It’s Not Gold vs Stocks; It’s Gold vs Fiat Money (Video)

Fox Business asked Peter Schiff to explain why investors should continue to hold on to their gold, rather than sell it at a loss. Peter clarified that he has never recommended investing only in gold and not in stocks. Instead, owning gold is a way to protect yourself from fiat money and central bank policy.

A lot of people were as bullish on stocks…in 1999, and they were that bearish on gold. But again, I’ve never told people to sell all their stocks and hold only gold. I tell people to have 10-15% of your portfolio in gold. I stand by that allocation. But I think stocks are very expensive in the US. I think they are more expensive in general than they were in 2000, because the Fed has given more help to the market.”

Highlights from the interview:

“I don’t tell people to forget about stocks. I tell people to own gold in addition to stocks. Although, I do think that US stocks are very expensive. In fact, it does remind me – you guys are talking a lot about the 1990s bubble. What’s happening right now with gold reminds me of what was happening during the dot-com bubble. Remember, we had a vicious bear market in gold from ’96 to 2000. It was the opposite of the new economy. Everybody had faith in Alan Greenspan. He was the maestro. They believed in the new era. Gold got crushed. Gold stocks got crushed. The New York Times came out with an article in 1999 – ‘Who Needs Gold When You Have Alan Greenspan?’ Well, we know how badly that ended. Everybody needed it, because then gold was up 650% in the next 12 years. So I think people are making the same mistake again. They have faith in the Fed, they have faith in Yellen. This is the biggest bubble ever. I think people should be buying gold, but they don’t know enough to do it…

“As a ‘buy the rumors, sell the fact,’ [the Fed raising rates might get gold moving]. The dollar has been rising on the idea that the Fed is going to raise rates. But I don’t think it’s actually going to happen. I don’t think the Fed can raise rates. That’s why they’ve been at zero for seven years. This bubble is [so big] that even a small rate hike will prick it. So all the Fed can do is talk about raising rates. They know that they can’t do it. Now, could they do a 25-basis-point hike just symbolically to pretend they are going to do more? Maybe. But I don’t even think they’re going to do that. I think they’re going to do QE4. When the market comes to terms with reality, gold is going to take off. When people are going to wake up? I can’t tell you. It’s amazing that they’re so clueless for so long…

“A lot of people were as bullish on stocks as Hillary is now in 1999, and they were that bearish on gold. But again, I’ve never told people to sell all their stocks and hold only gold. I tell people to have 10-15% of your portfolio in gold. I stand by that allocation. But I think stocks are very expensive in the US. I think they are more expensive in general than they were in 2000, because the Fed has given more help to the market. The market is more dependent on zero-percent interest rates today than it was dependent on Alan Greenspan in 1999, 2000. I think it is very dangerous in the US market. People have underestimated that danger before. They need to hedge themselves in gold. But again, I am not [saying] it’s either or. It’s not about gold or stocks. It’s about gold or dollars. It’s about gold or yen. It’s about gold or pounds or euros. Gold is money, so don’t compare it to an investment like stocks. Compare it to alternatives for money. I would rather own gold than dollars or euros or yen. I think that they’re going to keep on printing money, they’re going to keep interest rates at zero, but they can’t mine the gold. Gold is scarce. Gold is valuable. If you want to save, it makes a lot more sense to save in gold than a fiat currency…”

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