Monday, May 18, 2015

Gold to reward investors big time

There really is no limit to how high gold prices can rise. We’ll always have to do [QE] to offset the damage from the previous QE.

It’s like trying to put out a fire with gasoline. That’s all the Fed has—gasoline. And everyone expects the fire to go out. It can’t go out.

You need to be long gold and there is going to be a huge payday. I think the upside in gold stocks is phenomenal from here,

Peter Schiff is a smart investor and author of several best selling books. He correctly predicted the economic meltdown of 2008 - 2009

Monday, May 11, 2015

Janet Yellen was right ...sort of

Janet Yellen was half right when she said the stock market was overvalued.

If the Fed was really going to raise interest rates [the stock market] would be a lot lower. That's also why I don't think the Fed is going to raise interest rates, because I don't think Janet Yellen wants the stock market to go down. This whole phony recovery is based on asset bubbles and the Fed is not going to intentionally prick those bubbles."

I don't know how far the market will drop because I don't think the Fed will allow it to.


Peter Schiff is a smart investor and author of several best selling books. He correctly predicted the economic meltdown of 2008 - 2009

Wednesday, May 6, 2015

China probably wont have a US styled recession

The recession in China is when the economy is growing at 7% instead of like 9%, but I don't think they are going to have a recession the way we measure it. I do think that there are misallocations in the Chinese economy that are the result of their monetary policy being too loose, their interest rates being to low. They have printed too much money but all that has been to prop up our economy and to prop up the US dollar. I think it has been China's effort to prop up the US economy that has been undermining their own economy. What they need to do is stop buying treasuries, let their own currency rise so that their own people can consume more of what they produce and stop lending money to Americans to buy things that we cannot afford.


Peter Schiff is a smart investor and author of several best selling books. He correctly predicted the economic meltdown of 2008 - 2009

Things could be worse for Greece if it exits EU

I think the politicians in Greece have to talk in a certain way to get elected – 'We are going to take a tough line against the Europeans' – and that is how they appeal to the masses and they get votes. But at the end of the day, once they are in power again they are lot more pragmatic and they are going to actually look at the situation. If they actually leave the eurozone, then what are they going to do? Then the country is going to implode, the currency is going to collapse, and now they are going to have to impose austerity on themselves. At least now they can always blame it on Germany or Brussels. If they actually leave the eurozone then who do they have to blame? They are going to have to stew in their own brew.

Everybody thinks that it is going to be terrible for Europe if Greece leaves. Look, it could be the best thing for the eurozone to have a sacrificial lamb, to let Portugal or Spain or somebody else have a good look at life after the euro and then maybe they will be shocked into making some reforms, kind of like scared straight, and say, 'Hey, look. I don't want to end up like Greece so let's start cutting back on government spending now so that we don't have to leave or get kicked out.'

You can't have Greece holding everybody else hostage by saying, 'We are going to leave unless you keep giving us more and more money.' That is an even greater moral hazard because that sends a message to other countries to do the same thing if there are no consequences to being reckless and there is no reward for being frugal or prudent. They just can't cave in to Greece's demands.

But I feel bad for Greece in that it was government moral hazard that enabled the Greek government to get so indebted in the first place. It's just like what we have done in the US. We did the same thing. Look at all the money Puerto Rico owes, the debt crisis there. Why does Puerto Rico owe so much money, and why were they able to borrow so much money in the first place? It's because the US government made Puerto Rican debt tax free in all 50 states and so muni bond funds were eager to gobble. Plus, by keeping interest rates so low everybody was chasing yield, and they found it in Puerto Rican bonds. Puerto Rican politicians then took advantage of all that demand by borrowing money at artificially low rates and using it to buy votes.

Now they are in trouble, but they would not be so highly indebted but for our tax code and the Fed. Politicians just do what politicians do. They are always looking for a handout. That's how they get votes. They promise something for nothing and cheap money allows them to deliver on that promise until the bill comes due. And it always comes due, whether it is Greece or the United States. We have been throwing this party a lot longer then they have and we are in much worse shape. When interest rates go up the real Greek tragedy will play out in America.


Peter Schiff is a smart investor and author of several best selling books. He correctly predicted the economic meltdown of 2008 - 2009

Monday, May 4, 2015

Greece is example of government that wants to avoid telling the truth

I hope for the sake of Greeks that the drachma does not come back. It did not serve them well in the past but what it shows you is the degree to which politicians will avoid telling the truth. The Greek politicians don't want to level with Greek voters that they can't pay the pensions and they can't pay these inflated salaries and benefits that they promised, so they want to pay them in drachma. But the drachmas aren't going to buy much.

Greece would probably be better served to stick with the euro and to actually implement the reforms – real austerity on the part of the government. They need less government not just trying to get more taxes from the Greek workers. They just need fewer people living off those Greek taxpayers. They need less government in Greece. I would be all for Greece leaving the eurozone if they wanted to establish a free-market paradise, if they were going to become like a Hong Kong or a Singapore in Europe, if they were going to just say, 'Yeah, we want to be out of the eurozone so we can have sound monetary policy, limited government, low taxes.' But instead, they are promising even more socialism. They say, 'We need to leave the eurozone so we can have even more socialism than we have now.'


Peter Schiff is a smart investor and author of several best selling books. He correctly predicted the economic meltdown of 2008 - 2009

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