We’ve seen a sharp selloff in both gold and silver. Gold was down over $40 an ounce Friday (and nose-dived in early Sunday trading). Meanwhile, the US dollar saw a sharp increase, along with a rise in long-term Treasury yields. The catalyst for these sharp moves was a better-than-expected jobs report and expectation that it will spark a quick pivot to monetary tightening by the Fed. In his podcast, Peter Schiff said the markets are moving on fantasy, not economic reality.
Peter acknowledged that the employment report was better than expected, but not nearly strong enough to justify the gold and silver selloff and the dollar rally.
If you actually look at the employment number but also look at all the other economic data that came out, not only on the day, but on the week, all of this data continues to support a weak US dollar and a stronger gold price. But the markets are not trading on fundamentals. Fundamentals have nothing to do with this market. This market is based on hype, based on momentum, and it’s based on algorithms.”
Peter said these algorithms are a great example of “garbage in, garbage out.” Whenever they get a good economic number, they trigger gold sales and dollar buys. Or whenever somebody at the Fed talks about the mere possibility of tightening, the computers trigger the same moves. But there is no real rational understanding of what the numbers actually mean and the bigger picture.