The coming year will present a lot of challenges to investors, and no one knows that better than Euro Pacific Capital CEO Peter Schiff.
After all, it was Schiff who accurately predicted the housing market crash a few years ago. So no one in the business makes for a better barometer of imminent financial disaster.
And according to Schiff, that may be exactly what we see in 2014...
Peter Schiff & The Economic Outlook For 2014
According to Schiff, there are still very big problems with the overall economy. They're simply being masked by the Federal Reserve's QE program. Remember, $85 billion of new money is hitting the economy each month, thanks to the Fed.
Some of these underlying problems include declining wage growth, and a waning work force participation rate. In fact, these levels have fallen to where they were in the 1970s.
You see, while the 'official' unemployment rate has ticked down slightly, it doesn't reflect the number of people that have simply given up looking work. Furthermore, the jobs that are being created are mostly temporary. In reality, the labor market actually expanding at 14-times the pace of full time jobs.
Schiff sees no significant drivers for increase the rate of growth or any real improvement in employment numbers. He also feels that the housing market is fairly week, with most of the current money being invested in rentals, rather than single family homes.
Of course, you will see continued inflation in 2014, with rising prices in almost every area of the economy.
Fed Tapering & The Stock Market
Now, the key question heading into 2014 is when the Fed will start tapering.
A few months ago, when many analysts and experts were predicted the Fed would announce the a reduction in its bond purchases at its September meeting, Schiff correctly called it the other way, saying there would be no taper.
And guess what: He doesn't see a taper coming at all during 2014, either.
According to Schiff, the markets have become addicted to cheap and easy money. So, it's doubtful that the Fed will choose pull the rug out from under the market. To the contrary, the central bank might even EXPAND the program.
For that reason, Schiff thinks the coming year will be a fairly decent one for stocks. In fact, it's actually more dangerous for investors to NOT be in the market right now, since the value and purchasing power of the dollar will continue to decline.
Foreign markets and traditional inflation hedges, such as gold and silver, remain crucial investments, as well.
However, Schiff advises investors avoid bonds.
The bottom line: With stocks continuing to rise, don't be afraid to keep looking for high quality U.S. stocks. But be selective, and keep one eye glued to the Fed, in case it does decide to rain on the parade after all.
To Your Wealth,