Get the Government Out of Money

Peter joined Michael Simmons on Reality Check last week to explain why the recent drops in gold and silver are exactly the kind of price action investors should welcome. He connects the sell-off to forced liquidations in other markets, walks through decades of Federal Reserve (the Fed) policy mistakes, and warns that continued dollar creation to finance debt makes precious metals a prudent hedge. He also reiterates his view that sound money belongs to the private sector — and it will not be cryptocurrencies.

Peter opens by framing the current precious-metals weakness as an opportunity rather than a failure, tying it to broader margin stress across risky assets:

In fact, this recent decline in gold and particularly in silver, I think, gives you an opportunity to buy if you had missed out so far. I think what’s happening with gold and silver at the moment is they’re getting caught up in margin call liquidation related to other assets, particularly in the crypto space– Bitcoin, Ethereum, crypto related companies– and then to a lesser extent, some of the tech stocks, software, AI related names that a lot of people held on margin. And I think there’s just a lot of forced liquidation right now.

How an Economy Grows a... Schiff, Andrew J. Best Price: $1.99 Buy New $7.20 (as of 11:05 UTC - Details) He then lays out the upside potential for gold if the U.S. keeps financing deficits by creating more dollars out of thin air — a process that accelerates inflation and erodes purchasing power:

The question is, how long is it going to take to get there? Is it going to take gold 50 years to go from 5,000 to 20,000? Or could it do it in five years or less? We’ll see. There’s a good chance that it may do it relatively soon based on the financial position of the United States and how many dollars we’re likely to create out of thin air over the next few years to finance exploding debt.

Peter traces his long-held conviction in precious metals to the policy path taken by central bankers, beginning with Alan Greenspan and continuing through every Fed chair since — a string of errors that he says inflates bubbles and sows the seeds of future collapse:

But I also understood the policy mistakes that the Alan Greenspan Federal Reserve was going to make and what the implications were for inflation and the economy. And so I knew that gold and silver prices would be going much higher. And I was absolutely right. And in fact, the mistakes that Alan Greenspan made were repeated under every Fed chair since, including the current chair.

He warns that easy money and artificial price signals have distorted asset values across the board, producing one unsustainable bubble after another. The 2008 crisis was only a warning tremor for what’s coming, in his view:

We have asset prices that are completely out of whack with their fundamental values. We just go from one bubble to another. And we’re headed for a massive economic collapse. We had some tremors when we had the 2008 financial crisis. But that’s nothing compared to what’s ultimately going to happen.

Turning to confidence in the dollar, Peter argues the political choices of recent years accelerate an exodus from the greenback. International actors and private citizens shift away when they perceive a government is undermining the currency: The Real Crash Schiff, Peter D. Best Price: $0.10 Buy New $3.95 (as of 01:15 UTC - Details)

I mean, I think that’s why you saw this big increase in the price of gold. You’re having an exodus out of dollars, a loss of confidence in the US government, and rightly so, based on a lot of things that are being said and done by the current administration that would cause that loss of confidence. I mean, it should have happened on its own anyway. But we’ve certainly given the world a kick in the ass to move away from this, in which they should have done it anyway.

Finally, Peter reiterates a libertarian core point: money should be handled by markets, not by politicians. If the private sector were free to choose money, it would not necessarily pick the latest tokenized scheme — Bitcoin and other cryptocurrencies do not automatically qualify as sound money:

Well, I would much rather have the government completely out of the business of money. I think it should be the private sector that handles money. I think to the extent that the US government needs money, they should collect it in taxes. They shouldn’t be able to conjure it up out of thin air. But I think if the private sector were to be back in charge, it wouldn’t be Bitcoin or any of these tokens that would end up being money. It would be gold. It would be silver.

This article was originally published on SchiffGold.com.