The gold price fell to a one year low on Friday (October 30) as a drop in tech stocks pressured precious metals.
According to Reuters, falling tech stocks may have prompted investors to sell gold to cover losses elsewhere in the market. Commerzbank (ETR:CBK) analysts suggested precious metals could recover following the decline.
Speaking at the New Orleans Investment Conference on Thursday (October 29), Peter Schiff of Euro Pacific Asset Management said consumer prices have continued to rise this year as gold and silver prices declined.
At the time of his remarks, silver was trading below US$52 per ounce and gold was around US$4,020 per ounce. By late Friday, silver had fallen to US$49.12, while gold had dropped below US$3,900.
Schiff criticized US Federal Reserve Chair Kevin Warsh, describing him as a “dove in hawk’s clothing.” He questioned whether Warsh will take a tough enough approach to inflation.
Earlier in the week, the Fed held its benchmark interest rate in a range of 3.75 to 4 percent.
“You’ve got this huge increase in inflation, and the pressures are continuing to build. What has he done? One 25 basis point rate hike — one — and all the markets are expecting is one more in December,” said Schiff.
M2 money supply has grown at an annualized rate of about 6 percent since Warsh took office, he said, while the Fed’s balance sheet has changed little. Based on Schiff’s estimates, inflation rose from 2.7 percent in 2025 to about 4 percent during the first nine months of 2026. He expects it to reach 5 percent this year and exceed 7 percent in 2027.
Schiff offered his interpretation of the circumstances surrounding Warsh’s nomination.
He said that US President Donald Trump’s criticism of former Fed Chair Jerome Powell, along with pressure involving Fed Governor Lisa Cook, have raised concerns about the central bank’s independence.
Those concerns, he argued, have weakened confidence in the US dollar, helping support the gold price.
He speculated that Secretary of the Treasury Scott Bessent backed Warsh’s nomination because his reputation as an inflation hawk was seen reassuring markets that the Fed would stay independent. He contrasted Warsh with former Fed Chair Paul Volcker (1979 to 1986), who raised interest rates to approximately 20 percent when inflation was around 12 to 13 percent, adding that today’s monetary policy is too accommodative to contain inflation.
Schiff estimates that US financial institutions could be sitting on about US$2 trillion in unrealized losses tied to fixed-rate mortgages. He warned that the figure could climb to US$3 trillion if mortgage rates rise to 8.5 percent.
In his view, the estimate is based on roughly US$8.5 trillion in outstanding fixed-rate mortgages carrying an average interest rate of 4.6 percent. He cautioned that further rate hikes could deepen these losses, put additional pressure on home values and lead to more mortgage defaults.
“The predicament that Warsh was in is: okay, we have an inflation problem, but we can’t actually do anything about it because if we try to do anything about it, we’re going to have a financial crisis,” he said.
During his remarks, Schiff pointed to rising US government debt and interest expenses, estimating that annual debt interest payments could reach US$2 trillion next year. He warned that continued government borrowing and rising interest costs could eventually trigger a sovereign debt crisis, further undermining confidence in the dollar.
Despite the recent decline, Schiff acknowledged that a correction was reasonable after gold and silver reached record highs earlier in 2026. Gold peaked at US$5,589.38 on January 28, while silver hit US$121.62 the following day.
Schiff expects precious metals to benefit over the longer term as inflation persists and confidence in the dollar weakens. He said that once investors recognize the Fed’s limitations, gold and silver could climb to new highs.
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Securities Disclosure: I, Aastha Sethi, hold no direct investment interest in any company mentioned in this article.
