Schiff: The Fed Has No Choice But to Keep QE Alive...Buy Gold! (GLD)

January 4, 2013 2:54 PM EST
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Outspoken Euro Pacific Capital CEO Peter Schiff is getting a little more outspoken again today.

Schiff sent an email to Barron's making a case to buy gold, even as the Fed hinted to a shorter time frame for QE.

The U.S. economy is almost fully dependent on low rates, something the Fed said it would maintain through the end of 2014. Given that no one else is buying Treasuries or mortgage-backed securities besides the Fed, any stoppage would cause the ultra-low rates to creep higher, Schiff explained.

He is convinced that buying will continue due to a cash crisis that leaves the Fed with no other choice.

Schiff concluded: "In addition, the failure of the government to agree on deficit reduction means that there will be increasing amounts of debt issuance by the Treasury in the years ahead...which the Fed will have to buy. In light of this, recent declines in gold prices should be seen as a buying opportunity."

Amid Schiff's plea, gold is lower Friday, with the SPDR Gold Shares ETF (NYSE: GLD) down 0.8 percent to $159.96. February gold contracts last ticked by down $23.2 to $1,651.4 per ounce on the Comex.

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