Peter Schiff: This is the last great buying opportunity for gold

Gold has been making headlines for the past two weeks after it dropped off dramatically. During the Monday morning trading session, gold declined by $132.70, or nearly nine percent, to $1,383.20 (at the time of this writing). Silver also dipped below $25 to $23.16.

Should goldbugs panic or be happy that they can purchase more precious metals now gold and silver are much cheaper? Peter Schiff, president of Euro Pacific Capital, insists that gold is still cheap and buyers of precious metals should not be deterred by institutional investors, such as Goldman Sachs.

In a new video titled “The Gold Bull Market is Dead – Long Live the Bull Market,” Schiff, a former 2010 Republican Senate candidate, explained that the economy may only appear to be recovering because the Federal Reserve is pumping so much money into the economy. Therefore, any talk of ending quantitative easing, low interest rates and overall stimulus is nothing more than just talk – if the economy is only being kept afloat by stimulus then why would the central bank end the policy measure?

“Evidence is building that the recovery everybody is talking about is not nearly as strong as people think. Now I think people are starting to dial back their expectations of the Fed ending QE early,” stated Schiff in his Sunday video. “In fact, I think eventually they’re going to realize instead of ending QE they’re going to have to step it up. $85 billion a month isn’t enough to keep this artificial recovery going, the Fed is going to have to do more.”

If this is the case then why isn’t gold rallying? Schiff hypothesized that it could have been because Goldman Sachs issued a report Wednesday that encouraged investors to sell gold. Since it’s an enormous firm and people listen to them, traders decided to sell off gold.

Also, it was reported Thursday that Cyprus would be selling off 400 million euros worth of gold reserves to help finance the euro bailout. This, according to Schiff, triggered a lot of selling, even though it’s bullish instead of bearish because Cyprus will be selling their gold to other nations who want to buy the gold.

In the end, Schiff argues that there is a “negative sentiment” because people are waiting for a collapse in the price of gold.

“This negative sentiment is going to provide a very good backdrop from which to launch a new rally in the price of gold for which it will ultimately take it way beyond the highs were established in September of 2011,” said Schiff. “Some of the things I’m hearing people say are ‘gold is no longer a safe haven’ and ‘U.S. stocks are the new safe haven.’ Can you believe people thinking U.S. stocks are a safe haven?”

Schiff added that gold is money and cannot be compared to a stock, which is something that a lot of investors on CNBC like to do. Instead, Schiff says he compares gold to the U.S. dollar and other fiat currencies.

“Buckle up your seatbelts. I’m sure it’s going to be a rough ride next week. But don’t lose your conviction, hang onto your gold and if anything use these as buying opportunities and accumulate. If you don’t have gold, take advantage of the decline in price,” concluded Schiff.  “I think in the future, I think we’re going to look back at this particular period as the last great buying opportunity of this ongoing bull market.”