price hit multiple historic highs, far exceeding $2500 per ounce. Precious metal prices have risen by over 21% year-to-date.

Schiff pointed out that the rise in gold prices indicates that monetary policy is not tight enough. Previous Fed chairs have used the price of gold as a key indicator to determine whether they are on the right track in tightening or easing monetary policy.

"When Greenspan was Fed chair (from 1987 to 2006), he said we were essentially on the gold standard because gold was an important way to measure whether his monetary policy was too loose or too tight," Schiff explained. "Greenspan said he watched the price of gold, which was around $350 per ounce at the time. He said if the price of gold rose to $400, 'I know I'm too loose.' If it fell to $300, 'then I know I'm too tight.' So, he used the market signal of the gold price to understand what he needed to do with monetary policy and interest rates."

Schiff added that the current record levels of gold prices indicate that the Fed's monetary policy is actually not tight enough. He said:

"If gold is the most important signal of monetary policy, and it is at a historic high of $2500 per ounce, this should tell Powell that monetary policy is too loose. Powell has always claimed that policy is tight. If policy were tight, gold prices would not hit historic highs. We are clearly pursuing the wrong policy. Powell is now preparing to cut rates when he should be raising them. That's why gold prices have been hitting historic highs recently and will continue to rise significantly."