Peter Schiff: This Is Gold’s Day

Peter Schiff recently appeared on the Claman Countdown with Creative Planning president Peter Mallouk to talk about the recent record high in gold and the trajectory of the markets over the next few months.

Mallouk is bullish on the stock market, but Schiff makes the case that this is gold’s day.

The S&P 500 has gained about 19% on the year, but Mallouk pointed out that if you stretch the timeline to two years, the index is basically flat. For that reason, he said he is bullish. He said we’ve seen rates go way up and people are starting to see “somewhat of a reasonably soft landing.” Barring something unexpected, he said the future looks “very bright.”

Meanwhile, gold surged to a new record high of $2,135 early Sunday morning before pulling back sharply Monday. Claman pointed out that gold typically moves down as Treasury yields increase. So, what is the longer-term outlook for the yellow metal?

Peter said he thinks, “This is gold’s day.”

I know we are $100 lower already because we got some profit-taking on the big spike up. But I think $2,000 is now the support for gold. I mean, it could trade slightly below it, but this is not the end of the bull market. It’s the beginning.”

Peter said there is no ceiling on the price of gold because there is no floor to the value of the dollar.

The dollar is going to lose a lot more value, and you’re going to need a lot more dollars to buy an ounce of gold.”

What will the Federal Reserve do at its December meeting? Claman pointed out that the mainstream consensus is the central bank has paused and the next stop is a rate cut.

Peter said he thinks the Fed will have a hard time cutting rates but that doesn’t mean it won’t make the attempt.

They’re probably going to try at some point. I know they’re going to go back to QE, which is just creating inflation.”

Mallouk said he agrees with Peter on the backdrop – the US government is debasing the currency and the value of the dollar is diminishing. But he said over the long term, gold just keeps up with inflation. He prefers stocks, especially in an environment where the Fed has gotten a handle on price inflation and there is the potential for a soft landing.

Peter conceded that it is better to own “productive assets,” especially if you can buy them cheap.

The problem is right now, US stocks are extremely expensive, and historically, it’s very dangerous to overpay for stocks. On the flip side, gold is actually very cheap historically. And if you look back at prior periods where inflation was a problem, like the 1970s, the price of gold, in one decade where the Dow went down, the price of gold went from $35 an ounce to $850. So, think about that percentage gain.”

Peter pointed out that by 1980, gold and the Dow were trading at roughly the same price.

So, right now, you have the Dow Jones around 35,000 and gold around 2,000. Imagine a world where both of those are the same price because that’s the world where we’re headed, and investors have to prepare for it.”