In a passionate and charged debate on Thursday's episode of "Futures Now," Schiff and Dow presented divergent views on the Fed, government data and inflation. And interestingly, each of these disagreements came together to paint a picture of why they see gold going in different directions.
First of all, while Dow, author of the Behavioral Macro blog, sees gold going higher before it drops much lower, he says that the only way to gauge the action in gold is by looking at sentiment.
"The longer-term view on gold is still bearish," Dow said. "I think ultimately the economy will improve, rates will go higher, we're not going to get the inflation that a few people still fear, and that will mean that the second half of the gold bubble will melt. But it's hard to tell if we're at that point now, or if that point comes a few months out."
For Dow, "gold is the ultimate psychological trade. It's the ultimate sentiment-driven asset. It's not about fundamentals. There are no fundamentals. ... So you really have to go by how the sentiment is manifest in the market, and whether or not it's at an extreme."
Dow believes that sentiment is now neither especially bullish nor exceptionally bearish, making it difficult to predict gold's next move.
But Schiff's take is very different.
"I disagree with just about everything that Mark said with respect to his comments on sentiment," Schiff responded. "I still think the sentiment is quite negative on gold. Maybe not as negative as it was, but very few people believe in this rally ... so I think the sentiment still favors higher gold prices."
"The fundamentals have favored higher gold prices all along," Schiff continued. "It's just that most people don't understand how great [the fundamentals] are. They believe the myth of the U.S. recovery. They believe the Fed can actually unwind its balance sheet, that it can end QE, that it can raise interest rates and that the economy is going to keep on expanding. None of that is going to happen. It's all fantasy. "
But Dow says that Schiff's understanding of the Fed is fundamentally flawed.
"I think what people really haven't been understanding and are slowly coming around to is how the transmission of monetary policy actually works. A lot of people way back in 2009, 2010 started predicting inflation, an explosion of yields, a collapse in the dollar—a whole series of things that didn't manifest themselves. Now people are starting to learn that, wait a minute, printing money does not lead to inflation automatically," Dow said.