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Gold will reach US$5,000 on faltering dollar, says Peter Schiff
Source: BI-ME , Author: BI-ME staff
Posted: Thu October 1, 2009 12:18 am
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INTERNATIONAL. Renowned investor and economist Peter Schiff, the president of investment firm Euro Pacific Capital and author of 'Bull Moves in Bear Markets' said the US dollar is expected to get even weaker, reaching  new lows versus commodities and other currencies.
 
He sees the Dollar moving to the center of a carry trade and encouraging global investors to borrow more dollars to fund higher-yielding currencies and assets.

Speaking in a recent interview with CNBC Schiff said: “I don’t know when [the dollar] is going to strengthen,” Schiff told CNBC. “The dollar isn’t the new yen, it’s unfortunately the new peso.”

“The yen has gone a lot higher but the dollar is going to go a lot lower, which makes it ideal,” said Schiff.

“Not only can you borrow dollars for very cheap and earn to carry by investing in higher yielding assets, but the dollar is going to fall sharply. So anyone who puts on the carry trade is going to make a ton of money.”

Schiff expects the Fed will soon have to take tough decisions of either having to supply the carry traders with an endless amount of cheap dollars or put a halt to the carry trade and aggressively raise interest rates that could “bring on a much more severe recession than anything we’ve experienced so far.”

Schiff added that we’re still early in this bull market on gold.

In a recent web cast on Yahoo! Finance, Shiff said he sees gold reaching US$5,000 an ounce.

Blaming the US government's poor monetary policy decisions, he sees the dollar falling to new lows versus commodities and other currencies.

Last week, Schiff made his long-expected  US Senate bid for next year's elections, official.

He said in a statement: "I plan to bring my dedication and experience to the taxpayers of Connecticut. I may make mistakes in this campaign-but I will not make mistakes in representing you in the Senate. I look forward to an exciting race where I can share my vision with the people of Connecticut."

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