Peter Schiff on Politics, Precious Metals and President Obama's
by Anthony Wile
The Daily Bell
by Anthony Wile: FDR,
Lincoln ... and a Disturbing Supposition Regarding Barack Obama
Peter Schiff is CEO of Euro Pacific Capital, Inc. and
Euro Pacific Precious Metals, LLC. He is an internationally recognized
economist specializing in the foreign equity, currency and gold
markets. Mr. Schiff frequently delivers lectures at major economic
and investment conferences, and is quoted often in the print media,
including the Wall Street Journal, New York Times,
L.A. Times, Barron's, BusinessWeek, Time,
and Fortune. His broadcast credits include regular guest
appearances on CNBC, FOX Business, CNN, MSNBC and Fox News Channel,
as well as hosting a daily radio show, The Peter Schiff Show. Mr.
Schiff is also the author of several bestselling books, including:
Proof 2.0: How to Profit from the Economic Collapse and the
illustrated parable, How
an Economy Grows and Why It Crashes. His latest bestseller,
Real Crash: America's Coming Bankruptcy - How to Save Yourself and
Your Country, was released in May 2012.
Peter, thanks for sitting down again with us again. Please introduce
yourself and your firm for those who don't know you.
My name is Peter Schiff. I have several companies; the largest one
is Euro Pacific Capital and also in the US I have Euro Pacific Precious
Talk about your father, who is now in jail as a tax protestor. How
is he doing?
He's hanging in there. He's 84. He turns 85 next month. I think
he's a political prisoner. He's in jail not because he really violated
the law but because he represented a threat to the government's
illegal collection of income taxes. So I think it's very unfortunate
that my father is in jail and I think it says a lot about the character
of our country when we can have a political prisoner.
You ran for office, but it didn't work out. Are you finished with
politics? What do you think of the political system?
I ran for office once. I was in the primary for the US Senate. I
ran in a pretty blue state, Connecticut, so even if I had won the
primary it would have been a difficult challenge to win the general
election. The person who beat me, Linda McMahon, lost. In fact,
she lost twice. She spent about $100 million and still couldn't
win the election.
I have no idea
whether or not I'll try it again and whether or not I'll try it
again in Connecticut or maybe I'll try from another state. I certainly
might move out of Connecticut. They're raising taxes here in Connecticut
so one day I might live in a more tax-friendly state. And also,
those states might tend to have a greater chance of electing somebody
like me. But you never know; you never say never. I have no immediate
plans to run for anything.
Bring us up to date about Euro Pacific Capital Inc. [a broker/dealer
based in Westport, Connecticut] and its ongoing success.
Euro Pacific Capital is a brokerage firm. We work with mainly American
investors and help them diversify globally, invest in foreign stocks
and bonds. We also work with US opportunities as well. But I think
the biggest threat that most Americans face is a collapse in the
value of the dollar and so I think to mitigate the loss of purchasing
power that will result from that you really need to look abroad
and concentrate in countries that have currencies that will hold
more of their value, where the governments are not pursuing policies
that are as destructive as the ones that we're pursuing here. I
think universally, though, politicians in all countries are doing
foolish things. We don't have a monopoly on stupidity here in America
but we've certainly raised it to a higher level than most countries.
So I think Americans have to protect themselves. We also deal with
commodities and precious metals, things of that nature.
Tell us about The Peter Schiff
It's a radio show that I do, on the Internet at schiffradio.com.
It's also syndicated nationally. We're on maybe 50 or 60 stations
right now, mostly smaller markets but we're starting to get some
traction at getting some bigger markets to carry the show. Hopefully,
we'll have more and more stations picking it up as the year progresses.
to make a much bigger impact. Right now it's pretty much preaching
to the choir. I think the people who listen to the show are primarily
people who follow me anyway and who appreciate listening to me everyday
to get my take on what's going on but I'm hoping to broaden my reach.
That's the whole purpose for the show, to try to get this message
to a wider audience. And as more stations pick up the show, hopefully
we'll be able to accomplish that.
We do it live
from 10:00 a.m. to noon Eastern Time, Monday through Friday. Of
course, you don't have to listen live. It's great if you do because
you can call in but you can also listen to the show later. We repeat
it; there's a loop that continuously runs each day so if you don't
listen live you can certainly listen to the rebroadcast.
Are you still bearish on the dollar and bullish on investment in
Oh, very much so. Everything that's happening just makes me even
more confident that my bearish forecast is correct. For example,
the House just voted to suspend the debt ceiling, which makes it
easier for the government to create dollars, and the more dollars
they print, the less they're going to be worth. And I think now
that we have cleared the way for much bigger deficits in the future.
We're going to have a lot more money printing when the Fed monetizes
them. And so the dollar's days are numbered. How many days are in
that number? That I don't know but I do know that you want to prepare
for its demise and that's what I'm helping people do.
Tells us about Euro Pacific Precious Metals.
That's my precious metals company. I sell individual investors gold
and silver for physical delivery. We sell bullion bars and coins.
We don't sell numismatics. I think a lot of Americans have been
fooled by some of my competitors into buying rare coins rather than
just gold and silver. Most people who want to buy gold and silver
are looking for an inflation hedge and they call up a gold firm
looking to buy Maple Leafs or things like that but they end up being
sold a rare coin, a collectible coin, on the guise that it would
be a better investment.
But it's not
a better investment. It's just a much bigger commission for the
broker who sells it. The markups are horrific. In many cases they
exceed 50 percent 60, 70 percent markups are commonplace,
meaning that if you want to buy $6,000 worth of gold you've got
to send a check for $10,000 and $4,000 of it is commission. And
what has to happen is the price of gold has to really double before
you can even sell your coins and get your original investment back.
So we don't
do that at my firm and that's the reason I set it up. Too many people
were being conned by salesmen into buying these overpriced collectibles
and being talked out of legitimate gold investment. We only sell
legitimate investments. The markups are very small; they average
maybe about 2% above our cost and so you don't need a doubling in
the price of gold to break even. You just need a small movement
in the price of gold. And, of course, I'm expecting a much larger
movement in the price of gold, which is the reason I have and keep
owning it in the first place.
In fact, I've
got a special report people might want to download. I put it up
for free on the Internet. Just go to goldscams.com
and in my special report that you can download I go over all the
scams, the popular cons that are being used by a lot of the gold
companies to fleece their clients out of their money. So if you
read that you'll know what to be on the lookout for.
Are physical metals a good buy? Which is better right now, gold
I think they're both good. I think you're seeing pullbacks already
in both. I think if I'm correct on what I think is going to happen
the price of silver, percentage-wise, will probably go up more than
the price of gold. But recognize that if I'm wrong then silver prices
will probably go down more than gold prices. So you get more risk
upside in silver but you probably also have more downside. That's
generally the way it works in the investment world; the more gain
if you're right; the more you can lose if you're wrong.
I think Americans
should have both. I think it makes sense for people to have both
gold and silver as an alternative to dollars or other fiat currencies.
The dollar isn't the only flawed fiat currency. I think we just
have a larger flaw than most. But I think everybody needs to be
worried, no matter where they live. Central banks everywhere are
printing too much money. Interest rates are too low everywhere.
There's too much inflation and people need to protect themselves.
Gold and silver represent an excellent way to do that.
Is silver money or just gold, historically speaking?
Well, both. In the United States the Founding Fathers put us on
a bimetallic standard. If you look at the Constitution, both gold
and silver were established as money in the United States and gold
and silver circulated as money in this country for most of its history.
We went off the gold standard in 1971 and we basically took silver
out of our coins in 1964, 1965. So we pretty much followed the Constitution
for most of our history but we abandoned it, of course, eventually,
and that's the reason for our downfall. We are no longer operating
under the rules that our Founding Fathers set up. We became a wealthy
nation, the wealthiest nation in the history of the world, because
the Constitution limited the size of government, and we had sound
Well, we destroyed
the Constitution. Now we have fiat money, we have a massive government
that gets bigger and bigger and bigger, we have the exact opposite
type of nation that the Founding Fathers created for us and now
we're having the opposite result. We're now broke. We're now the
world's biggest debtor nation, we're hemorrhaging red ink, our standard
of living is falling and it's about to collapse.
Does one need to be careful when buying gold and silver generally?
Yes. First of all, you want to make sure that you're actually getting
gold and silver. You don't want to have something else. So you want
to deal with a reputable dealer and you want to buy products that
you can trust from a dealer that you can trust like Euro Pacific
Precious Metals. If you buy a recognizable coin or bar from a reliable
mint or issuer then you can be confident that you own real gold
and silver and not just some other kind of base metal that's just
coated with the gold or silver.
But you want
to not buy numismatics unless you want to collect coins. You can
be a coin collector just like you can be a stamp collector or a
baseball card collector, any kind of memorabilia. People collect
art. But it's different than being an investor in gold and silver
because a rare coin is valuable because of its rarity, not because
it's made of gold or silver. People want it because it's rare. Just
like if you want to invest in paper you don't buy a rare baseball
card because it's made of paper. The paper has got nothing to do
with the value of the card. You can buy a rare gold coin and you
can pay $20,000 for it, $50,000, even though it might only have
$1,500 worth of gold. The gold is immaterial to the value of the
coin. Just like a char is made out of wood but it doesn't mean you're
investing in wood and lumber when you buy a chair. You're buying
a chair. So if you want to be a coin collector that's one thing
but it's difficult to make money and the spreads are very wide.
The difference that you pay between the bid and the ask.
But I think
if we have a real collapse in the US economy with lots of inflation
I would expect rare coins to lose value relatively. People who own
coin collections might have to sell their coins because they lost
money someplace else. And so I think if you really feel that there's
going to be a lot of inflation and a weak economy you don't want
to start a coin collection; you want to own just gold and silver.
So you want to buy coins that are made of gold and silver where
the price you pay closely approximates the value of the gold and
silver in the coin.
If you buy
a one ounce gold coin and gold's $1600 an ounce, if you're paying
$1640, $1650 you're getting your money's worth. If you pay $5,000,
$10,000 to get a one ounce gold coin the price that you're paying
has very little to do with the value of the gold that's in the coin.
But the reason the gold and silver dealers try to talk people out
of buying a bullion coin as opposed to a rare coin is the markups
in the bullion coins are 1%, 2%, 3% tops whereas their markup is
50%, 60%, 70%, 100% when they sell you the so-called rare coins.
And I even
say "so-called rare" because most of the coins that are
being marketed as rare aren't rare at all. They're actually quite
common and in reality they have very little numismatic value. They're
just marking these things up so enormously. So even if you want
to buy legitimate rare coins, the last place you want to buy them
is from a lot of these firms that are advertising on TV because
even what they're selling isn't rare at all. And if you are a collector
the last thing you would want to buy is a circulated French rooster
or a British sovereign. Those are no more rare than junk silver
coins quarters and dimes that you can buy for pretty
much their melt value.
So you want
to realize that the salesman has a big interest in switching you
over into one of these coins and they try to tell you that, "Well,
the reason to buy it is because if the government ever confiscates
gold or silver they're not going to confiscate these coins,"
and I just think that's a bunch of BS. I don't know if the government
is ever going to confiscate gold and silver but if they do they're
going to confiscate everything, including those coins.
What about commemoratives?
This is also kind of like a scam because these commemoratives aren't
rare at all. The mint issues them like hotcakes. What makes something
rare is its scarcity. If you buy a coin that was minted 100 years
ago and it wasn't minted as a collectible, it was minted as an actual
coin but a few people maybe set them aside and never used them so
now maybe there's five or ten of them left in the world, then those
are legitimately rare and some collector will pay a lot of money
to possess something that hardly anybody else has. But all these
proof sets that are being made today will never be rare and so they
don't really have any value other than to somebody who doesn't know
any better and buys them.
But the thing
is, if you buy a freshly minted coin it's in proof condition even
if it's not a proof set. There's really no difference between a
brand new, just minted coin and one that's in a little plastic box
that says "proof set." It's the same thing yet you pay
a huge markup for it when you buy it but if you try to sell it you're
not going to get any more money than any other silver coin. So you
don't want to buy anything that's marketed as being a proof, a collectible.
All you're going to do is overpay for it and make somebody's day
the salesman, the firm that he works for, they're going to
make a bunch of money at your expense.
You want to
buy as much gold and silver as you can for the money. You want to
pay the lowest premium you can over the melt value of the coin and
that's what we do at Euro Pacific. We always make sure that we're
selling bullion bars and coins that enable people to maximize the
amount of money going into metal and minimize the amount of money
going into my pocket when it comes to a sales commission.
Is it time to buy precious metals stocks? Will it ever be?
I've been saying it for a long time. I've been buying gold and silver
stocks for about 12 years for myself and there have been rallies,
there have been pullbacks. Recently we've had a pretty substantial
pullback from the highs. I think there's lots of opportunity in
the mining stocks, particularly if I'm correct on what I think is
going to happen to the price of gold and silver.
One of the
interesting things about the move that we've had so far, even though
gold has gone from $300 an ounce to $1600 and silver's gone from
$4 an ounce to $30. You would think that these gold and silver companies
are just minting money right now and they're making a fortune but
they're not because the cost of mining has also gone up by roughly
the same percentage. It's no more profitable to mine gold at $1600
an ounce than it was to mine it at $400 because of the cost. What's
ironic about it is that inflation is driving up the cost of mining
but because the governments have convinced most investors that there
is no inflation, they don't see a reason to buy gold as a hedge.
And so gold companies are kind of a victim of inflation as opposed
to benefitting from it, which is what you would believe.
But I think
ultimately they will. I think ultimately you're going to see gold
and silver prices just skyrocketing much higher than the cost of
mining and that's when these companies are going to be able to really
start making money. So you would want to buy them before that happens
and I think there are some great deals right now in the mining sector.
If people are interested in knowing which stocks are my favorites
they should contact Euro Pacific Capital, talk to the brokers, find
out if these types of investments are suitable and then have a discussion
about which of the gold and silver stocks I would recommend that
Do you believe in a gold standard? How about a market-based gold
and silver standard? Isn't that a historically prevalent standard?
I believe what the Founding Fathers believed. My views are aligned
with George Washington and Thomas Jefferson and Benjamin Franklin
and John Adams. The Americans who founded this country founded it
on a gold standard. They believed in real money, that the free market
should determine the price of money and the quantity of money, not
the government. Money is too important to be turned over to government.
And whenever government has the power to do something they will
abuse that power and that's what they've done. Ever since they usurped
the power to create money out of thin air they've debased the dollar
dramatically. Ever since we created the Federal Reserve 100 years
ago the dollar's lost 98% of its purchasing power and now the country
is on the verge of complete collapse.
with fiat money, has turned us from the world's wealthiest creditor
nation to the world's biggest debtor. We have a trade deficit with
every country we trade with. We have an enormous national debt that
we can never pay back. The only reason we can even pay the interest
on the debt is because the Fed has got interest rates at zero. That's
the highest rate we can afford. But the minute interest rates go
up the party's over.
And this is
the consequence of allowing government to usurp all these powers
that were denied to it by the Constitution but they found a way
around those safeguards and one way around it was the monetary system
that unfortunately now exists in our country, where we just have
fiat money, we have paper that has no intrinsic value, that is just
created at will by the Federal Reserve, used to monetize government
debt and the country's suffering because we didn't heed the good
advice and the laws that were created by our founders.
What do you think of President Obama's reelection?
I think it's a shame but sometimes you elect the government you
deserve. To say that we deserve Obama is quite a statement because
it's pretty bad to say that we deserve this. But we voted for him
and we're going to have four more years of growth in government,
four more years of decline in our living standards, four more years
of taxes and inflation and regulation and stagnation and unemployment.
President Obama constantly talks about how unlucky he was that he
inherited such a bad economy from his predecessor. Well, his successor
is going to inherit an even worse economy than the one that he did.
I think the economy is going to be in much worse shape in 2016 when
Obama finishes his second term than it was in '09 when Bush finished
his second term.
Will Obama be able to turn the economy around in his second term?
No. The second term is going to be when it hits the fan. That's
when the chickens are going to come home to roost. People think
that now that the economy is going, this is where we're going to
have the Obama legacy. He has an opportunity to really form his
legacy and he doesn't have to worry about fixing the economy anymore
because he already fixed it.
He didn't fix
it; he just broke it beyond repair. We just don't realize how broken
it is because we're drunk on a bunch of new, cheap money and more
stimulus, the exact same monetary and fiscal policy that created
the housing bubble and created the financial crisis of 2008. So
we've numbed us to the greater pain but the novacaine is going to
wear off in the Obama second term and we're going to find ourselves
in worse shape than we were in the depths of the financial crisis
because we didn't solve any of our problems. We made them bigger.
Most people just don't know that yet. It's the same people that
didn't realize that we had a housing bubble, that didn't see the
financial crisis until they could see it in a rear view mirror.
Those are the same people who think that the worst is behind us.
I think we're
in the eye of the hurricane and I think that once we get out of
the eye and we get to the other side we're going to realize that
we were in the weak side of the hurricane before. We're about to
get into the much stronger side because I think the next downturn
is going to be the more severe.
Are elections rigged these days? Are votes trustworthy?
They're rigged in the sense that you can't outvote the mob at this
point. The government has created so many people who depend on government,
who are voting for theft, who vote for somebody who promises to
steal from somebody else and distribute the loot to their supporters.
That's the problem. This is the fatal flaw in democracy. That's
why the Founding Fathers, when they wrote the Constitution had the
foresight to create a republic, not a democracy. The Founding Fathers
called democracy mobocracy. They thought it was tyranny of the majority,
which they feared as much as tyranny from a king. And so they built
in all these safeguards to protect us from what they regarded as
the evils of democracy but over time, those barriers have been removed
and now we're suffering exactly the way the Founding Fathers warned.
So yeah, I
don't think the elections are rigged in that the votes are fraudulent;
they're rigged in that you don't really have a choice. You can vote
for the Republican or the Democrat, the lesser of the two evils.
As far as I'm concerned it's kind of both the same party, the Republicrats
or the Demopublicans. They all believe in big government; it's just
that the Democrats want big government to be slightly bigger than
the Republicans. But they all want to keep growing government, they
all believe in this fiat monetary system, they're all Keynesians
and so you don't really have a legitimate choice and even if you
do your vote's going to be canceled out by somebody who wants something
When you have
all these people who aren't even paying income taxes voting to raise
taxes on the few who are still paying, the society unravels. You've
got people riding in the wagon and you've got people pulling it.
And as you get more people in the wagon the wagon moves slower because
you don't have enough people pulling it. And now you try to whip
the people who are pulling it even harder by raising their taxes
and now you incentivize them to jump in the wagon, too. And you
reward the people who are riding in the wagon with more government
subsidies and you punish the people who are pulling the wagon with
taxes and pretty soon the wagon can't move at all because everybody's
trying to ride in it. That's about where we are so voting is almost
a waste at this point. We need real change and it doesn't seem like
we are going to get it at the ballot box.
Can anything help the US economy at this point?
Yeah. Sure, there are a lot of things could help the US economy
but unfortunately, they're not going to happen. What we need is
less government. We need big cuts in government spending. We're
getting opposite. We need to repeal lots of government rules and
regulations; instead, we're getting more of them. We need higher
interest rates; instead, we continue at zero percent. The Fed needs
to contract its balance sheet; instead, it keeps expanding it. We're
doing everything backwards from what we need to do and so instead
of repairing the damage that's been done to the economy, we damage
it even further.
this deep hole even deeper and eventually we're going to suffer.
Right now we're kind of delaying the pain because we're papering
it over with debt and so we can continue to live beyond our means
but at some point we're going to run out of credit, we're not going
to be able to borrow to consume anymore, the world won't finance
this profligacy and then just like you see in Greece, the whole
thing is going to implode.
2008 financial crisis, this time it's going to be a crisis for the
government. It's going to be government bonds that are collapsing.
It's going to be the dollar that's going to be collapsing, which
means there's no bailouts for anyone.
Is the US turning into an authoritarian state?
Yeah, certainly. I think that we're losing our freedoms, our individual
liberty. It's being replaced by this collectivist mentality, that
it's not about the individual; it's about the State. And if you
listen to President Obama's inaugural that's pretty much what he
said. It's not about individual liberty, about the value of the
individual, but about society, about the State, about the collective.
That is not the ideology that built this country. That's the kind
of ideology that built the Soviet Union or communist China or Cuba
or any place they tried this nonsense.
We tried socialism
in America initially. When the Pilgrims first landed in America
they tried socialism and it didn't work. They almost starved to
death. It wasn't until it was every man for himself, it wasn't until
it was about the individual that anybody actually farmed and that
the Pilgrims didn't die out. When they tried to do it all collectively
and pool their resources, nobody worked, nobody farmed and they
all almost starved.
You're very critical of the Fed. Is it improving?
Is the Fed improving? No. They're getting worse. I've been joking
about that everybody has been preoccupied with Lance Armstrong and
the fact that he cheated because he doped. He used artificial stimulus
to win the Tour de France. Well, that's exactly what we're doing
on a national level. Ben Bernanke is doping the economy just like
So we've got
a Lance Armstrong economy. Instead of condemning him we might as
well memorialize him. Maybe we should build a big statue to him
in Washington, DC or maybe put pictures of Lance Armstrong on our
money. That would be a little bit more honest because all we're
doing is juicing the economy with cheap stimulus but when it wears
off we're going to collapse. We're going to have a fall from grace
just like Lance Armstrong.
Will there be hyperinflation?
I hope not. I don't think we'll have Zimbabwe-style hyperinflation
because I think cooler heads will prevail before it gets that bad.
Maybe before it gets that bad we'll discover the error of our ways
and take the very painful steps necessary to prevent hyperinflation.
But it's still certainly a scenario that is not impossible or even
improbable. If we continue to do what we're doing it's inevitable.
The question is will we continue on this path or will we reluctantly
ultimately change directions. But I know that the longer we wait
to do that, the more painful it's going to be and maybe the less
likely it will be.
We tend to figure that there has been some deflation around the
world as the bubble has collapsed but will there still be real
further deflation as a certain group continually argues?
We have a hard time with that idea because so much money has been
We're gong to see deflation in the sense that prices, including
asset prices and consumer good prices, will come down when measured
in gold. If you look at deflation as falling prices, you will see
falling prices if you're pricing things in gold. But the problem
is, most of the people who are calling for deflation think that
you're going to have deflation in terms of dollars, that the dollar
is going to become more valuable.
going to happen. The dollar intrinsically has no value at all but
the government can create its dollars at will. They were talking
about minting trillion dollar coins a few weeks ago. That shows
you how easily the government can create money out of nothing. They
can make trillion dollar bills. They're making them in Zimbabwe.
So I think that if you think that you're going to see a collapse
in prices in dollars you're wrong because even though the price
of things might come down, I think the value of the dollar will
come down even more. So from that perspective you're going to see
inflation and potentially hyperinflation.
But in terms
of real money you could see deflation, which is one of the reasons
I'm saying people should buy gold because if you own gold then your
cost of living is going to come down because for you, prices are
going to get cheaper. But if you're putting your faith in dollar
bills, your cost of living is going to skyrocket because the Fed
will always try to fight the markets because of deflationary forces.
And these are healthy, corrective forces. It's the market trying
to re-price assets to where they should be. The government tries
to artificially prop things up with cheap money and the market is
fighting against that. But the government has a weapon that can
overcome the market, and that's the printing press, and so as long
as you're dealing in a fiat world, the rules of the game are different.
like to talk about deflation and they look at prior periods of deflation,
they're looking at countries that were operating under a gold standard.
We're not operating under a gold standard. We have no standard.
And if you look at countries that have taken on tremendous debts
in a fiat world, in a fiat system, it's never been deflation in
terms of that currency; it's always been massive inflation or hyperinflation.
It's only deflation if you measure prices against the currency that
didn't collapse or against something like gold.
Is it right that one man like Ben Bernanke should have the power
to okay the printing of tens of trillions of dollars in a short
period of time? How is it possible that people accept he and other
central bankers have such great power?
No. It's not right that one man should have that authority, nor
would it be right for a group of men to have that authority. I don't
think any one man or any group of men is smart enough to know how
much money should be there or what the price of money should be,
no more than somebody can guess what the price of bread should be,
or the price of oil should be. Prices should be determined by the
marketplace. And I think money, interest rates are the price of
money, the price of credit, is the most important price there. Money
is one-half of every transaction. I think prices for money need
to be set by the market.
government does it they're going to do it wrong and they're going
to create problems, either shortages or surpluses. Just look at
America. Nobody is saving and everybody is borrowing because money
is priced wrong. It's too easy to take on debt. It's too cheap to
borrow, so we have too much of it. There's not enough reward for
savings so Americans aren't saving because rates are too low. So
rates need to rise so that we have more savings and less borrowing
but the Fed won't let it happen. So we have all these problems and
eventually, as I said, it's going to end in disaster because of
If you believe
in the free market then believe in it. But you can't believe in
the free market and then think the government should control the
price of money.
Should the US get rid of the Fed? How would it be possible?
Getting rid of it would be problematic because if we just got rid
of it we wouldn't get rid of their bad policy. I think Congress
would just take over where the Fed left off and then some, and it
might even be worse. At least with the Fed we have the pretense
of an independent central bank. If we got rid of the central bank
we would get rid of the pretense and we would just have this straight
monetization and we'd have the government in control of the printing
presses without any kind of buffer even though the Fed, for
all practical purposes acts like an arm of the government and it
doesn't really act like the independent central bank that it was
designed to be.
What I advocate
is limiting the Fed's power, not turning the power over to Congress
but limiting the power the Fed has so it can't do as much damage
making it smaller, taking away its powers, kind of restoring
to the Fed its original mission, which it has strayed from so dramatically.
And I think if we diminish the Fed's power enough then maybe we
can eventually abolish it without worrying about Congress taking
up those powers directly but right now it would be pretty dangerous
to get rid of the Fed, knowing what's likely to replace it. We wouldn't
want to turn all that power over to Congress or the president.
You received criticism due to the performance of some of your client's
accounts in 2008, as well as controversies over the predictions
themselves. How has your performance been of late?
Obviously, you're always going to have critics. Whenever you put
yourself out there people are going to want to criticize you, they're
going to want to take you down a peg. Sure, in 2008 we owned a lot
of foreign stocks that went down and we owned foreign currencies
that went down. The dollar went up in 2008 so pretty much everything
we owned, including physical gold, went down in 2008. So if you
were going to try to evaluate my performance and just use 2008 well
then, yeah if you were following my advice in 2008 you lost
money in 2008.
But I think
that's an unfair benchmark. What if you followed my advice in 2007
and 2006 and 2005 and 2009 and 2010? You can always focus in on
one short time horizon and say, "Well, gee, if you listened
to him only during this period of time you lost money." I never
claimed to be perfect. I never claimed that if you listen to me
you'll make money every day, every week, every second, although
I think if you evaluate what I've been telling people to do over
the long term then over the long-term perspective I think my advice
has been very good. The dollar has weakened. In fact, the dollar
surrendered all of its gains that it made in 2008, 2009 and 2010.
Whatever gold lost in 2008 it more than made up in the following
years. And, of course, I didn't start recommending gold in 2008;
I was recommending it ten years earlier, whether it was under $300
an ounce. So even if it fell from $1,000 to $700 in 2008 to say,
"Well, gee, we followed Peter Schiff's advice and bought gold
at a thousand and it went to $700," I didn't tell people to
start buying it at $1,000; I've been telling people to buy it since
it was under $300. And if it didn't matter if it went down to $700;
then it went up to $1900 so even if you bought it at $1,000 and
rode it down to $700 you're still ahead.
And, of course,
they didn't want to give me credit for shorting subprime mortgages.
They didn't point out, "How much money did people make who
took my advice and shorted subprime mortgages in 2007?" They
cleaned up. They didn't point out Peter Schiff's clients who were
short subprime or who shorted any other of the financials that we
were telling people to short. So again, if they're looking at the
long clients the majority of our clients were long
but if they're looking at it just in 2008, they're not looking at
it in its proper context.
And, of course,
what makes it more difficult is that security regulations don't
allow me to basically point to the accounts that did really well.
If I've got 15,000, 20,000 clients, certainly after a year like
2008, depending on when somebody started you're going to find some
clients that were unhappy back then. Every broker had unhappy clients
in 2008. You probably can't find any whose clients are happy because
everything went down. No matter what you bought, if you bought anything
it went down. So it's easy to find some people who can criticize
the performance but I can't go ahead and point to the accounts that
went up because that's a violation of security law.
So I thought
it was very unfair. I think some people tried to make a name for
themselves by criticizing me. They tried to orchestrate marketing
campaigns for their own firms based on saying, "Hey, you shouldn't
invest with Peter. You should invest with me." I think they
were very unfair and unethical attacks. Everybody who attacked me
back then refuses to come back and say, "You know what? We
misjudged him. We were premature." Even the Wall Street Journal
did an article about how much my clients lost in 2008 but they refuse
to do an article about how much they made in 2009 or 2010 or 2011
or how much they made in 2003 or '04 or '05. The only article that
the Wall Street Journal ever wrote about me was about my performance
All they want
to do is discredit me because I'm one of the only people who was
publicly predicting the financial crisis of 2008. Instead of saying,
"Hey, what did this guy know that everybody else missed?"
they just want to discredit me so people don't listen because I'm
identifying a bigger problem now that nobody wants to acknowledge.
I'm saying that the worst isn't over yet, that we have a worse crisis
coming, and the main establishment doesn't want people listening
to me. And they know that if they legitimize me by giving me credit
for my prior predictions then some people might listen. So they
want to try to create this false picture that I didn't really get
it right and if I got anything right it was because I was a stopped
clock, I was the blind squirrel that stumbled on an acorn. They
don't want to acknowledge the accuracy of my forecasting and why
I knew what I did so they try to use this supposed bad performance
in 2008 to somehow discredit me. Meanwhile, all those people that
they want us to listen to also had lousy performance in 2008. The
difference is, they didn't see the financial crisis coming and I
did. And I might have been short subprime and they had no clue,
and we were long gold or we were long commodities or we were short
the dollar for ten years, not just for one.
I think that
my overall track record in investments is good but I think my track
record for forecasting economic events long term is better. I think
I understand what's going on and if people go back and read the
things that I've been writing for the past ten years, look at the
interviews that I've given, the more you learn about me the more
you'll appreciate the accuracy of what I'm saying. And it's not
because I'm so smart. I acknowledge that I'm not any smarter than
all the people that are getting it wrong; I just think I have a
better understanding of economics. Not that it's a complex subject;
it's because it's a simple subject. But so many other people have
just been brainwashed. They drank all this government Kool-Aid and
they believe what they were told by some professor at some university
who also was clueless. I didn't swallow any of that nonsense. I
think my head is on straight and so I think I'm in a position where
I can see something that's obvious where other people are blind
Is gold going to US $5,000? Why isn't it moving faster? Are powerful
interests selling it short and otherwise manipulating the market
for precious metals?
I don't know whether or not the metals market is manipulated. Some
say it is; some say it isn't. Clearly, if it is being manipulated
it's not working. The prices have gone up dramatically so if people
were trying to prevent the prices from rising it's failed. Maybe
the manipulation has somehow slowed the assent but even if that's
the case I still think that the assent is going to continue. A lot
of people are worried about or point to the fact that gold hasn't
rallied more in the last year. I don't know why. Markets don't always
move exactly the way you think they're going to move. They're going
to move in steps and I think we've consolidated a big increase.
I think there
are a lot of people that don't understand. I think the short run
assets get mispriced because the majority of people who are buying
and selling and who are investing other people's money I think get
it wrong. So I think people don't understand the real predicament
the US economy is in. They don't understand how much value the dollar's
going to lose. The people who are not buying gold right now are
the same people who were buying houses at the top of the real estate
bubble or buying mortgages, the same people who were buying dotcom
stocks in 1999. Dotcoms were mispriced, houses were mispriced, gold
was being mispriced because you have the same problems in the market
but buyers and sellers are not getting it right.
long term, the price is right. The fundamentals will win out and
I am expecting a major, major rally in the price of gold and silver
that will surprise a lot of people, including the gold and silver
You've raised your profile tremendously by using the Internet to
spread your views. Is the Internet generally an important force
in spreading the word about free-market thinking? Is it still a
positive choice for change and freedom?
I think so because you bypass the gatekeepers. Without the Internet,
the only information you can get out there is what will be published
in a newspaper or if you get an interview on ABC or CBS or CNN.
So if they don't want to advance your agenda, if they actually want
to stifle it, then it's difficult to get the word out. You can always
write a book but then people have to know that the book is there,
they have to buy it or check it out in the library.
But with the
Internet you can bypass all those gatekeepers. I can bring information
directly to the public and, more importantly, it's easy for the
public to discover that the information is out there because they
can search it on the Internet. It's not a function of me having
to put an ad in front of their face that they're going to see. If
they're looking for this material, they're going to find it at their
fingertips. All they have to do is search for it. So it's a lot
easier for people to discover voices like mine and, therefore, it's
a lot easier for me to get my message out there because the audience
Then, if I
help convince people of something or help educate people and they
believe in something it makes it easier for them to pass this information
on to other people because they have the vehicle, the Internet,
to transmit this information either directly or to encourage other
people to read my stuff or listen to my radio show or watch my video
blogs. So it's easier to get this information out there than it
was in the past when you didn't have this Internet and the social
media forums to disseminate the information.
Would you like to recommend any books and articles that are especially
My books, my articles I write all the time. You can read
my stuff on Europac.net, watch
my video blogs at my
YouTube channel, SchiffReport, listen to my daily
radio show and you'll get a lot of information. I bring on a
lot of good guests that you might not hear if you just listen to
more mainstream talk shows. Of course, people can get a free subscription
to the newsletter I put out monthly,
Peter Schiff's Gold Letter.
What's your latest book? Are you working on a new one?
No new books right now. My latest book is The
Real Crash: America's Coming Bankruptcy How to Save Yourself
and Your Country. That just came out earlier in 2012 so
that's the latest one. Before that, I came out with a revised edition
of Crashproof, Crashproof
2.0. You can even buy that one in paperback. And I have
a great little cartoon book I wrote called How
an Economy Grows and Why it Crashes. It's an illustrated
fable but it really teaches you a lot about economics and it's quite
humorous so if you haven't picked that one up, that's a really good
one, especially if you have children. Children in fifth, sixth,
seventh grade can really learn a lot about economics by reading
Where do we go from here?
I think we're going to have a crisis. I think it's going to be a
real collapse and that's going to be the catalyst, potentially,
for constructive change. But until there's a crisis it's going to
be more of the same until more of the same precipitates the crisis.
I think in
the meantime we prepare personally, we get our investments in order,
we make sure we have our money invested properly so it's not a financial
crisis for us, it's just an economic crisis for the country
not that I want to belittle that but I think it's important that
you not go down with the ship financially, that you put yourself
in a position to be able to help other people by being in a lifeboat.
And then once it hits the fan and we have the crisis, hopefully
we'll be able to make a loud enough and strong enough argument so
that we finally do the right thing, that the crisis is a catalyst
for productive change where we re-embrace our roots, where
we go back to the ideas of the Founders, where we re-embrace the
Constitution and free-market capitalism and sound money and limited
government. We do all that and then the collapse can be a force
On the other
hand, if we completely abandon those ideas and embrace big government,
if we blame everything on freedom and capitalism and we see a solution
in even more government, then I think we've really consigned America
to generations of poverty and oppression and at that point probably
the only thing that we could do would be leave, to get out of the
country while it's still legal. I hope it doesn't get that bad but
we've got to be prepared to win this ideological battle because
I think the future of the country will hang in the balance.
Thank you for your time once more.
is a philosopher of sorts as well as an accurate prognosticator.
He actually predicted the current crisis, and warned about its inevitability
throughout the 2000s. Of course, Schiff is anti-state and not in
the "elite" club, which is why his forecasts did not get
circulated widely in the mainstream press.
message is negative, but his perspective is positive. He sees what's
taking place as a "catalyst, potentially, for constructive
change." In fact, he believes that it will take a crisis to
precipitate the end of destructive economic practices in the US
and the larger Western world. The prospects on the other side of
the crisis are favorable, in his view.
In the meantime,
he wants people to protect themselves against what is inevitably
on the way. He says, "We [must] make sure we have our money
invested properly so it's not a financial crisis for us, it's just
an economic crisis for the country." And he adds, "I think
it's important that you not go down with the ship financially, that
you put yourself in a position to be able to help other people by
being in a lifeboat."
These are good
points. Schiff has a panoply of financial solutions that people
might want to consider. They are all based on the same sound logic
that led Schiff to make his accurate predictions about the problems
of the US economy and how they might unfold.
Too often predictions
of what is occurring and is about to occur in Western markets sound
apocalyptic. While Peter Schiff shares some of this negativity,
his overall optimism a sense that Austrian-style human action
can help people weather the storm and emerge unscathed on the other
side is encouraging, or ought to be.
place is a battle of ideas, he reminds us. "We've got to be
prepared to win this ideological battle because I think the future
of the country will hang in the balance."
himself, through his successful businesses, his outspoken advocacy
for market-based economics and his profound knowledge of the Way
the World Really Works, has proven a sound ally for people who value
the truth and are concerned about where Western society is headed.
with permission from The
Wile is an author, columnist, media commentator and entrepreneur
focused on developing projects that promote the general advancement
of free-market thinking concepts. He is the chief editor of the
popular free-market oriented news site, TheDailyBell.com.
Mr. Wile is the Executive Director of The Foundation for the Advancement
of Free-Market Thinking – a non-profit Liechtenstein-based foundation.
His most popular book, High
Alert, is now in its third edition and available in several
languages. Other notable books written by Mr. Wile include The
Liberation of Flockhead (2002) and The Value of Gold (2002).
© 2013 The
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