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Peter Schiff Defends the Many Uses of Gold (Video)

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Peter Schiff was on RT’s Boom Bust to talk about the latest jobs figures, the price of oil, the Swiss gold initiative, and the many uses of physical gold.

Follow along with this partial transcript:

“I think the kind of jobs we really need are in production. We’re adding all these jobs in retail, trade, and hospitality. People get jobs as bartenders, or waiters, or they work in a hospital. These are not the jobs that people can support a family on, that they can buy a house on, that they can save for their retirement. We need productive, higher-paying jobs. Unfortunately, as long as the Fed is artificially stimulating the economy with cheap money, we’re never going to get those type of jobs…

“I don’t think this decline in oil prices is going to be permanent. I think motorists can enjoy the savings while they last, but I think what’s really driving the oil market is this perception that the US recovery is real, and that we’re going to be raising interest rates. Whereas, Europe and Asia, they’re still in recession; they’re going to be doing quantitative easing. So people think the dollar is going to rise in an environment of global weakness. So they’re looking for a big reduction in demand for oil. That’s really what’s driving the price down.

“I think that everybody has got this wrong. I think the US economy is much weaker than people believe. Rather than the Fed raising interest rates next year, they’re far more likely to launch another round of quantitative easing. That’s going to be a game changer for the US dollar and for the price of oil…

“I think [the failure of the Swiss gold initiative] is ironic, and maybe it’s going to mark the low point for gold. We’ll see. Gold sold off below $1150 on the announcement, even though it was highly expected – pretty much nobody thought the Swiss were going to do the right thing and pass this. But the crazy thing is how many people were warning the Swiss how reckless and crazy this would be. The establishment was out in force. The mainstream, the bankers, the investment firms, telling the Swiss how dumb they would be to back their reserves even one-fifth in gold, [and that] they should have 100 percent of their reserves in euros and dollars. As if there’s any real value there.

“They would be much better off backing up their currency with something real, as opposed to just other fiat currencies. You know, the Swiss had 40 percent gold backing as late as 1999, and a gold-backed Swiss franc didn’t hurt the Swiss economy in the 70s , or the 80s, or the 90s. I don’t know why people think it would be so detrimental for the Swiss economy now. In fact, it would save the Swiss franc and liberate the Swiss people from the problems of the euro…

“There were a lot of people who thought Russia would sell their gold to defend the ruble. I give Putin a lot more credit than that. I don’t think he’s so dumb that he would sell his gold. I think he would much rather sell his dollar and use this weakness in the price of gold to increase Russia’s gold reserves. Because ultimately, it’s your gold reserves that are going to determine the strength of your currency and the underlying productivity of your economy. The dollar reserves are not going to do you much good, because they’re not going to have much value…

“[Willem Buiter, Citigroup Chief Economist] is describing dollars or euros or yen. Those have intrinsically no value. You can create as many as you want at no cost, and they really have no use. Gold is probably the most valuable metal that is mined from the earth. But maybe this guy should take a look at all the uses for gold. Because beyond money, and beyond jewelry – to say it has no value – what are they going to make jewelry out of if they’re not going to make it out of gold? There’s a lot of demand for gold jewelry… You see gold in furniture, picture frames, it’s in avionics, it’s in electronics, it’s in the medical industry. There are so many uses for gold. One of the reasons that gold is not used more is because it’s too expensive. So people substitute less-effective metals for gold, because they can’t afford it.

“But if you’re trying to have the very best. For instance, if you’re NASA and you’re building a space ship, and you can’t have your circuits failing, you’re using gold. Gold is in cell phones. Gold is in a lot of things where you need something to work and you need a reliable metal to do it. Look at dentistry. You want to get your teeth filled with copper or lead? You want to get the best fillings… they’re going to be made of gold…”

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