Gold Bull Peter Schiff Not Impressed About Perceived Safety In Treasuries — 'You Don't Understand The Real Problem'

Author: Bhavik Nair | June 02, 2023 01:16am

Peter Schiff, chief economist and global strategist at Euro Pacific Capital said investors are wrong to think U.S. Treasuries will provide a safe haven in current times and has warned they do not understand the real issue.

"If you’re hiding out in Treasuries because you’re worried about the #economy, #banks, or an over-valued #StockMarket, you don’t understand the real problem. You’re correct to be concerned, but wrong to think there’s any safety in Treasuries. Don’t be fooled by nominal yields," Schiff said in his tweet.

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Treasury yields declined on Thursday on reports of an extended fall in new manufacturing orders and lower labor costs, reported Reuters. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was hovering close to 4.35% according to the latest data available at the time of writing. This is lower than the levels close to 4.63% seen last week.

The iShares 1-3 Year Treasury Bond ETF (NASDAQ:SHY) closed 0.16% higher while the Vanguard Short-Term Treasury Index Fund ETF (NASDAQ:VGSH) gained 0.18% on Thursday, according to Benzinga Pro.

Despite the fall in yields, a looming concern for the bond market is the barrage of T-Bill issuances as the government ramps up its borrowing following the debt ceiling saga. As massive supply hits the market, short-term yields are expected to go higher.

Bullion: At the same time, spot gold was trading 0.15% higher at about $1,980 per ounce levels during the Friday afternoon Asian trading session. Schiff opined that the rally in bullion is a sign that the recent correction in the commodity is over.

"Today’s strong #gold rally, in the face of a much “stronger” than expected ADP #jobs report, is a good sign the recent correction is over. All of the weak longs have likely been flushed out, leaving them to watch from the sidelines as mining #stocks take off for new highs," Schiff said in his tweet.

Private businesses recorded an increase of 278,000 jobs in May, a slight dip from the revised figure of 291,000 in April but significantly surpassing the expected 170,000, as reported by Automatic Data Processing Inc (NASDAQ:ADP) on Thursday.

Indeed, gold mining stocks like Barrick Gold Corp (NYSE:GOLD), Newmont Corporation (NYSE:NEM), Agnico Eagle Mines Ltd (NYSE:AEM) and Gold Fields Limited (NYSE:GFI) gained on Thursday.

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Posted In: ADP AEM GFI GOLD NEM SHY VGSH