Peter Schiff: “I Think The Dollar Is Going To Collapse Before The Market Does”

I had the opportunity this week to reconnect with Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital.

It was a powerful interview, as Peter indicated the Fed is trapped in a long-term position of destroying the dollar, while mainstream voices cheer resultant new highs of the stock market. Such dollar debasement Peter explained, means “the price of gold is going to skyrocket”—once the negative propaganda wears off.

In response to this week’s conflicting policy statements issued by the Fed, Peter said, “They checked into the ‘Roach Motel’ of monetary policies because they can get in—but there’s no way to get out. So what they do is they bluff. They pretend there is an exit strategy knowing that exit is impossible…they just have to maintain the pretense as long as they can, before the market figures out the true predicament they’re in.”

“No matter what Ben Bernanke says, between now and the time he’s supposed to taper, he will come up with an excuse why he can’t and I think he already knows this. But he can’t let the market know that the whole recovery…is merely a temporary by-product of the QE, and that the minute you remove the QE—we’re right back in recession.”

When asked if continued money printing is setting the stage for an equities market collapse, Peter said, “I think the dollar is going to collapse before the market [does]…The Fed is propping up asset prices by debasing the dollar—the currency with which those asset prices are denominated.”

“So if you’re going to destroy your currency, then asset prices are not going to collapse…Another way you can look at it is expressed in gold…Stock and real estate prices expressed in gold are going to go down significantly over time. I know we’ve had a rally in asset prices in terms of gold recently…but I think that’s very temporary.”

In terms of the most beat-up sector in the marketplace at the moment, gold mining stocks, Peter indicated that they represent, “The greatest buying opportunity that I’ve seen during the entire bull market…Many gold stocks are actually priced even lower than they were a decade ago…So you got the opportunity to ‘roll back the clock’ to the time where gold was under $300 oz…[but] I’m not sure how long this window of opportunity will be open…hopefully people will take advantage of it.”

Speaking also to the cost-struggles these companies have suffered through, Peter said, “Gold has not gone up as fast as the cost of mining it, because everybody is convinced there is no inflation. They believed the propaganda from the central banks and governments, and so gold has not even gone up to reflect the increased cost of mining it…but I think eventually…the price of gold is going to skyrocket and the miners are going to literally be gold mines. Right now they’re not—but I think eventually they will be.”

As a final comment towards the ‘madness of crowds’, Peter said, “The majority is always going to be wrong…the mob has such a vested interest in believing in a fantasy, that they can’t reject it…[even] in light of evidence that would seemingly prove them wrong.”

“[But] I think those of us who can see through all the B.S.—we know how this game is going to end. We know where the puzzle pieces need to be and we just have to position ourselves accordingly…The fundamentals are going to win out in the end regardless of how far they deviate…[even] during these periods of mania.”

This was another powerful interview with one of the true market visionaries of our time. It is required listening for serious investors and market students.

Bull Market Thinking