Peter Schiff, chairman of SchiffGold and founder and chief market strategist at Euro Pacific Asset Management, said gold prices could reach $10,000 an ounce if Vice President Harris wins the U.S. election in November.

"If Harris is elected president, we have no chance of doing the right thing," Schiff said. "The debt is going to grow exponentially... We're going to be at $40 trillion. If we add $4 or $5 trillion to the debt every year, we could easily be at $50 trillion in total debt in her first term. She's going to try to blame capitalism for all the problems that the government has caused, and then try to change the ideology."

Schiff said the decline of the U.S. dollar as the world’s reserve currency would be one of the drivers for gold prices to reach $10,000.

According to Schiff, it is hard to imagine that the dollar will be able to maintain its status as the world's reserve currency under a Harris administration. "Our creditors will inevitably conclude that we cannot repay our debts, that the numbers are too large, and that the U.S. government cannot possibly meet its commitments," he said.

On Monday, spot gold broke through its previous high during the Asian session, setting a new record high of $2,588.95 an ounce, up 0.4% on the day.

Default and inflation

Schiff explained that a U.S. default would be a better option than inflation.

"Default is the best way out of this debt situation," he said. "But if we default dishonestly, politicians will blame it on inflation. From the perspective of creditors and everyone else who owns dollars, inflation is worse than default. People lose more money in inflation than in default. If the U.S. government defaults, it won't default completely, the repayment rate might be 30%. We could then get the debt down to a manageable level, but inflation might wipe out more than 90%, maybe even 99%. Who knows if we'll experience hyperinflation."

Schiff pointed out, "It was only a 4x increase for gold to reach $10,000. Gold had already gone up more than that from 2001 to 2011. And now gold is just starting to go up again, and we have broken through all the resistance. You will see a big increase in gold prices, and its increase will be comparable to the initial increase from $300 to $1,900, a 6x increase. But you will see this increase in a shorter period of time."

The Fed should keep an eye on gold prices

Schiff added that the Fed should take its cues from gold prices rather than the macro data it focuses on, noting that the Fed will make a big mistake this week.

“The Fed claims it is data dependent, but the data it relies on is irrelevant because it is false and often revised, and the most important data point is the price of gold, which recently hit a new all-time high,” Schiff said.

In the weeks leading up to the monetary policy meeting on September 18, spot gold prices hit multiple all-time highs, well above $2,500 an ounce. So far this year, the precious metal is up more than 21%.

Schiff noted that rising gold prices suggest monetary policy is not tight enough. Previous Fed chairmen have used gold prices as a key indicator to determine whether they are on track in tightening or easing monetary policy.

"When Greenspan was chairman of the Fed (1987 to 2006), he said we were actually on the gold standard because gold was an important way to gauge whether his monetary policy was too loose or too tight," Schiff explained. "Greenspan said he watched the price of gold, which was about $350 an ounce at the time. He said if it went to $400, 'I know I'm too loose.' If it went to $300, 'then I know I'm too tight.' So he used market signals from the price of gold to understand what he needed to do with monetary policy and interest rates."

Schiff added that the current record gold price levels suggest that the Federal Reserve’s monetary policy is not tight enough. He said:

“If gold is the most important signal for monetary policy, and it’s at an all-time high of $2,500 an ounce, that should tell Powell that monetary policy is too loose. And Powell keeps claiming that policy is tight. If policy was tight, gold prices wouldn’t be hitting all-time highs. We’re clearly on the wrong policy. Powell is now preparing to cut rates, when he should be raising them. That’s why gold prices have been hitting all-time highs recently and will continue to rise sharply.”

Article forwarded from: Jinshi Data