Peter Schiff: Gold Goes Through the Roof

On Jan. 19, Peter Schiff did an interview with Daniela Cambone on Kitco News to kick off the Vancouver Resource Investment Conference. Peter said gold is going to go through the roof, and he explained exactly why. He also offered a little historical context.

The interview began with a look at recent headlines in the news. With the war drums quieted and a Phase 1 trade deal signed, can markets breathe a sigh of relief?

I doubt it. But the markets, I think, want to believe that.”

Peter reiterated what he said in his recent podcast — the trade deal didn’t really amount to much and he doesn’t think there will be a Phase 2 deal.

This is not a game-changer for the US economy at all. So, I don’t think this is really good news.”

As far as the Middle East, Peter said he thinks that even with the apparent de-escalation, tensions are higher now than they were before a US airstrike killed an Iranian general. But Peter said what we really need to be worrying about is the US economy and Federal Reserve policy.

Because it’s Fed policy that’s driven the rally. This Fed policy is very destructive to the US economy and ultimately, the US dollar.”

Peter said the Fed is on a very disruptive course of action. It will keep printing money and keep interest rates artificially low.

Because they’re afraid of the consequences of what they’ve already done. So, instead of dealing with those consequences, they want to kick the can down the road by making the consequences even worse, which is what they’ve done by lowering rates again and going back to quantitative easing.”

Cambone referenced Bridgewater Associates co-chief investment officer Greg Jensen saying gold could surge over $2,000 as central banks embrace higher levels of inflation. Peter said gold could go a lot higher.

I think if Trump is not reelected, if we get like President Sanders, gold should go above $2,000 this year. And if it’s not above $2,000 by the election it should be at $2,000 election night if we get the results. But ultimately, gold goes much higher than that.”

Peter noted gold peaked at $1,900 in 2011 after a 10-year run where gold stated below $300. Gold got that high because people initially had the correct reaction to quantitative easing and zero percent interest rates. But the Fed managed to convince the mainstream that it could normalize interest rates and unwind QE and shrink its balance sheet. Gold pulled back on that false belief.

But now that people are coming to the conclusion that QE is indefinite and that rates are never going to normalize, the bottom is going to drop out of the dollar and that means gold goes through the roof.”

Peter said the mainstream still hasn’t really caught on. Despite the fact gold was up 18% last year and is already up over 2% in 2020, gold stocks are actually down. The last time this happened was in 2000.

Think about what was happening in the year 2000. It was the peak of the Nasdaq bubble and it was the bottom of the 20-year bear market in gold. Peter reiterated that gold is climbing a “wall of worry.”

Peter touched on the difference between physical gold and gold stocks.

Physical gold is a very secure, conservative store of value. It’s an alternative to keeping cash. Rather than keeping dollars or euros, keep gold. Once you get into mining stocks, you’ve got a whole new element of risk. You’re an investor in a mining company. There are a lot of different things that can go wrong.”

Peter also talked about the saga of his bitcoin wallet and presidential politics.