When Janet Yellen Talks, Why Do People Still Listen? – Ep. 188

The Peter Schiff Show Podcast

The price of gold fell about $12/oz today; silver prices were down another .28 Both metals have been falling since recent new yearly highs Gold, though is not very much below the highs The real carnage has been in the mining stocks, particularly today; today was one of the biggest down days I've seen all year The GDX index was down just over 7% Some of the mining stocks were down 10% or more on a very small move in the price of gold and silver In fact, we've wiped out the last 2 months of gains in the mining stocks What is the catalyst for this? Early this morning, around 8:30 - 9:00 New York time before the U.S. Stock Market opened No news - gold was up 1 or 2 bucks... All of a sudden a huge sell order hits and gold drops about 7 or 8 bucks on no news Somebody decided to dump a lot of gold on the market, at one time and didn't really care what the execution price was Considering how large the sell order was, it didn't really knock the market down very much But the gold stock market was a different story It kind of made me think that the rationale for getting gold to drop was the impact it might have on the gold stocks themselves My guess is that a lot of people who were running with stops, that's when you have an order to sell below the market to try to protect your profits My guess is that they hit a lot of stops today in a lot of these mining stocks and maybe, some of the bigger players were able to buy more gold stocks based on the shake-out that was created By a relatively modest drop in the price of gold Meanwhile, the dollar didn't rise very much today; the downtrend still seems to be firmly in place What everybody seems to be focusing on is the Fed People are worried about what Janet Yellen might say on Friday The Fed's Jackson Hole Conference gets underway tomorrow and Janet Yellen speaks on Friday I guess the thoughts are: "Maybe she will say something hawkish." Maybe she'll say the U.S economy is strengthening and the Fed is getting closer to meeting its objectives And that a rate hike is possible in the near future So what? That's what she always says. Now she's not going to come out and say, "We're raising rates for sure. We're moving rates in September." The only thing she could say is that a rate hike is still possible That is no different than anything that she has said in the past So people being nervous about a possible unprecedented hawkish statement makes no sense Even in Janet were to say she is raising rates in September and she followed through a rate hike So what? It's not going to hurt gold and it's not going to help the dollar Expected rate hikes were already baked into the dramatic rise of the dollar in 2014-2015 Gold declined from a high of almost $1900 to a low of $1050 because it was discounting all the rate hikes that are never going to materialize Even if we get one or two more, that is nothing compared to market expectations Even if we get a couple of small rate hikes, even if we get to .75 or even 1% That is still not enough to hurt gold or help the dollar When are people going to figure out it doesn't matter what the Fed does