Acclaimed economist Peter Schiff warned Tuesday about the potential impact of a rise in bond yields, oil, and gold. He referred to this as a “trifecta of doom,” indicating an entrenched inflation and dwindling confidence in the Federal Reserve and the U.S.’s fiscal solvency.
What Happened: “This trifecta of doom is a warning to investors of entrenched #inflation and a loss of confidence in the #Fed and fiscal solvency of the U.S.,” Schiff tweeted. He further cautioned that the dollar could be the next to fall and that the stock market might be the last to react.
On the same day, Schiff noted that Gold had shrugged off the day’s spike in bond yields to close nearly $3 higher. He noted that Gold mining stocks performed well on Tuesday with the VanEck Gold Miners ETF GDX rising over 1.8%.
“Maybe [gold traders] are finally realizing that while higher [inflation] is bearish for bonds, it’s very bullish for gold.”
See Also: September Retail Sales Top Expectations As Consumers Defy High Inflation, Interest Rates
Why It Matters: It should be noted that Spot Gold rose 0.1% to $1,921.86 per ounce as traders watched the ongoing Israe-Hamas conflict and looked out for the upcoming rate hikes. Gold COMEX December 2023 futures were up 0.27% at $1,940.90. The precious metal is typically considered a safe haven investment.
Schiff’s comments echo his previous warnings about the state of the U.S. economy. In early October, Schiff criticized interpretations of core CPI data, claiming it misrepresented the real concept of inflation. He linked inflation to excessive demand caused by an increase in money and credit supply and feared that rising public and private debts could exacerbate inflation.
In a previous tweet Schiff, Schiff expressed his doubts about the effectiveness of the Inflation Reduction Act and the Federal Reserve’s aggressive interest rate hikes in stabilizing price levels.
Photo Courtesy: Wikimedia Commons
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