Peter Schiff: Markets Repricing Now As Crisis ‘Bigger Than 2008' Unleashed

The Imminent US Economic Collapse [0:00]

• The speaker predicts a massive economic collapse, stating that the true bubble is in the US dollar, the US bond market, and the entire US economy.
• This crisis is framed as much larger than the 2008 financial crisis and specifically a US crisis, not global.
• Gold and silver are seen as undergoing a repricing for a new monetary world order.
• Central banks are reportedly moving out of dollars and into gold, anticipating gold to become the primary reserve asset.
• The era of the US dollar as the reserve currency and its associated "exorbitant privilege" is ending.
• This shift means the US can no longer live beyond its means, requiring it to produce what it consumes and save what it borrows.
• The economy, built on trade deficits, leverage, and consumer credit, is predicted to implode.
• This will result in a US dollar and US sovereign debt crisis, which benefits the rest of the world by increasing their purchasing power.
• The standard of living in America is expected to fall, while it rises elsewhere.
• Investors not positioned for this outcome will face significant losses in their stock and bond portfolios.

"The bubble is in the dollar. The bubble is in the US bond market. The bubble is in the whole US economy."

Gold and Silver as a Warning Sign and Investment [01:40]

• Gold and silver prices are seen as indicators of the impending monetary crisis, with gold reaching new record highs above $5330.
• Silver is also performing strongly, though not at its all-time record high.
• The metals are "moving like this," signaling a complete repricing for a new monetary world order.
• Central banks are moving out of dollars and into gold, positioning gold as the primary reserve asset.
• This transition signals the end of the US dollar's dominance and its associated privileges.
• The US will no longer be able to live beyond its means, leading to an implosion of its economy built on deficits and leverage.
• This US-specific crisis is seen as a positive for the rest of the world, which will reclaim productivity and see increased living standards.
• Investors are urged to divest from US stocks and bonds, as real returns are diminishing due to inflation.
• Private investors are beginning to enter the gold and silver market, though many remain cautious or believe it's a bubble.
• Gold and silver mining stocks are considered extremely cheap despite significant price increases, as their earnings have outpaced share prices.
• The speaker believes gold and silver prices will continue to rise, making mining stocks poised for substantial gains.
• The breakout in gold and silver is compared to the subprime collapse in 2007 as a warning sign of an impending sovereign debt and dollar crisis.

"So the dollar's days of uh being the reserve currency and the exorbitant privilege that went along with it are coming to an end and that is a gamecher for the United States."

The Nature of a Sovereign Debt Crisis [05:57]

• A sovereign debt crisis is defined not by default, but by a lack of private buyers for a nation's debt, forcing the central bank to become the sole buyer.
• This scenario leads to massive inflation as the central bank prints money to purchase government debt.
• The speaker connects this to the "new world order" discussed at events like the World Economic Forum in Davos, signaling a rupture from the old order.
• The old world order, where the US was central and the dollar was the global lifeblood, is ending.
• This shift means the US can no longer rely on consuming what others produce and borrowing the world's savings.
• Donald Trump's actions are seen as inadvertently accelerating this shift, as he misunderstands the global economy's dynamics.
• Trump focuses on US consumption, while the true economic power lies in production, which the rest of the world possesses more of.
• Separating the US from the world would leave America with empty shelves and high prices, while the rest of the world would have full shelves and lower prices.

"So it's the debt crisis that begets the currency crisis and runaway inflation. That so that's where we're headed."

Gold and Silver as Indicators, Not Bubbles [09:14]

• The price action in precious metals and mining stocks is presented as evidence against a gold and silver bubble.
• Despite record highs in gold and silver ETFs, most mining stocks have seen modest gains or pulled back, indicating fear rather than greed.
• A true bubble, like in crypto or dot-coms, is driven by mania and greed, where caution is thrown to the wind.
• In a bubble, stocks become expensive and valuations are justified; conversely, gold stocks have become cheaper with lower P/E ratios.
• The speaker anticipates a "blowoff bubble stage" for gold where valuations become extreme, similar to companies adding ".com" to their names during the dot-com bubble.
• This stage is characterized by widespread media attention and speculative investment, which is currently absent in the gold market.
• The market is still very early in the gold bull market.
• Clients buying gold and silver are doing so for reasons of store of value, safe haven, inflation hedge, and as an alternative to cash, dollars, and treasuries.
• Historically, gold and silver have outperformed the US stock market, which has lost 75% of its real value over 25 years.

"What we see now in the precious metals market is fear."

Central Bank Buying and Investor Sentiment [14:16]

• Despite an article suggesting declining central bank gold inflows, the speaker believes central bank buying is ongoing and will increase.
• Investor demand is seen as picking up, supplementing central bank purchases.
• Attendees at investment conferences are largely cautious, with many advising profit-taking, which the speaker interprets as bullish.
• The speaker advises against selling, believing there is much more upside potential ("you ain't seen nothing yet").
• Taking profits on a tripling of an investment is seen as leaving significant gains on the table.
• The speaker personally holds substantial gold and silver mining stocks and continues to invest in other areas, like oil and gas.
• Some prominent investors, like Rick Rule, are reportedly taking profits, which the speaker acknowledges may be prudent for them due to their unique positions.

"I mean, it it's it's bullish."

The Impact of Tariffs and the Illusion of Free Prices [18:11]

• The speaker explains that CPI might not be significantly higher due to tariffs because tariffs are designed to raise prices, and without them, prices might have fallen more.
• Tariffs prevent prices from dropping, acting as a hidden tax on consumers.
• US companies may have front-ran tariffs by importing goods before they took effect, but this inventory is depleting.
• As new inventory subject to tariffs arrives, prices will inevitably rise.
• The weaker dollar further adds upward pressure on prices.
• The idea that tariffs can exist without raising prices is an economic fallacy; their purpose is to increase the cost of foreign goods.
• Tariffs protect local industries by making imports more expensive, forcing consumers to consider domestic alternatives.
• If tariffs did not raise prices, they would not offer protection.
• The revenue generated by tariffs comes from Americans paying higher prices, not from foreign entities.
• Historically, tariffs were a primary source of US government revenue until the 16th Amendment established income tax, shifting the burden from consumers to the wealthy.

"But the whole idea that you can have tariffs and not have higher prices is just an economic fallacy."

A Commodity Boom and Global Rebalancing [22:26]

• The speaker is bullish on energy and agricultural commodities, seeing them as leading a broader commodity boom.
• This trend extends beyond precious metals to industrial metals.
• Emerging markets, particularly BRICS nations, are expected to become significantly more prosperous as they shed the burden of supporting the US.
• Inflation is seen as extinguishing US dollar-denominated debt for these nations, paving the way for economic booms outside the US.
• The speaker advocates for investing overseas in foreign stocks and bonds, commodity-linked investments, and precious metals.
• Foreign dividend-paying stock strategies have yielded exceptional returns (62% last year, 12% already this year).
• This represents a sea change from the past decade when the world favored US stocks; now, money is flowing out of US markets and returning home.
• Cryptocurrencies, particularly Bitcoin, are seen as a bubble, and investors are advised to get out of this space.

"I'm very bullish on energy right now and agricultural commodities."

Bitcoin's Failure as "Digital Gold" [25:00]

• The speaker dismisses the notion that crypto investors have moved to precious metals, believing Bitcoin holders are still "holding and hoping" due to a cult-like belief.
• Bitcoin was marketed as "digital gold" and an alternative to gold for inflation hedging and dollar concerns.
• This narrative pushed Bitcoin during a period when gold was consolidating (2011-2024).
• Gold's strong performance in the past year has "blown that false narrative apart," proving Bitcoin is not like gold and not digital gold.
• Bitcoin has zero correlation with gold, and deglobalization efforts will not lead people to Bitcoin.
• From its 2021 peak, Bitcoin is down over 50% when priced in gold.
• The speaker anticipates a significant sell-off in Bitcoin and its ETFs this year.
• Money that flowed into Bitcoin ETFs initially came from gold and silver mining stocks.
• Investors who sold gold stocks to buy Bitcoin are significantly worse off.
• MicroStrategy's Michael Saylor, a proponent of Bitcoin, has spent billions and is only marginally ahead, highlighting Bitcoin's poor returns compared to gold.
• The speaker notes that selling Bitcoin would cause its price to implode.

"Bitcoin is nothing like gold. It's not digital gold."

Market Complacency and Leading Indicators [29:09]

• Despite gold prices soaring, broader market volatility, including in the S&P 500, has not yet reflected this.
• Consumer confidence is at a 12-year low, yet market complacency persists.
• The speaker explains that these reactions take time, similar to how complacency reigned during the subprime crisis.
• Bond yields have been rising even as the Fed cuts rates, indicating suspicion in the bond market.
• The dollar has started to decline, with gold and silver being the most sensitive indicators of these underlying problems.
• The subprime crisis in 2007 was the first manifestation of broader issues in the mortgage market.
• Similarly, gold and silver are showing the first signs of distress in the global monetary system.
• The speaker likens the current situation to a deafening alarm bell that most people are not hearing or choosing to ignore.
• The bubbles are in the dollar, US bond market, and the overall US economy, with gold and silver prices acting as the "pin" pricking these bubbles.

"Gold and silver are just the most sensitive."

Permanently Right, Not Perma Bear [31:28]

• Schiff responds to criticism of being a "perma bear" by stating he has been "permanently right."
• He argues that the problems he has warned about for decades are now bigger than ever.
• Over a 10-year track record, he claims to have more than doubled the return of the S&P 500, reframing his "early" calls as profitable.
• He explains that understanding problems early, rather than seeing them after a crisis, is key.
• The current economic bubble has been inflating longer than the housing bubble due to its magnitude.
• He compares his position to winning a poker game by having all the chips when others go broke, emphasizing the importance of being right in the long run.

"Yeah, I've been permanently right."

Profiting from Government Mistakes [39:04]

• The US economy is in far worse shape now than in 2010 due to past policy errors, such as not allowing free market corrections after 2008.
• The Fed's balance sheet is enormous, interest rates have been at zero for extended periods, and bubbles and distortions are widespread.
• The crisis is expected to be significantly worse because the underlying imbalances were not corrected.
• Schiff has positioned himself and his clients to profit from these economic mistakes, not by advocating for them.
• He wanted sound economic policies (shrinking money supply, cutting spending, raising rates) but invested based on the expectation that politicians would choose expediency (low rates, deficits, money printing).
• His investment strategy is based on what he knows will happen, not what he wishes for.
• Shorting the US government is achieved by buying gold, silver, foreign stocks, and foreign currencies, betting against the US's failure.
• Donald Trump's presidency, while initially raising hopes for fiscal discipline, ultimately led to increased deficits due to reckless tax cuts and spending, further accelerating the "sell America" trade.
• Both Democrats and Republicans have failed to address the debt problem, leading to a lack of hope for control and a run on the dollar.

"I invested assuming they keep rates low, they keep running deficits, they keep printing money. That's not what I wanted to happen, but that's what I knew was going to happen."

The Japan Bond Market and Global Debt [35:20]

• The Japanese bond market crash, with a $7 trillion risk to global markets, signifies that "chickens are coming home to roost."
• Japan, the largest holder of US treasuries, can sell these assets to reduce its own debt.
• Selling US treasuries would force the Fed to print money to buy them, causing inflation in the US rather than Japan.
• This action is seen as a way for Japan to seek revenge and "torpedo" the US economy.
• European pension funds are also considering selling treasuries, with one Danish fund already selling $100 million.
• The global community is increasingly unwilling to live in a world dominated by a potentially aggressive US, leading to a desire to "take the US down a peg" by selling treasuries.
• The US's ability to maintain its military and global presence is largely funded by foreign loans, not domestic taxation.

"So the best thing Japan could do is torpedo us, right? Torpedo our economy."

The Inevitable Crisis and How to Profit [44:02]

• Schiff reiterates that the US economy is in far worse shape than in 2010, and the current crisis will be much worse due to unaddressed imbalances.
• He has been preparing clients for this inevitable collapse for a decade by positioning portfolios to profit from government economic mistakes.
• His strategies involve investments like gold, silver, foreign stocks, and currencies, which are bets against the US economy's failure.
• The market believes that neither political party will effectively address the mounting debt, leading to a "run on the dollar" and a "sell America" trade.
• He advises getting out of the market before a potential "fire sale" and stampede.
• Schiff promotes his mutual funds and separately managed accounts as designed to profit from the impending crisis.
• He views the current situation as a "deafening" alarm bell that most people are not heeding, but he is prepared to help others protect themselves.

"So my portfolios are designed to profit from exactly what's about to happen because I knew this was going to happen a decade ago and so I've been positioning for a crisis that I knew was inevitable."