Is Gold Heading to $13000? Schiff & Maloney Look to the Future (Video)

In part two of this face-to-face discussion, Peter Schiff and Mike Maloney turn to the precious metals. Has the price of gold ever been overvalued, or is it still undervalued? In a world of debased paper money, what roles can gold and silver play in the future?

View part one of their conversation here.

Access their full, 5-year gold forecast here.

This is part two of a series we’ve produced from this valuable discussion. Videos on new topics will be released weekly for the rest of the month.
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Follow along with this full transcript:

Mike: I believe it was incredibly undervalued at 1900. And all these pendants youth.

Peter: Yeah on a short term basis, it clearly was not, but you know in hindsight it’s very easy to know. But you know at some point when the…

Mike: I’m talking about like the Dow gold ratio, and the gold real estate ratio, and the gold all of the… When it comes to the amount of stuff that gold, when gold was at 19, and gasoline was at four bucks a gallon. Gold was still undervalued compared to what it should be.

We’ve gotten so, we make about the same amount of gold per person, we mine about the same amount of gold as we make babies, throughout the centuries, so there’s a certain amount of gold per person, about the same now, as there was back in ancient Roman times. All of the stuff that we make though, we’ve become thousands, and thousands of times more efficient at making stuff.

And so instead of the vast majority having just a subsistence living where they might have a pair of shoes, and be able to clothe themselves, and have a bed. The majority now, you have access to all of these different things, you’ve got a refrigerator, you’ve got into a plumbing. We’ve all got cellphones, we’ve got computers, cars. You got hotels at your disposal, jets, and everything else. And the value of the amount that gold purchases, is extremely low on a historic basis, because it’s been diluted by all of the other liquid financial assets that we keep on developing, that we can store our wealth in. If those go away, and I think a lot of the national occurrences will be going away, then gold’s value should just absolutely sky rocket. It should be buying not twice as much stuff, but a hundred times more stuff than it is.

Peter: Well people believe that these FIAT alternatives represent legitimate stores of value when they don’t. When people start to question that, and they realize that their value is not safe there, that the purchasing power is not protected that it’s going to vanish. Then people will quickly look for an alternative, because they want to preserve what purchasing power they have left. And yes everybody’s going to try to rush back into gold, and that means the price is going to be substantially higher, because of the increase of demand.

Right now, they don’t have, people are complacent. People trust the system, and it hasn’t dawned on them yet. Despite all the things that have happened recently that should have shaken their confidence, that this is going to end badly. But you know when people figure this out, you remember back to the housing bubble, and sub prime mortgages. People were confident in these securities, people were paying above par. People were paying more than a 100 cents on a dollar to buy a sub prime mortgage before the bubble bomb. But once it popped, and it was very quickly, these things were worthless. You couldn’t give them away. They had no value, but all the change was perception. The mortgage didn’t change, the borrowers no more credit worthy or no less credit worthy, it was the same house, and the same borrower. It’s just the perceptions of the lender changed, they went from being confident to being realistic. And once they’re realistic, it was pessimism.

And so people are confident that their purchasing power is safe in the Dollar or the U.S. Treasury, but that’s not true. They just haven’t figured it out yet. But when they wake up, what are they going to do. Everybody figures it out the same time right? Nobody want to be ahead of the curve, right? Everybody wants to go with the crowd, because that seems like the safe thing to do. Only in this case, you can’t go with the crowd, you got to be way ahead of that crowd or you’re going to be trampled in the stampede.

Mike: Right, and the people that are ahead of the crowd are the ones that see all of the big, the wealth transfer coming toward them instead of away.

Peter: And you can’t worry that you’re too early. Don’t worry about being too early, because the alternative is that you’re too late. And if you’re too late, then it doesn’t matter. You’re never going to do it just right. Maybe some guy will get lucky enough to time it perfectly.

Mike: But that’s just pure luck,

Peter: Yeah, but most people that try to do that, they’re going to end up missing it. Let me just buy that, let me just wait till it gets a little bit cheaper, and all of a sudden it runs away from you. So you’ve got to be early, and you’ve got to be patient. But if you do both those things, then you’re in a position to profit, to win this game. You know other people are going to end up going broke.

We’re on a precipice of something huge, and you’ve got the powers that be telling us everything is great, and there’s nothing to worry about. But there’s a lot to worry about, and people have to do what they can on their own to protect themselves.

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