Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush - TARGETING 5 MILLION OZ. AT 1+ G/T
With U.S. national debt approaching $40 trillion, annual deficits nearing $3 trillion, and interest payments heading toward $2 trillion, well-known Wall Street investor and long-term dollar bear Peter Schiff said this week that the Federal Reserve has been backed into a corner and will ultimately have no choice but to inflate away the debt — a move that he believes will drive silver to $200 an ounce and gold to $10,000.
Gold has already climbed back above $4,100 an ounce following the release of June nonfarm payrolls data. The U.S. added just 57,000 jobs last month, far below economists’ expectations of 100,000, fueling bets that the Federal Reserve will hold interest rates steady. But in Schiff’s view, investors are focusing on the wrong signal. He argues that the alternative to higher inflation would be a sharp stock market decline, falling home prices, recession, and fiscal restraint in Washington — outcomes he believes policymakers will go to great lengths to avoid. Instead, the Fed will continue allowing inflation to erode the real value of government debt, because raising rates sufficiently would make servicing that debt unaffordable.
Silver: Old Resistance Becomes New Support
Schiff is even more bullish on silver than on gold. He views the recent pullback from silver’s highs as a buying opportunity and expects the metal to hold above $50 an ounce — a level that twice capped rallies, in 1980 and 2011. In his view, the old resistance has now become new support, and silver has truly just entered a new bull market.
Schiff forecasts that silver will reach $200 an ounce, with $50 becoming long-term support, while gold will first climb to $5,000 and eventually hit $10,000. He calls his $200 silver target a “conservative estimate,” noting that silver has risen from roughly $4 an ounce since he began buying in the late 1990s. In his view, these gains reflect the declining purchasing power of the U.S. dollar rather than any fundamental change in silver itself. “You’re going to need a lot more dollars to buy silver, and to buy everything,” he said.
The Dollar’s Reserve Status Faces Erosion
Schiff states bluntly that central banks are already diversifying their reserves away from the dollar and into gold, reversing the monetary system that has been in place since the dollar replaced gold as the world’s primary reserve asset in 1971. Gold was the reserve asset before it became the dollar, he noted. He added that mining stocks remain undervalued, as analysts continue to treat higher gold and silver prices as temporary phenomena. But once investors accept that rising precious metals prices are permanent rather than cyclical, mining equities should undergo a broad revaluation.
Schiff’s forecasts have long drawn skepticism, as the dollar remains the world’s reserve currency, Treasury auctions continue to attract buyers, and markets have not experienced the collapse he has warned about for decades. He counters, however, that gold purchased below $300 an ounce in the late 1990s has outperformed the S&P 500, while investors who held cash or U.S. government bonds have suffered greater losses.
