Peter Schiff: the buck is heading for bust

Peter Schiff
Peter Schiff, chief executive of Euro Pacific Capital

The US economy is headed for “the biggest bust ever”,  Euro Pacific Capital’s CEO Peter Schiff told Kitco News last week. People are oblivious to signs that the US economy is slipping into recession, says Schiff. “As this reality rears its head, gold prices are going to start to rise” and the dollar “is going to fall into a vacuum… the only buyer is going to be the Federal Reserve”. The resulting inflationary environment could create “the perfect storm for gold”.

For now, things might look just fine – after all, last month the Nasdaq stock exchange enjoyed its biggest gain since 2000. But as Schiff puts it in a recent episode of The Peter Schiff Podcast, investors need to be aware of what happened right after that peak 18 years ago: the Nasdaq declined by around 80% from peak to trough. This lesson from history “should give people pause”, says Schiff.

Yet there is none. US stockmarkets have now been in a bull market for an extremely long period, and this is also now the second-longest economic expansion on record. Yet rather than take this as a sign that we could be near the end, instead “people are betting that we’re not going to have another recession and we’re not going to have another bear market – maybe ever”.

This is worrying. Not every market is currently running with the bulls. Many emerging markets are getting clobbered – some are even at decade lows. Rather than believe everything is rosy, a more sensible bet would be to assume, says Schiff, that we will have another recession and bear market – and relatively soon.