Transcript:
Caroline Woods
Markets are near highs, but not everyone is buying this rally. Peter Schiff has been warning about a weaker dollar, higher gold and real risk for equities. He joins us now. Peter Schiff, chief economist and global strategist at Europac.com. Thanks so much for being here.
Peter Schiff
Oh my pleasure.
Caroline Woods
So we’ve heard a lot of bullish takes lately Peter. So we thought it was time to bring on the other side. So to kick things off tell us what’s the market getting wrong right here as it sits near all time highs.
Peter Schiff
Well I think investors have gotten a lot of things wrong, but that hasn’t stopped the market from from going up. You know, it’s, the majority of investors don’t understand the fundamentals. And they buy stocks anyway. Stocks can go up. But in the long run, the fundamentals are going to ultimately bring the market back down. And so you have to be prepared for that.
Peter Schiff
You know the U.S. economy is in a lot of trouble. Much more than is generally, perceived. I think we’re on the verge of not just a financial crisis, but a U.S. dollar and sovereign debt crisis. So I think U.S. stocks, which are extremely expensive by any, you know, conventional way to measure stock value, even even the bulls will concede that they’re expensive.
Peter Schiff
They just expect them to stay expensive. But there’s a lot of risk that when you’re price for perfection, you’re not going to get it. And the markets are going to be repriced. And, you know, now you have the war, which I think people are underestimating the significance of this war, how much damage it’s going to do, to the U.S. economy, to the budget of the United States, to the credibility of the United States, and, to long term interest rates and inflation, so that the markets, I think, are really looking past a lot of problems and pricing stops based on hope and not reality.
Caroline Woods
So you said that investors need to prepare for the downturn. If you’re right, how should they be positioned?
Peter Schiff
Well, they can take profits. If they’ve been investing in the U.S. market for some time, they should have some nice profits. They should they should get out and they should look to alternatives. You know, one would be precious metals, gold and silver. But they’re also stocks you can get into resource stocks, mining stocks, precious metals, industrial metals, energy stocks although they they’ve run up a bit but I still think they’re going higher.
Peter Schiff
Other commodity agricultural plays. Look at the emerging markets. A lot of value is still there. And even developed markets outside the U.S. that I think where the stocks are much better value, where you don’t have these, you know, sky high, you know, valuations with these Pease and IPOs and low dividend yields. And in countries that will benefit from the weakness of the dollar and strength in overseas markets.
Caroline Woods
So as they think about portfolio allocation, how much of the portfolio should be allocated to things like gold versus stocks. What does that the 6040 portfolio look like in a Peter Schiff world?
Peter Schiff
Well, I think you should have more allocated to stocks and gold. But the key is which stocks? I think Americans should have a greater allocation to foreign stocks. I would substantially underweight U.S. stocks and I would, you know, focus more on like energy companies, something like that. I, I think that there are much better values to be had outside the United States.
Peter Schiff
The U.S. has had a huge run over the last decade, and it’s very expensive, even if everything was good. The U.S. market is expensive, but it’s not. It’s it’s a ticking time bomb. So minimizing your exposure to U.S. stocks, I think is a good idea. I’d have no exposure to U.S. bonds. I can’t think of any rational basis why a long term investor would want to own any treasuries or corporate bonds.
Peter Schiff
The yields are just much too low, to offset the risk either of default or inflation. So if you want to be in bonds, I would look overseas. You know, we do have a managing international portfolio of foreign bonds, which has a much higher yield and then and U.S. bonds. But I think that your risk is lower in that.
Peter Schiff
I think, those currencies are going to hold up better over time as far as the purchasing power that they’re able to deliver.
Caroline Woods
So international over us, and I understand that from a valuation perspective. But what about from a fundamental perspective?
Peter Schiff
Yeah, both I mean fundamentally, you know, and that’s what valuations are part of. They’re a reflection of the fundamentals. The other way to look at stocks would be technicals. And I think even there the technical picture for the U.S. market looks pretty toppy to me. We’ve had a big run. And you know we could be consolidating and making a major top.
Peter Schiff
That will cap the upside for a while. I think we’ve already seen that in crypto. You know, I think bitcoin a lot of other tokens have already done that. You know they were actually bubbles. And now they’ve kind of popped. And there’s still a lot of hope keeping much of the air in those bubbles. But I think it’s all going to come out.
Peter Schiff
And and so the stock market in general is not as overpriced as something like Bitcoin. But it’s similar in that the prices are much too high and they’re going to come down.
Caroline Woods
Bitcoin is about 40% off the highs but it’s not broken. So what’s the market seeing that you’re not.
Peter Schiff
Well I think it is broken I think.
Caroline Woods
But I mean it’s it’s trading at 76,000.
Peter Schiff
Yes. Well you know a year ago it was 110,000 and it got as high as 126,000. And look at what’s happened over the course of the past year. Look at all of the bitcoin that strategy has purchased. Look at all of the Bitcoin that at least a half a dozen other copycat Bitcoin treasury companies have have purchased. Look at all the hype that has come out of the Trump administration.
Peter Schiff
Look at what’s happened with the Trump family and how much they’ve embraced crypto in Bitcoin and what they’ve done. So you’ve had massive pumping of Bitcoin. You’ve got a bitcoin president, a bitcoin czar. You’ve got bitcoin friendly legislation that has been passed in Congress. You’ve got various states that have passed bitcoin friendly legislation. You’ve got a Bitcoin strategic reserve.
Peter Schiff
You’ve got all of this good stuff that should have resulted in a higher price for Bitcoin, and instead it resulted in a much lower price. So that tells me that the smart money has spent the last year selling and the, Bitcoin has been accumulated by retail investors, by small mom and mom and pops, by ETF buyers. You know, this is a very unhealthy market.
Peter Schiff
I mean, I think the whole story behind, Bitcoin has broke. In fact, look at what Saylor has to do now. When a year ago, he was able to sell 0%, preferred 0% interest because people really wanted exposure to bitcoin, he can’t do that anymore because they don’t want the exposure to Bitcoin. He has to bribe them with an 11.5% yield.
Peter Schiff
So people are saying I don’t care about bitcoin anymore. I don’t want the upside of bitcoin. Give me that 11% yield. That’s what’s going on. So the whole story is broken. Yes Bitcoin is not a zero yet. You can still get a lot of money if you sell your bitcoin. But no one’s making any money buying it. It’s not going to be the new gold.
Peter Schiff
It’s not digital gold. It’s not going to replace the dollar. It’s not going to replace anything. The whole thing was a giant, Ponzi, decentralized Ponzi, pyramid blockchain letter. The fact that it gets so much attention from the financial community without criticism, the fact that the SEC is not coming after Michael Saylor, which is ridiculous. I mean, they would never let me get away with what they’re letting Saylor get away with.
Peter Schiff
They’d probably shut down my whole business if I was promoting something the way he is.
Caroline Woods
Okay, so you’re not buying Bitcoin, but you are buying gold. And gold already had a big move. But it is, what, 20% off the highs? What actually takes gold meaningfully higher from here?
Peter Schiff
Well, the same things that drove it higher in the last several years. I think that gold has been driven by a dollarization trend that has focused mainly on foreign central banks, but I think it will spread beyond that. I think retail investors are going to start buying gold, maybe in a small way at first, but they’ll buy more over time.
Peter Schiff
And of course, in private institutions, I think you’re going to be buying gold. I think a lot of the money that may have gone into Bitcoin will start going into gold. Now that, you know, the wind has come out of that Bitcoin sale, I think, more people are going to look at gold that might not have looked at it.
Peter Schiff
But gold has done very well for all the naysayers. Gold has outperformed the stock market over the past 26 years, since the century began. And it’s not even close. The stock market is down better than 70% price of gold. So that is a big decline.
Caroline Woods
How much higher can you go from here?
Peter Schiff
Major bear market.
Caroline Woods
Yes. So how much higher can we go from here?
Peter Schiff
Or how much lower can the market go? A lot. I think the.
Caroline Woods
Market was hitting all time highs at the same time that the market was. So it didn’t necessarily move in the direction that you would think.
Peter Schiff
Why keep happening? Gold. Gold was going up faster than the market. So in relation to gold the market was going down. So that can be very confusing. When you have inflation, prices tend to go up. The price of everything goes up. But that doesn’t mean that things are getting more valuable. It just means you’re getting more expensive.
Peter Schiff
What you want to do is look at the price of gold to see what’s really happening to prices, because gold is a neutral arbitrator of what’s actually happening. And so when you start measuring prices in gold, when you start measuring assets in gold, you realize that prices are actually falling. But in terms of the fiat currency that the fed creates out of thin air, of course prices are going up, but it’s not the prices that are changing, it’s the value of the fiat currency that’s changing.
Peter Schiff
The fiat currency is losing value. And so you need more units of that currency to buy the same quantity of goods or assets.
Caroline Woods
Peter, you’ve called this and everything bubble. What’s the first thing that’s going to break.
Peter Schiff
Well, you know I think crypto is already broke. It just hasn’t collapsed. The bond market has broke down, too. I think if you look at where yields are compared to where they were a few years ago, in fact, you know, yields are much higher today than they were before the fed started cutting rates. So I think the bonds have already broke.
Peter Schiff
They haven’t just broke down. Stocks of course, haven’t even broken yet because they’ve just hit new highs. So I think you’ve seen a breakdown in crypto, a breakdown in bonds. I think the dollar hasn’t really broken down, but it’s topping out and and gold is clearly broken out. So his silver I think oil has two now I think you know and other commodities look at copper.
Peter Schiff
So I think I think, you know, this is a break out in the commodity markets and generally a commodity bull market, is not good news for the bond market. And if we’re going to have a bear market in bonds, it’s going to be hard for the stock market to shrug that off.
Peter Schiff
Do you believe that I is included in the everything bubble? Is I a bubble? And should investors have exposure to names like Nvidia in their portfolio?
Peter Schiff
Well, I don’t know if AI itself is a bubble, just like the internet was in a bubble, but many stocks that, you know, got caught up in that as dot.com stocks, there was a bubble there. You know, just like airlines were, you know, railroads were in a bubble, but there was a bubble in railroad stocks. I mean, railroads did a lot to transform America.
Peter Schiff
But that didn’t stop the valuations from getting ridiculous in those companies. So I think, well.
Caroline Woods
Which names do you think are safe? And sorry to interrupt you, but which names do you think are safe from a bubble popping in? Which would you expect to be happy talking about years down the road?
Peter Schiff
Well, I itself to me is the most transformative development or technology that I’ve ever seen. And so I think the potential for AI to improve, humanity’s, standard of living to make life on Earth better, to raise the standard of living of everybody, particularly the middle class or the lower class, I think is incredible. But that does not mean that, you know, the companies that are raising so much money, many of them still through private deals, you know, they’re not even public yet, but a lot of them are that the valuations are probably way out of line with what those companies will end up being worth.
Peter Schiff
You know, it’s a very competitive market when it comes to AI is going to get a lot more competitive, but who knows of the massive amounts of money that are now being spent, on building out the infrastructure on the data centers? If this money is not just mal investment, this money is not just a waste. If these companies are not going to be maybe even at a disadvantage over other companies that have spent so much money on stuff that may not even be necessary.
Peter Schiff
You know, we don’t really know how this is going to play out, but I do think it’s also probably going to happen at a slower pace, even though the technology is improving so rapidly as far as how much better it gets. It’s not like everywhere I look I see robots and, you know, I, I is helping certain aspects of my life.
Peter Schiff
I use it, I do things, but it it’s not so transformative. Yet that doesn’t mean it doesn’t have the potential over time to do that. But I think that the people who are really excited about it are underestimating how long it’s going to take to get the real benefits of AI. In the meantime, all those benefits are being priced into a handful of stocks as if they’re going to be right.
Peter Schiff
But fisheries. But you know, it should be.
Caroline Woods
Do you have a business.
Peter Schiff
That end up benefiting.
Caroline Woods
So you do you have exposure to those stocks in your portfolio?
Peter Schiff
Well.
Peter Schiff
Look, personally I have some exposure to high tech stocks like I own Taiwan Semiconductor. I myself we own that in our in our vault in our emerging market fund. Obviously TSM benefits because it makes all this stuff right. A lot of the stuff is not Nvidia’s a GPU, but it makes a lot of these chips. I have other companies, you know, personally, I own this company called Delta Electronics, which is now the biggest company in Thailand.
Peter Schiff
When I bought it, it was pretty insignificant. It’s now about 100 times what I paid for it, and the reason it went up so much was because it really got into, I know I probably should sell it, but I haven’t. I just kind of hung on to it. And I have, you know, a tremendous gain. And obviously percentage wise, it’s the biggest gainer in my portfolio.
Peter Schiff
It’s not quite the biggest position in my portfolio, but it’s one of them is one of them.
Caroline Woods
Do you have any mag seven in your portfolio? Do you have any mag seven in your portfolio?
Peter Schiff
No, I don’t I don’t have any of the mag seven names, in my portfolio, nor did I have them on the way up. So it’s not like I was so smart. I got in, I made a bunch of money in med, or Microsoft or, you know, Nvidia and I and I, I got out. I just never even got involved in them.
Peter Schiff
But I got another text. I owned Singapore Technologies. I mean, I owned some of these companies. I just tend not to buy what everybody else is buying.
Caroline Woods
And I didn’t get any FOMO on the way up, especially lately.
Peter Schiff
In the short run, it can cost you something to not buy what everybody is buying, because if everybody’s buying it, it can push up the price. But at the end of the day, that usually doesn’t own very well, end very well. You have a big collapse. You have a lot of bag holders. You know, I’m a value and a contrarian investor by nature.
Peter Schiff
And generally they go hand in hand because the best way to buy value is to buy what other people don’t like, because that’s how you can get it cheap. And so that makes you a contrarian. You’re looking for value that other people don’t see, and then you buy it and you wait for them to figure out what you already know.
Peter Schiff
And so that’s that’s our whole strategy with the company. And that’s how I invest I personally.
Caroline Woods
All right. We’re just about out of time. I want to get to our rapid fire game of this or that. Our viewers love that. One final question though. If you have $100,000 to allocate today, where are you putting it? How much in gold?
Peter Schiff
Well, where am I putting it? Or where should your typical well, your typical guy with 100 grand, he should be investing it in my funds. The Euro Pacific funds I have on.
Caroline Woods
Your fund side.
Peter Schiff
Yeah. Well be. Yes.
Caroline Woods
I set you up.
Peter Schiff
For that one. I got an emerging market fund. I got a gold fund. I got a global value fund, a global dividend payers fund, and a global bond fund that’ll cover that covers everything that covers your whole 100 grand. You get a complete diversified exposure outside, you know.
Caroline Woods
Where are you putting it then? How much in gold?
Peter Schiff
How much money?
Caroline Woods
Markets.
Peter Schiff
I have my money in the same stocks that are in these funds. I have a few others that are not in there, but by and large, I eat more of my own cookie than any of my, clients.
Caroline Woods
Okay. And just finally, what has to happen for you to be wrong?
Peter Schiff
Wrong about what?
Caroline Woods
Your entire thesis that stocks are going down.
Peter Schiff
Well, there’s no way Bitcoin is my entire thesis that that’s that’s the I don’t think that there’s a chance of that. I mean so many things. Look I’ve been I’ve been in this business what, 30 years plus, but so many things that I have predicted over the years have already come true. Things that the vast majority in the mainstream media and Wall Street, you know, the big name firms in the government, whether it’s people at on the fed or, you know, people as part of the presidential, you know, economic advisors, so many things that nobody else saw coming that people, in fact, specifically said were impossible to happen, that I predicted have already happened.
Peter Schiff
So, so much has already happened to validate what I’ve been saying, that the odds that this is all random coincidence and that I’m somehow wrong, I think are very slim. The only thing that hasn’t happened yet is the ultimate, collapse. The ultimate crash. That is the consequence of all these forecasts that have already come true. So the only thing is the time, I don’t know exactly when the whole thing is going to implode, but all the pieces of that puzzle are coming together.
Peter Schiff
All the things that I’ve been saying would happen, are happening or have happened.
Caroline Woods
So okay, so let me ask in a different.
Peter Schiff
Way I.
Caroline Woods
Could.
Peter Schiff
I early.
Caroline Woods
Yeah. No, I meant what would what would make you wrong. But let me ask it this way. What would make you bullish on stocks from here.
Peter Schiff
Oh I’m on U.S. stocks. Yeah. Well if they went down if they went down a lot then I would could get bullish. I mean obviously if they got cheap I would get bullish. And I still think over time U.S. stocks are going to go up just like they’ve been going up for the past 26 years. But in terms of gold they’ve been going down.
Peter Schiff
And that’s what I’ve been telling people. It doesn’t matter what happens to the nominal price of your stocks. What matters is what are they worth when you sell them and you want to go buy them. And I think that U.S. stocks are going to keep losing value over time, especially if you want to sell them and buy gold.
Peter Schiff
But so I would rather invest in foreign stocks, in commodities and other investments that I expect to outperform the U.S. stock market, even though I expect the U.S. stock market to outperform the dollar.
Caroline Woods
Okay. So perfect time to transition to our rapid fire game of this or that. This is quick questions. Quick answers. Usually there’s one or the other. It’s called this or that. Are you ready to play with us.
Peter Schiff
All right I thought we already started, but let’s go.
Caroline Woods
The current rally real or a set up?
Peter Schiff
Set up.
Caroline Woods
Stocks. Long term polar bear.
Peter Schiff
Priced in gold. Bear priced in dollars.
Caroline Woods
Bull inflation peaked or persistent.
Peter Schiff
Persistent and going to get higher.
Caroline Woods
The fed hike again. We’re forced to cut.
Peter Schiff
They should hike but they’ll probably be forced to cut.
Caroline Woods
Resilient economy or recession delayed.
Peter Schiff
Recession, maybe depression. Oh my god.
Caroline Woods
When does that show up? 2027.
Peter Schiff
I think we’ve been in a recession for years. The numbers just mask it. But officially, when would the recession start? I don’t know, maybe. Maybe this year, you know, we’ll see if they can stop it with the midterms and a stimulus plan. So either this year or 2027.
Caroline Woods
U.S. or international markets.
Peter Schiff
Enter Nashville by their.
Caroline Woods
Cash or hard assets.
Peter Schiff
Aren’t assets.
Caroline Woods
Gold at 4500 by the dip or wait for 4000.
Peter Schiff
By the dip now. And if it goes to 4000 by more going.
Caroline Woods
In physical gold or gold miners, both produces healthy silver catch up over hikes.
Peter Schiff
Excuse me.
Caroline Woods
Silver catch is overhyped.
Peter Schiff
By its breakout by the step at.
Caroline Woods
AI opportunity or bubble. Both Nvidia generational leader or peak hype.
Peter Schiff
Peak hype.
Caroline Woods
Real estate high rates kill the market or inflation keeps prices high.
Peter Schiff
Well, it’s a combination of both. It depends on the market location. But I would still I would still avoid U.S. real estate. Okay.
Caroline Woods
And finally a value stock that others don’t like. But you do.
Peter Schiff
Well, pretty much almost all the miners, I think, at this point are value stocks. But, and there there are a lot of individual names out there and they’re in our portfolios. It’s hard to pick one.
Caroline Woods
But can you give us. Okay, give us three. Yeah.
Peter Schiff
Give us three. Just come out with what I think are the three, the three, the three most undervalued stocks, you know, in the portfolio, people that you know. But there’s a lot there’s a lot of names that we like. Anybody could just go to Morningstar and look at my our funds and pull up the holdings and see what we got in there.
Caroline Woods
All right. It’s time to go public record. Peter Schiff chief economist and global strategist, Europac.com. Thank you so much. Appreciate your playing along and appreciate your perspective as well.
Peter Schiff
Sure thing.
Caroline Woods
Take care for a totally different view. Check out our street talk with Nancy Tengler as she breaks down why she’s bullish on the market and gives names she’s buying right now.
