Home > Peter Schiff: A Much Bigger Collapse Is Coming (GLD, SLV, IAU, AGQ, PHYS)

Peter Schiff: A Much Bigger Collapse Is Coming (GLD, SLV, IAU, AGQ, PHYS)

July 18th, 2012

Dominique de Kevelioc de Bailleul: Euro Pacific Capital CEO Peter Schiff received top headline on Yahoo Finance News Tuesday, encouraging investors to loading up on gold and silver before the rush from global investors into precious metals becomes the only game in town.

The global financial crisis will inevitably move to the other side of the Atlantic to the U.S., as the focus on the dollar’s terrible fundamentals once again puts pressure on the Treasury market.  And when that day comes, the selling of US debt and market turmoil it will ignite will dwarf Europe’s sovereign debt catastrophe, according to him. Get my next ALERT 100% FREE

“We’ve [U.S.] got a much bigger collapse coming, and not just of the markets but of the economy” Schiff tells Yahoo’s Breakout host Jeff Mack. “It’s like what you’re seeing in Europe right now, only worse.”

In agreement with Swiss economist Marc Faber and commodities trader Jim Rogers, Schiff predicts the Depression of the U.S. economy will deepen some time in 2013.

As the Fed responds with more aggressive QE to prop up banks, in addition to maintaining historically record low debt carrying costs to Treasury, investors will most likely come to realize that the Fed has become powerless to affect any positive outcome to the crisis.  More jobs will be lost, tax revenue to the Treasury will fall, and deficits will soar even higher than the $1.5 trillion deficit expected for fiscal 2013.

“That’s when it really is going to get interesting, because that’s when we hit our real fiscal cliff, when we’re going to have to slash — and I mean slash — government spending,” says Schiff.

“Alternatively, we can bail everybody out, pretend we can print our way out of a crisis, and, instead, we have runaway inflation, or hyper-inflation, which is going to be far worse than the collapse we would have if we did the right thing and just let everything implode,” Schiff continues.

But Bernanke will most likely make good on his promise to economist Milton Friedman (1912-2006) during a speech the Fed Chairman made at Friedman’s 90th birthday celebration.  In his speech, Bernanke relived the Fed’s monetary policy responses to the financial crisis of the 1930s, and praised Friedman for pointing out that the Fed’s restriction of money supply to stem the flow of gold out of the United States was a mistake.  The Fed, instead, should have increased money supply to save the banking system and move off the gold standard (as Britain did earlier in the crisis).

“This action [raising of interest rates] stemmed the outflow of gold but contributed to what Friedman and Schwartz called a ‘spectacular’ increase in bank failures and bank runs, with 522 commercial banks closing their doors in October alone,” Bernanke said At the Conference to Honor Milton Friedman, University of Chicago, Chicago, Illinois .

“The policy tightening and the ongoing collapse of the banking system caused the money supply to fall precipitously, and the declines in output and prices became even more virulent.  Again, the logic is that a monetary policy change related to objectives other than the domestic economy–in this case, defense of the dollar against external attack–were followed by changes in domestic output and prices in the predicted direction [down].”

In 1931, the gold price was fixed at $20.67, making it a bargain to holders of U.S. dollars if the Fed had acted by debasing the dollar.  But instead, the Fed decided to protect the dollar from “attack” by domestic and foreign holders, a policy move that Schiff believes is in the best interest of the U.S. economy, today.

That’s not likely to happen, however.  It’s clear from the passage, above, of Bernanke’s entire speech that Bernanke will sacrifice the U.S. dollar in the hopes of saving the banking system; he believes it’s a small price to pay to prevent the decimation of the banking sector—the very point of Friedman’s lifetime of work.

“Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve,” Bernanke ended his speech.  “I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry.  But thanks to you, we won’t do it again.”

And Schiff takes Bernanke at his word, and recommends that investors buy gold and silver before “Helicopter” Ben makes good on his promise to Milton Friedman of 10 years ago.

Related Tickers: SPDR Gold Trust (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), iShares Gold Trust (NYSEARCA:IAU), ProShares Ultra Silver ETF (NYSEARCA:AGQ), Sprott Physical Gold Trust (NYSEARCA:PHYS).

By Dominique de Kevelioc de Bailleul From Beacon Equity Research

BeaconEquity.com is committed to producing the highest-quality insight and analysis of small-cap  stocks, emerging technology stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily OTC stocks in the stock market today, which have traditionally been shunned by Wall Street.  We have particular expertise with renewable energy stocks, biotech stocks, oil stocks, green energy stocks and internet stocks. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.



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  1. Cranios
    June 26th, 2013 at 15:43 | #1

    Schiff is just as wrong by being perpetually bearish, as the guy who’s perpetually bullish. Only more so, since stocks go up more than they go down, in any decently long time period. Amazing what an easy time stopped clocks have making money just by saying this stuff.

  2. AP
    June 1st, 2013 at 21:56 | #2

    PAN & KEN – I’d love to continue this dialogue. I hope we can do so cordially.

    I am very torn about the Armagedon Hedge (i’ll stop short of calling it a trade, because trade implies that its part of a normal course of markets, and if Armagedon appears, well, normal is out the window).

    On one hand, Peter was absolutely right leading up to 2007, and one would have made a lot of money following his advice leading up to these years. Looking forward, I think there is a lot of credibility to being concerned about the various economic policies being put forward by the U.S., Eurozone, Japan, etc.

    On the other hand, the point could be made that even a broken clock is right twice a day. Peter was correct in 2007 and 2008, but if one had just hung tight they would have not lost a penny (on a nominal basis). And even if he is right, if he is as right as much as he thinks, the better investment is probably bullets and butter. G

  3. Ken Danagger
    May 31st, 2013 at 19:27 | #3

    He’s only wrong until he is right. Just like back in 2006 and 2007. The mainstream media ridiculed him for years. Lots of financial talking heads attacked and actually laughed at him on-air. He steadfastly kept warning people that the bubble was going to pop. In 2008 his predictions came true. The bubble didn’t just pop – it exploded!
    How soon fools forget.

  4. panskeptic
    May 21st, 2013 at 01:07 | #4

    Peter Schiff has been wrong at the top of his lungs for at least the last five years.

    Anyone following Schiff’s advice closely has lost 90% of his money. The Armageddon trade is a bad one and will remain one for the foreseeable future.

    August 16th, 2012 at 08:41 | #5


  6. Matt
    July 19th, 2012 at 12:54 | #6

    Josh….go to apmex.com…or Kitco.com….both reputable ..you can order online or call them. Since toyou are new to this…you might want to call and get your questions answered…I’ve found apmex to be very helpful over the phone…

  7. Steve
    July 18th, 2012 at 15:18 | #7

    Also Josh, buy the most common, recognizable, bullion coins. Maple Leafs and Krugerands are great starters for you.

  8. Steve
    July 18th, 2012 at 15:16 | #8

    Hey Josh,
    Mining companies are tricky picks, you will need to research each company individually. Generally, American mining companies are overpriced due to high regulation, and high production costs. Look to Canada and Mexico, but still be cautious.

    As for physical, you abosultely want bullion. Rare, “numismatics” are like trading baseball cards and not recomended (unless you like trading baseball cards).

    For bullion, go to one of the two. Kitco or APMex. They are the two leaders and have very competive pricing, just a few percent over spot price, good service, AND, they will buy it back from you when needed.

    Hope this helps.

  9. Josh
    July 18th, 2012 at 13:46 | #9

    When buying gold or silver (I’m a newbie as you’ll see), where would you buy it? Are we talking about Gold and Silver mining companies or physical gold and silver bullion? If it’s bullion, where do you go? The only gold and silver sales I can see outside of the stock market is that sold in pawn shops. I obviously wouln’t put investment money into gold from a pawn shop. Any clarity?

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