The Federal Reserve will ultimately return to quantitative easing, which will send stocks reeling and gold soaring, asserts Peter Schiff, CEO of Euro Pacific Capital.
Now that the Fed has finished its third round of quantitative easing, it should leave well enough alone, he says. "The recession the Fed is fighting is the cure" for excesses in the financial system, Schiff told MarketWatch.
But he thinks that the Fed will implement QE4 at the first hint of weakness in the stock market or economy. And once investors realize stocks are overvalued, the dollar will plummet and gold will fly higher, he says.
"Gold prices will go ballistic, once people realize that the dollar is overvalued," Schiff said. He predicts the dollar will plunge 90 percent.
Earlier this month, the dollar reached a seven-year high against the yen and a two-year high against the euro.
As for gold, it hit a four-year low of $1,130.40 an ounce Nov. 7. December gold futures settled at $1,190 on the Comex Thursday.
David Rosenberg, chief strategist for Gluskin Sheff, doesn't share Schiff's view of stocks.
"Corrections [like that of September-October] are part and parcel of the investment process, and it is imperative to realize that what is most important for building wealth is not timing the market but time in the market," he writes in the Financial Times.
"This does not mean some cash should not be raised and risk taken off the table, but one has to stay engaged, because it is likely that what we saw unfold of late is only a near-term reversal in what is still an overall uptrend."
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