The Most Dovish Interest Rate Hike Ever

Manufacturing is in recession and the overall economy will likely join the manufacturing sector next year. In fact, we lost manufacturing jobs again this month.

Everyone is still convinced that the Federal Reserve is about to raise interest rates next week. They might just do it now because Janet Yellen has basically assured everybody that it does not matter if they raise rates now, what matters is what they will do afterwords. She is basically trying to take the sting out of it by making this the most dovish interest rate hike ever. (SPDR S&P 500 Index ETF (SPY), SPDR Gold Trust ETF (GLD))

 Peter Schiff is an American businessman, investment broker and financial commentator. Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc.

U.S. Economy: The Recovery is Ending

Manufacturing is already in a recession. Look at the ISM number that came out last week at a 6 year low. Even the Services sector ISM came way below estimates. Retails sales have been abysmal, consumer confidence is going down. All signs point that the recovery is ending.

Markets: Interest Rate Hike, Tightening Cycle

If we actually get an interest rate hike next week that is the only interest rate hike we re going to get from the Federal Reserve. It is not going to be the beginning of the tightening cycle, it is going to be the end of the tightening cycle which actually begun a couple of years ago when they first started talking about the taper.  That was the beginning of the tightening cycle and I think the first official rate hike, if we actually get one, is going to be the end of the process.

I Expect The Dollar To Be Weaker

As I have been saying, we have the biggest problems in the United States and so I do expect the U.S. Dollar to be weaker than these other fiat currencies and when they are sinking but the dollar is sinking faster that is when the price of gold can really take off. (SPDR Gold Trust ETF (GLD))

The Best Environment For Gold

The best environment for Gold is going to be when the weakest currency is the U.S. Dollar. Gold does well when all the currencies are going down but for some reason the U.S. Dollar needs to be going down the most. Because if the U.S. Dollar is going down more slowly than the Euro Currency or the Yen everybody assumes the U.S. Dollar is strong and Gold goes down which is an asinine assumption and obviously its not going to be able to persist that way. Ultimately gold has to go up.

Dow Jones: The 2,000 Points Relief Rally May Be Reversed

We were down 400 points in the last 2 days on the Dow Jones Industrials and remember the Dow Jones rallied 2,000 points off its September low. That is where it was when everybody thought the Federal Reserve was going to hike interest rates in September and when we got that bad jobs number we had a 2,000 points relief rally because the Fed was not about to raise rates.

And now what as been holding up the market was the idea that the ECB was going to come in with all this money printing. But now that we are not going to get that and people still expect Yellen to raise rates, well, we might lose the entire 2,000 points relief rally in which case the rate hike is back off the table as if it was ever on the table in the first place.