Peter Schiff Talks Gold, Silver and Bitcoin (Video)
Peter Schiff recently appeared on RT Boom Bust to talk gold and silver.
Gold has struggled over the last few weeks with a looming Federal Reserve rate hike and the specter of tax cuts on the horizon weighing precious metals down. Peter said he thinks this is something of a seasonal lull and he expects the price to bounce back in the first part of 2018.
The last few years, you’ve seen gold sell off at the end of the year and then rally pretty strong in the new year. Because what happens is, before the end of the year, people get very optimistic about the future. ‘Oh, things are going to get better. Growth is going to pick up. The economy is going to take off.’ And so they get optimistic. They buy stocks, they buy the dollar a little bit and they sell their gold. And then the new year comes around and the hoped-for rebound doesn’t materialize, and they buy the gold back and the dollar sells off. And that’s I think where we are.”
Federal Reserve rate hike expectations have been the primary weight pulling gold lower over the last few weeks. Peter reminded RT viewers that gold went up after the last rate hike.
Once that rate hike is in the rearview mirror, I think gold will react the same way it has to the prior rate hikes. I think it’s going to go up. And I think the dollar is going to have a very bad year next year. I think this is the first year the dollar has been down in quite some time, but I think it’s the beginning of the next major leg down in what has been a long-term dollar bear market.”
Peter said the rate hike has already been baked into the markets, but the mainstream doesn’t seem to understand that the Fed can’t just suddenly turn off the money spigot without consequences.
I think what’s been priced in is so many people believe that all this loose money can be withdrawn – that the Fed can reverse the policy, or other central banks, that they can normalize interest rates, that they can shrink their balance sheets. None of this is possible. That’s what the markets don’t get. The cheap money of the past is going to be even cheaper money in the future. The Fed is going to have to abort the tightening. They are going to have to go back to zero in the next recession, which could happen a lot sooner than people think. They may even go negative. They are going to have to launch QE4. It’s going to have to be bigger than one, two and three combined. When the markets figure this out, then it’s a whole different game. And then you’re going to start to see much bigger moves up in the price of gold and other commodities as well. And that’s when you’re going to start to see real downward pressure on bond prices, when people realize central banks have lost control of this and that they have no ability to reverse course.”
This time last year, people were optimistic about the election of Donald Trump. Many believed he would get rid of Obamacare, cut taxes and slash regulations. After the Obamacare debacle, it became clear, Trump wasn’t a panacea. This year the optimism seems to center around the Republican tax cut plan. But as we’ve reported, the Republican plan won’t likely generate the economic growth many expect. Peter reiterated this point during the interview.
We not talking about shrinking government. And as long as government gets more expensive, we have to pay for it. And if we’re not going to pay for it with taxes, we’re going to pay for it through debt and inflation … That is going to be a more expensive way to pay for government than the taxes.”
Peter noted that the Republican version of a free lunch is tax cuts for everybody without cutting any government spending. Republicans are only deficit hawks and oppose spending when Democrats are doing the spending. Ultimately, all of this debt is going to be good for precious metals.
So, when the Republicans cut our taxes, but they don’t shrink the size of government, when government gets more expensive and they reduce the revenue to pay for it then where do they get the money? We don’t get government for nothing. So, they have to create the money. They have to print money. The Federal Reserve has to print money to buy the additional bonds that the Treasury has to sell to replace the tax revenue they lost. And that diminishes the value to the dollar. That causes prices to rise. So, the way the government gets our purchasing power is through inflation. So, instead of taking our money away from us, they leave us the money but they take the value away from the money. And higher inflation is bullish for gold.”
Peter ended the interview talking about Bitcoin. He reiterated what he said in a recent podcast, calling the stratospheric rise in cryptocurrencies the biggest bubble he’s ever seen. He offered some advice for people who have made money in Bitcoin over the last month or so.
I’m not saying you have to sell everything. You don’t have to take it all of the table. You know, you can play with some of the house’s money. But take some money – buy some gold. Take some of your windfalls and put it into something real, because when the bubble stops and all of the paper profits vanish, you want something more than memories to show for it.”
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