"Right now there’s some perception of safety there, but it’s the opposite of the leveraging. If you’re selling your assets, you’re accumulating dollars; but ultimately right now, it’s like there’s been this gigantic nuclear explosion in the United States, and everybody is running toward the blast. Pretty soon they’re going to figure out they’re going in the wrong direction."
- Peter Schiff, December 2008
Enjoy it while it lasts folks (if you're still holding dollars). And like all bubbles, this one will likely go on longer than any of us expect. But the longer it goes on, the bigger the burst. And won't that be interesting?
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30 comments:
all I can say is, that analogy is pretty awesome.
somebody should do a top 10 about peter's analogies.
god I'm getting tired of that moron!
Keith,
WTF!
Mike Norman interviewing Peter Schiff!!
Mike Norman working on a website called 'hardassetsinvestor.com'!!
The world is coming apart!! Norman even says, "We think that people probably should have some gold in their portfolio." I think I posted on your site, wondering where Mikey had gone. LOL
Peter Schiff on Gold, the Dollar and Asian Markets
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Video (2 parts) and a transcript.
He's totally wrong, everything is going the opposite of what he wants.
Deflation is everywhere, the US dollar and economy is de-coupling from other economies. The Chinese are de-valueing it's monetary unit.
The timing of his predictions may be correct for some time in the future, and the dollar just showed some weakness today, but that is far from the epiphany I need from Schiff.
schiff has it partly correct. don't hold dollars, invest in real stuff that has value. the part he is wrong on is betting on other economies, like china, have decoupled from the usa and that is wrong.
Yeah, maybe Norman went all "if you can't beat 'em join em" on us
But he sounded like his heart wasn't in it - he was just doing it for a buck
Remember Norman's comments on gold when it was in the $300's
And I agree with both sides of the Schiff-ometer.
He was right about the crash and the causes
He is wrong (today) about how to protect your wealth (commodities and foreign stocks)
He will be right eventually on the above. After the sell-off, after the liquidation and Great Unwinding, comes the Great Inflation. And at that point, after the turn, you'll want to be out of dollars and into commodities, metals and hell even houses.
Just wait for the turn... wait for the turn... patiently... wait for the turn
Keith,
Here is the first interview of Schiff by Mike Norman...
The Gloves Come Off
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BTW, here is an ACTUAL e-mail response I received from Mike about 15 months ago:
You're a total fucking moron and the kind of asshole that threatens the long-term greatness of America. Keep following schiff and enjoy your brief moments away from your miserable life you scumbag.
God, I love that response. LOL
Related to US dollars, here is a nice summary of country debt, wealth, US dollar holdings, etc.
The Wealth of Nations
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Schiff is right about what caused this mess (overspending). But he is wrong on how to protect against future losses (invest in China and foreign stocks/currencies).
The issue is that price deflation in almost all asset classes is happening faster than they can reasonably print money. Also, in all likelihood, almost every country on the planet is probably going to feel this crisis at LEAST as acutely as we are and probably more so (ie decoupling from the US has been shown to be a fairy tale). The dollar is still the safe haven currency in the world and this will keep it propped up for a while. When everyone else in the world is printing money, the relative effect of the US printing money is partially mitigated. Being in cash to take advantage of the massive delevering and reduction in asset prices is still the best short to midterm strategy. Long term jump back into your asset of choice.
If the scenario Schiff talks about unfolds, the only commodity we'll want to invest in is lead, because we will ALL be fighting merely to survive.
Schiff is right. As usual he's right 90% of the time. The next crisis is the debt bubble. At this pace, the US connot keep borrowing money from China and other countries, coz those traditional buyers of US treauries won't have enough disposable money to do that. They need to throw money at their own domestic problems.
Bernanke will keep printing money at will. The US $ will tank as no country would want it or could afford buying more of it. The US $ will no longer be the world's reserve currency. The US withdraws from WTO, kills the World Bank and the IMF, and defaults on its foreign debt. Famine, Wars, riots, assassinations. Pretty scary scenario!
We are all too interconnected as a world economically, and so we'll unfortunately see a continual decline in the standard of living across the world.
The "winners" will be forced to hide-out on their yachts and estates, while the "losers" will fight over substandard living conditions.
Schiff is a fantastic economist/housing expert. But do you really want to follow his advice on F/X ? I would not disagree but a $USD fall may not happen for another year. Funds are selling Emerging Mkts and that all gets converted back to $USD. Deleveraging means $USD rally. So when does this end? Late 2009?
Oh, btw, if you ever wanted to come see europe, come now while it's on 35% off sale
Never thought I'd say that, during the dollar's darkest days last year everything was insanely expensive
No more.
But how long will this dollar party last? As long as it doesn't end overnight, I'll be happy. But I've got my finger on the "sell" trigger...
Like peter said this is only getting started .. It's called foresight the same foresight needeed the predict the housing bubble . the fat lady has not yet sung .Don't be so short sighted. when things begin to play out the dollar will plumet other currencies will start to look good by comparison.gold and commodities will skyrocket. but of course all you people bashing peter will talk as if you knew this would happen all along ..idiots
Peter Schiff hates America. Like it or not, America is still the greatest nation on the face of this world. The greatest nation that ever existed. People from around the world are tripping over themselves to invest in our bonds and hold our dollars. The market is the ultimate judge and the market has judged that America is the greatest. Sorry Peter Schiff, you lost.
Schiff is a complete idiot or so are you people. He lost as much if not more as everyone else in this bear market because his dollar/commodity bet was wrong.
Why wrong? Because we are in deflation. I am not going to explain deflation to you, read a book. But those who think the $ will collapse are WRONG. The dollar will continue to go up against other currencies regardless of what you people think. Inflation will not and cannot happen for at least 8-10 more years.
Do some research. Bet against the $ and suffer massive losses. Oh yeah, GOLD will not go anywhere.
It's all about timing
Commodities and gold will likely continue to decline. Hell oil might go to $20. The dollar might get to parity against the Euro and Pound.
And then, one day, whoosh.
Right back the other way.
This rush to cash is brutal. As was foretold in Manias. And people aren't rushing to Euros or Pounds or Krona or Lev or Rubles. Nope, they're rushing to US Dollars, the most trusted currency in the world.
And they're playing right into Bernanke's hands.
Sheep.
Baaa.
"""
But how long will this dollar party last? As long as it doesn't end overnight, I'll be happy. But I've got my finger on the "sell" trigger...
"""
There lies the problem.
When the dollar reverses there's the potential it plummets overnight. Currency markets are very different than housing markets, they move faster than stock markets...
Right now I'm liking it - earning US dollars, spending Aussie dollars. But it can't last forever, you are right that bubbles always last longer than expected.
Makes for some fun gambling at least :)
I think what people, including Shiff (with all due remarkable respect), are missing is that there are Digital Dollars and there are Paper Dollars. Digital Dollars are what is being created to conteract the bad securities. Big Money is trying to convert their Digital Dollars to something will eventually be Paper Money. We are one tear away (pun intended) from Gold becomming king. We will go through a paper phase first. But we are close.
DMP
Let me get this straight. I buy gold because lots of $$$ printed. Gold goes up--down. I buy gold at $800----goes down to $700. I lose!
But but...lots of $$$ were lost. I mean something like $65 trillion and still adding. Now buyers have less $$, less buyng less cost, $$$ go up. I win!
Me buying gold, me now helping people get richer who bought gold cheap.
People bought gold cheap say..buy gold. Just like Realtor says prices will always go up up and away are my $$$. It's like robbing Paul to pay Peter.
May you have a nice life!!
We are heading into a depression. Consider diversifying some of your assets into gold and cash for an emergency.
Tyrone (or anyone), how do you insert the hyperlink that way into your posts?
Milwaukee town to print their own money..
http://www.chicagotribune.com/business/chi-talk_moneydec03,0,2902061.story
Schiff's macro view of the world economy makes sense, but decoupling (at least in the intermediate term) did not occur. China may not be ready to decouple, I suspect they want controlled decoupling, not a rapid, uncontrolled one with the resultant political instablity. Same for Japan. I'm not sure Bernanke will be able to sponge up all this liquidity fast enough if inflationary forces get out of hand SOMETIME in the FUTURE.
A broken clock is right twice a day. Listening to Schiff is like taking a Economics 100 course. Of course inflation will occur it has too, this is simple economic theory(Lots of Dollars in the system and a huge debt load is a recipe for severe inflation[Zimbabwe anyone!]). With his overly loud trumpeting of the obvious it should lead people to question what his real motives are. The scenario he proposes would probably lead the US to confiscate all gold and silver bullion from investors because a nation cannot allow its self to have a worthless currency-the USD would have to be attached to any standard to prop it up. But if this were to happen, the world would be in shambles- China completely "decoupled" forced to eek out an meager income of international trade with Fiji or maybe Uganda or whomever else they can get to buy all the crap the US doesn't because the US will be a burning wreckage of Dollars from sea to shining sea.
I liked what he had to say about the Housing and Credit bubble. But, although his view of inflation is is correct, it is not as horrendous as he implies. Gold is stagnant. It had a technical pop about a week ago and no follow through. Oil is slowly dying as inventories grow and Peak Oil cannot be defended anymore. Never take at face value what someone is saying if they have a financial interest in what they are talking about. I know he lost money but he needs to provide real sound information and not impassioned pleas for people to buy the stuff he was pandering 2 years ago. He is sounding more and more like Connie De Groot but on the opposite side of the fence.
When prices inflate again and the dollar dives it will be painful for us all, but the simple fact remains that the world economy is absolutely tied to the US and that probably won't change for a long long time. As long as the WORLD uses fiat currency, ITS intrinsic value will always be more than that of gold or silver. Hard asset prices have no true meaning other than what people believe they are worth and NOTHING to do with intrinsic value. If we go back to a gold standard than I will buy gold until I die because THEN it will truly be worth something.
Good luck trading. The Trend is your Friend.
lots of foreign currency bashing but take a look at the yen. it's killing the dollar
If you'd listened to Schiff's dollar arguments and invested your savings in it, you'd be down even further than the Dow.
Jack Crooks has it right -- the dollar is on its way up... WAY up... as a result of the collapse of overvalued European and Asian currencies as they slash interest rates and the resulting rush to the US dollar.
Had you invested in the dollar at the same time that Schiff was telling you to go to Euros and sterling, you'd have made about 1,800% while the market plunged 70%.
Schiff got the basic story about the economy right -- then again, any old fool could have done so. His gold-bug rants are ridiculous, as much an article of faith (not facts) as any other right-wing religious extremist.
Go with the facts. The facts are that the dollar ALREADY DID its decline in the last several years, and the resulting European currency bubble (and burst) will result in a HUGE surge in dollars over the next six months.
Schiff understood the disease but not the cure
He didn't anticipate what the rush to liquidate would do to the dollar or commodities. Hell, nor did I, but got lucky as I liquidated I went to dollars and then didn't find a better place to put them.
Yet.
But over time, he'll be right.. Once we make the turn, it will be a big one
I think I flat out disagree with Schiff's comment. I think if you sit down and think a bit, the US was not as leveraged as other nations. Just do some research.
In addition, we are delevering first. We are going back to normal first, we are the driving force.
You will see how those other nations look a year from now. They will be in rubbles. China might go into a revolution. I mean, I already started hearing about factories shutting down left and right.
Investors are not stupid, I would be buying dollars too. I am not saying anything against gold here, as gold is a real currency.
Dny
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