Economist and Stern School of Business professor Nouriel Roubini just doesn't get gold fundamentals, says Euro-Pacific Capital President and U.S. Senate candidate Peter Schiff.
Roubini says that gold’s continued rise it’s merely the speculative function of a bubble, not a reflection of fundamentals, Schiff notes.
“I have to respectfully disagree … the fundamentals do support higher gold prices,” Schiff said in a video report. “What he doesn’t understand … is that the government is changing the fundamentals with all the money it’s printing.”
“Governments all around the world are printing money, so that changes the demand. Commodities, and gold in particular, have to rise in price when governments are creating so much money (and) interest rates are so low.”
“That’s not a bubble, it’s just the reaction to the debasement of paper money.”
Gold continues to remain strong in the face of stock sell-offs, which indicates that it has “not yet decoupled from other assets and rising despite the fact that assets like stocks are falling,” Schiff says.
Many analysts agree that the Federal Reserve's actions largely underlie gold’s recent dizzying rise. However, if policymakers under the direction of Fed chief Ben Bernanke succeed, a big reason to buy gold evaporates.
"Since we believe Fed will do the right thing, will take remedial action, we're very wary right now," Milton Ezrati, market strategist for Lord Abbett & Co., told The Wall Street Journal about buying gold.
"It looks like fears are overblown, and that gold is too high," he said. "We think there's a future in equities."
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