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New Schiff Interview: All Inflation Has One Source

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On Wednesday, Peter appeared on This Week in Mining with Jay Martin. Jay and Peter discuss the state of the economy, the government’s assault on sound money, and why the mining sector constitutes a good investment.

Early on in the interview, Peter lays out the dilemma the Federal Reserve will face in the near future:

“Inflation is going to get much stronger as the economy weakens and enters recession. … Then the Fed has to choose, and it’s going to be at the point where it’s damned if it does and damned if it doesn’t. But it’s going to have to make a choice, a very unpopular choice. Does it fight inflation, which means much higher rates than the rates we have now (the rates we have now are not high enough)? Does the Fed hike rates even though there’s a recession and even though the hikes will make this recession worse and potentially cause a massive financial crisis? … Or will the Fed ignore the inflation problem and try to rescue the economy by creating more inflation?”

As the government continues to grow and encroach on individual liberty, Peter explains what would happen if gold is ever outlawed, as it was in the 1930s:

“There always will be a market. If it’s illegal, then there’s a black market. People sell all kinds of drugs in this country, and they’re not legal. But there are plenty of buyers. It just means the market is underground, and of course, even if it’s illegal in America, that doesn’t mean it’s going to be illegal in every country, so there will be plenty of legal gold markets. If they ever make it illegal to own gold, the one thing you want to own is gold. They’re not going to make it illegal because nobody wants it and the price is really low, right? They’re going to make it illegal because everybody is buying gold and it’s really expensive.”

They also discuss central bank digital currencies, the latest fad in authoritarianism:

“The more power you give to the government to interfere with the economy, the worse the economy is going to be, because you don’t want the government to interfere at all. The smaller the government, the better. But central bank digital currencies are just a way to make government a lot bigger and a lot more powerful and a lot more intrusive and a lot more oppressive, and so I don’t want it! Actually, ideally, I don’t want the government involved in money at all. I think it should just be created by the private sector.”

It’s important that citizens recognize the true cause of inflation:

“People don’t realize that the government is the source of inflation. And Wall Street and academia helped fool the public by talking about inflation as if it were rising prices. And they talk about ‘food price inflation,’ ‘healthcare inflation,’ ‘housing inflation,’ right? All this stuff is designed to push the blame for inflation onto the farmer, onto businesses, onto labor unions. All inflation has only one source, and that’s government.”

Both Jay and Peter see opportunity in the mining sector, especially if gold stays on its current trajectory:

“If all of a sudden a lot of gold that is unprofitable to mine at, let’s say even $2300 an ounce, when gold is $5000, $10000, wherever it’s going to be, even though the costs of mining will have gone up, they’re not going to go up anywhere near that proportion. So I think [gold] reserves that may be valued at zero are going to be worth billions of dollars on the books of these companies. So I think that’s a huge call option that’s free in these gold mining stocks.”

Royalty companies like Franco-Nevada offer investors additional protection from rising costs in the mining sector at the expense of reduced exposure to the price of gold:

“Look at the leader, Franco-Nevada. I mean look at where Franco-Nevada was 10 years ago, and look at where it’s at today. It’s a huge gain! But then look at Barrick and Newmont and all these other stocks— they’re lower than they were 10 years ago. Why? Because they got killed by rising costs. But Franco-Nevada didn’t have to deal with the costs. They just got the benefit of the rising price.”

Listeners interested in the mining sector will especially enjoy this interview, so make sure to watch the entire program at VRIC Media.

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