The gold price rally is not the result of any geopolitical instability, instead should be considered as the beginning of the next leg of up move, says Peter Schiff, CEO, SEC registered investment advisor Euro Pacific Capital Inc.
According to Schiff, the precious metal is poised for a tremendous rally here on. The sharp decline in prices during 2013 must be treated as part of the ongoing bull market, he added. The plunge in prices was mainly due to weak investors getting out of the trade as the metal headed lower. He believes that there is still lot of shorts in the market. Once they close these short positions, they will find it much more expensive to buy back gold.
Meantime, Schiff rejected the argument that developments in Crimea has largely contributed to the big move in gold prices. “Gold is not going up any faster since the Russians moved into Crimea than before”, Schiff said. Gold has never looked back since end-2013. The precious metal prices have started rising strongly since the beginning of 2014.
Further, the advisory firm notes that the U.S. Federal Reserve may be forced to ramp up economic stimulus packages to save the country’s economy. Any such action will turn out to be extremely bullish for gold. The short term target for gold is currently at $1,420 to $1,430 per oz. If that hurdle is cleared, gold may head all the way to $ 1,500 per oz, Schiff added.
Founded in 1977, Euro Pacific Capital, Inc. is a registered advisory firm specializing in foreign markets and securities. Based in Westport, Conn., it has six regional branches, over sixty investment consultants and a team of research analysts.