Submitted by QTR's Fringe Finance
In an exclusive hourlong conversation, Peter Schiff and I talk the current state of the U.S. economy, the stock market, the dollar and precious metals. We discuss:
The recent surge in gold prices and whether it will hit $3,000 by the end of the year or potentially $6,000 next year.
Both Schiff and I express concerns about the U.S. economy being "broke," the potential shift toward socialism, and rampant inflation driven by Modern Monetary Theory.
Peter Schiff compares today’s gold bull market to the 1970s, emphasizing that this is the beginning of a new bull market, unlike 1979 when the market peaked.
Schiff argues that while interest rates in 1979 ended the gold bull market, the current trend of rate cuts will continue to fuel gold's rise, highlighting the Fed's inability to combat inflation effectively.
The conversation touches on the inflation-adjusted gold price, suggesting that gold remains undervalued when adjusted for true inflation, which CPI doesn't accurately reflect.
The strange phenomenon of retail investors selling gold during one of its best-performing years is highlighted, attributing this to a lack of confidence and distraction by Bitcoin.
The role of Bitcoin as a distraction from gold investments is discussed, with Schiff noting that Bitcoin has underperformed relative to gold and criticizing Bitcoin as “fool’s gold.”
Schiff predicts a significant fall in the value of the U.S. dollar, exacerbated by trade deficits and foreign central banks' increasing preference for gold over U.S. dollars.
Schiff forecasts a looming crisis in the bond market, where rising long-term yields will signal a loss of confidence in U.S. credit quality, further driving gold’s rise.
The mainstream financial media's neglect of gold’s rise is criticized, with both agreeing that gold’s significance as a monetary metal is being ignored, especially compared to the attention given to stocks and Bitcoin.
We began by acknowledging gold’s impressive rally, and I probed Peter for his insights on where the metal could be heading. He was quick to point out that gold is on track to potentially hit $3,000 by year’s end, and perhaps as high as $6,000 by the end of next year. Schiff’s confidence wasn’t just based on speculation but rooted in historical precedent. As he reminded me, gold’s current trajectory may seem meteoric, but it pales in comparison to its massive gains in the 1970s, when it went from $35 an ounce to over $800.
This year, as Peter noted, gold has seen its most significant percentage increase in 45 years. "We are probably going to have the biggest rise in the price of gold in percentage terms since 1979," he stated. He cautioned, however, that unlike the bull market of the 1970s, which was eventually capped by Paul Volcker’s aggressive rate hikes in the 1980s, the current cycle shows no such brakes on the horizon. "Instead of the Fed hiking rates next year, they’re going to be cutting them," he predicted, which will only fuel further inflation and send gold soaring higher.
“If gold can go from $20 an ounce to $2,600 an ounce, it can go from $2,600 to $26,000.”
One key reason Peter sees this continuing gold rally as inevitable is the lack of genuine monetary tightening from the Federal Reserve. Despite Chair Jerome Powell’s claims that we’re in a period of “restrictive” monetary policy, Schiff argued that it’s been anything but. "It’s been less loose, but less loose ain’t tight," he quipped, with his usual disdain for central bank speak. According to him, real tight monetary policy would have forced the government to cut spending, led to higher savings rates, and reduced household debt—all things that clearly haven’t happened.
Peter also pointed to how the mainstream financial media has all but ignored gold’s rise. He highlighted that while the GDX (a major gold miners’ index) has outpaced both the NASDAQ and S&P 500 this year, you wouldn’t know it from watching CNBC or reading the Wall Street Journal. “They’re ignoring gold because they don’t want their viewers to hear that message,” Peter remarked, calling attention to how media outlets are more interested in promoting crypto than discussing the significance of gold’s surge. "They want to spread ‘everything is awesome,’ buy stocks, buy crypto," Peter added, suggesting that the overwhelming push toward Bitcoin and other digital assets has diverted attention from gold's quiet bull market.
“[Silver's] going to blow through $50 like a hot knife through butter."
Interestingly, while gold has risen dramatically, silver has lagged behind, and I asked Peter why he thought that was the case. He explained that part of the reason is psychological—investors don’t fully believe in the gold rally yet, and as such, they’ve been hesitant to jump into silver. "The central banks aren’t buying silver. They’re buying gold," Schiff explained. But once the broader market comes to terms with gold’s upward trajectory, Schiff predicts that silver will break through $50 an ounce with ease. “It’s going to blow through $50 like a hot knife through butter,” he stated, suggesting that the precious metal remains severely undervalued.
From there, the conversation shifted to a broader macroeconomic discussion. Peter painted a grim picture of the U.S. dollar’s future, warning that it’s on the cusp of a dramatic collapse. He pointed to the U.S.'s ballooning trade deficits and its role as the world’s largest debtor nation, something Schiff believes is unsustainable. Central banks worldwide, Peter argues, are already positioning themselves for this inevitability by hoarding gold. "We’ve been able to run up all this debt and export it, and the world’s been willing to suck it up and subsidize it," he said, but he doesn’t see that dynamic lasting much longer. As foreign buyers turn away from U.S. debt, the dollar will come under immense pressure, leading to further inflation and gold’s continued rise.
"We could get to a point where the Dow is worth one ounce of gold."
One of the more thought-provoking moments of the discussion was when Peter laid out the potential for an even deeper economic crisis, one that could mirror or even surpass the Great Depression or the stagflation of the 1970s. He envisions a scenario where the Dow Jones and gold meet at the same price, similar to what happened during previous economic crises. "We could get to a point where the Dow is worth one ounce of gold," Peter stated, suggesting that a significant economic event could trigger a massive revaluation of assets across the board. In Peter’s view, this scenario isn’t far-fetched, especially if the Fed continues to try and print its way out of crises.
Toward the end of our conversation, Peter circled back to the mainstream financial system and how various institutions, from government agencies to the Federal Reserve, have manipulated economic data to paint a rosier picture of the economy than what’s actually occurring. "All these government measures are inaccurate," Peter declared, pointing to inflation, GDP, and unemployment figures as prime examples of how statistics have been engineered to provide political cover. In contrast, gold, as Peter sees it, is the one objective measure of economic reality. "The only objective grade is gold. And gold is giving the Fed an F," he concluded.
As always, my discussion with Peter Schiff was eye-opening and provided a sobering take on the current state of the global economy. While he may come across as hyperbolic to some, Peter's arguments are hard to dismiss, especially as his long-term predictions about gold and inflation continue to play out. Whether you agree with his libertarian views or not, Peter offers a compelling case for why investors should be paying far more attention to gold and much less to the feel-good narratives peddled by the mainstream financial media.
🔊 Full audio only interview link
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