Peter Schiff: The Trade Is Get Out of the Dollar and Look at Gold (Video)
Right before the Federal Reserve raised interest rates for the last time in December 2018, Peter Schiff predicted the next move would be a rate cut. At the time, Fox Business anchor Liz Claman promised she would bring Peter back on if he was right.
He was. And she did.
The Fed cut rates for the first time in over a decade last week. Peter appeared on The Claman Countdown to talk about the cut, reiterating that it will not stop the coming recession. He also offered some advice to investors.
Of course, Peter said he wasn’t surprised by the cut. After all, he predicted it was coming. He also said Fed Chair Jerome Powell wasn’t being honest about the reason for the cut.
He’s trying to pretend it’s because of concerns about the overseas economy. It is really the US economy that is driving the Fed. That’s why this is just the first step on the road back to zero. And you know, it was a mistake when the Fed went back to zero the last time; it’s going to be an even bigger mistake when they do it next time. And they’re also going to go back to quantitative easing. You know, they announced yesterday the end of quantitative tightening, but the next step is to go back to QE, and QE 4 is going to be bigger than QE 1, 2 and 3 combined.”
Scott Shay, the director of Signature Bank, also appeared on the show with Peter. He said the rate cut was a mistake. He thinks there are a lot of more fundamental problems in the US economy and doing “financial engineering” with rate cuts is “besides the point.” Shay said instead of tinkering with interest rates, the US policymakers need to deal with fundamental issues of competitiveness.
A few hours before Peter went on the air with Claman, Trump tweeted that he planned to impose additional tariffs on Chinese goods. The stock market tanked and the yield on the 10-year Treasury fell nearly 13 basis points. Peter said he thinks Trump was sending a message to Powell, not to China.
This was basically Trump’s insurance policy to make sure the Fed keeps cutting. But, you know, I don’t think he needed the insurance. The Fed’s going to cut. Look at the horrible manufacturing data that came out today, the weak construction data. The US economy is going to recession and it’s headed there fast, and so the Fed is going to go down. But the trade – get out of the dollar and look at gold … People are totally on the wrong side of this trade right now. People don’t own gold and silver. They’re too long the dollar. They have no idea just how much inflation the Federal Reserve is going to be unleashing. And it’s not going to be good for stock prices. The inflation is going to be in the supermarket, not in the stock market.”
To end the segment, Peter and Shay butted heads on bitcoin. Peter said bitcoin is not anything like gold and it’s not a store of value.
I think that spec money is maybe chasing the bubble in cryptos, but the smart money is buying into gold and buying into silver because those are legitimate stores of value and they are monetary assets and they are going to shine when the dollar crashes.”