Schiff on Commodity Culture: Gold Breaks $3,600

On Monday’s episode of the Commodity Culture podcast, Peter joins host Jesse Day and walks listeners through what he sees as a pivotal moment for precious metals and for the dollar. He argues that gold quietly began a new leg of its bull market in 2024, that the labor market is weaker than officials admit, and that the Federal Reserve is headed toward politically driven policy errors that will push central banks back toward gold. His comments range from technical market observations about silver to a wider critique of monetary policy, reserve currencies, and political interference with the Fed.

Peter opens by putting the recent price action in context and explaining why many investors missed the move until it was well underway:

I think this cycle really just got started after that consolidation. But I think the leg started in 2024 when we broke above $2,000 and we quietly moved from $2,000 to $3,000 and nobody noticed it. In fact, when gold was hanging out at $2,000, a lot of analysts put sell recommendations on Newmont and Barrick because they thought that gold had topped and they didn’t see any upside. And then I think when Trump won, a lot of people expected the gold to fall because the economy was going to boom and Trump was going to do all this great stuff about shrinking the deficit, making America great again. But now it’s becoming more obvious that none of that was true.

He frames the current labor market as unusually weak for a non-recessionary period and contrasts official rhetoric with real conditions Americans face:

In fact, the last two times you had a labor market as weak as the one we got right now, it was the Great Recession of 2008, 2009 with the financial crisis or 2020 as we were shutting the whole economy down because of COVID. So, you know, the Fed has been mischaracterizing this labor market. Powell kept saying we have a really strong labor market. We have a really strong market. He was wrong the entire time.

Peter ties the weak job market and persistent inflation to a policy mismatch: the Fed appears poised to cut rates even as prices accelerate, a classic mistake that helps precious metals and hurts the dollar:

The labor market is weak. Inflation is strong. And I think that’s really what’s helping to drive the move in gold now and down in the dollar is the Fed is about to start cutting rates into rising inflation. And it’s hard to imagine when they’ve done that before because inflation is above their target and rising and they’re going to cut into that. So it’s the opposite of what they should be doing.

Moving from policy mechanics to global strategy, Peter warns that a shift in central-bank reserve preferences would be transformative for the U.S. external position and for the dollar’s role as the world’s primary reserve asset:

I think they’re preparing to replace their dollars with gold. I think gold is going to become the primary reserve asset for central banks. And that’s going to be a game changer for the United States because the world is not going to need our dollars anymore. Well, if they don’t need our dollars, then how are we going to buy all the stuff that we need, because we don’t produce it? And how are we going to finance our debt?

He also offers a practical note on silver’s technical situation, pointing out that precious-metal markets do not move in perfect lockstep and that silver still faces historical resistance:

It does have this psychological and not just psychological real resistance at 50 because we have a double top there that goes back to 1980. And then again, we hit it in 2011. So > silver has not broken out yet. While gold has, silver is still in this range. So I do expect that it will, you know, there’ll be some overhead resistance.

Finally, Peter brings politics squarely into monetary policy, warning that planned Fed interference and politicized rate moves could accelerate the dollar’s decline and even invite constitutional challenges to Fed independence:

Well, I think it’s going to be obvious to the markets that the rate cut is politically motivated. Also that Donald Trump is trying to basically hijack the Fed and fill it with his cronies who will make monetary policy to make the president look good, not to deliver on the Fed’s mandate of controlling inflation. I think this is going to be very negative for the dollar. I think there’s a real risk that the Supreme Court upholds Donald Trump’s authority to fire Fed governors. I think the Fed, the Supreme Court may say that a truly independent Fed is not constitutional and there must be oversight.

For Peter’s initial reaction to last week’s price surge, check out his remarks on the SchiffGold Gold Wrap Podcast!