Peter Schiff opens on the U.S. Dollar index which traded to an 8-month low recently. Despite central banks threatening higher interest rates, Schiff is not convinced the economy can handle it. A falling U.S. dollar benefits commodities and precious metal stocks. The VanEck Vectors Junior Gold Miners (GDXJ) was up half a percent Friday.
U.S. Dollar Index – 6 Month Chart
Peter is bullish on the Euro, but believes there are other currencies that will ultimately outperform.
“I still believe that the Euro Zone is going to fall apart. It’s just not going to fall apart as soon, as a lot of people thought. I think that the U.S. is going to have its day of reckoning before the Euro Zone has its.”
Also, with regards to central banks,
“Global bond markets that are falling, interest rates are rising around the world as traders start to brace from the unwinding of all the liquidity that the ECB and central banks, have been pouring into the market; now they’re going to be taking it out.”
Higher Interest Rates Bad News for Banks
On banks, Schiff notes,
“I don’t think that higher interest rates are going to end up being a positive for the banks… higher interest rates will impale the value of their collateral, it will result in loan losses and defaults. And, ultimately losses for the banks.”
Peter thinks the stock markets are soon going to come under pressure. He remains bearish on the U.S. economy and is predicting a dollar crisis in the coming years. Higher interest rates could be the impetus for such an event.
