Last week’s Inside Commodities conference, presented by Index Universe, had a slew of well-known speakers and industry experts. Of the big names on the list, Peter Schiff was one of the most anticipated panelists of the day, as his thoughts on precious metals have long been followed by investors. As usual, Schiff did not disappoint as he commented on not only gold, but the surrounding economy and where he thinks the U.S. is headed in the future [for more gold news and analysis subscribe to our free newsletter].
Starting with gold, Schiff was quick to put together his case for the asset amid all of the dollar-printing and fear over the economy. There is no such thing as a sure thing when it comes to investing, he noted, but gold is the closest thing he has ever seen to being a sure thing. The dollar will eventually depreciate as Bernanke and the Fed continue to print money at will with the new round of open-ended quantitative easing, leaving a bright future for gold. Schiff was also quick to note, however, that gold should not be seen as an alternative to stocks, but rather as a store of value.
Working off his statements of QE3, Schiff feels that “Helicopter Ben” will continue to print until we “OD on cheap money” and inflation begins to kick up. Once inflation starts kicking up, the Fed will be forced to raise interest rates which will have a devastating impact on our economy, and send us into a deeper recession than 2008. He made it a point to note that his book “Crash Proof – How to Profit from the Coming Economic Collapse” was not written about the 2008 crash, but rather what would come after that initial recession, which he predicted at a different juncture. To account for the coming financial collapse, Schiff insisted on buying gold on the dips and holding, because he thinks that one day the precious metal will rally and never look back [see also Do You Buy In To The Precious Metals Rally?].
Finally, Schiff made some interesting comments regarding inflation/deflation and how it relates to gold. When one audience member asked how gold would perform during deflation, Schiff pointed out that those who hold gold actually experience deflation, as most other commodities have dipped relative to gold in the past. His point was that owning gold over time will watch all other assets deflate, allowing you to buy more of them given that your gold is now more valuable than said asset, be it stocks or commodities or what have you.
His final reason for bullishness on gold revolved around the Chinese, pointing out that despite being the world’s largest producer of the yellow metal, China still imports it from abroad in order to accumulate a massive storage. Schiff discussed the possibility of China moving towards a wholly gold-backed currency sometime in the future as he made a compelling case for investing in everyone’s favorite commodity.
Disclosure: No positions at time of writing.