Outspoken president of Euro Pacific Capital says investors should get out of U.S. bonds and jump into gold and other natural resources before nation disintegrates.
Peter Schiff, president and chief global strategist of Euro Pacific Capital, is more than a little bit concerned about President Obama’s re-election.
Ever the provocateur, Schiff believes that the president is a socialist who was essentially elected by people who want free things—the perfect bedfellows for a Federal Reserve he argues is bent on debasing the dollar.
What does it all point to? Looking at earlier predictions of his that gold could reach as high as $5,000 a troy ounce from a dollar perspective, Schiff says it’s time to pay the piper, and said the greenback will almost surely collapse during Obama’s second term, as a whole lot of bad economic policy comes to a head.
Ludwig: Before getting too deeply into the implications of Obama’s re-election, did you see any difference between what a Romney presidency would have meant to the U.S. economy vs. another four years of Obama?
Schiff: Well, if Romney had won, we’d still have a lot of troubles. But it certainly would have been an improvement to have had Romney in office. But we still have a huge crisis coming, and I don’t think Romney being in office would have prevented that. But it would have given me a little bit more hope that we would come out of this a little bit better—that we might have tried more effective market-oriented solutions to these problems.
Ludwig: The gold market had a bit more of a bid in it since it started to seem more clear that Obama would probably win. Do you take that move seriously, or do you think that, at the end of the day, we’d see the same kind of monetary easing in either an Obama or a Romney scenario?
Schiff: The dollar was going to go down and gold was going to go up regardless. The re-election of Obama and the politics behind it just really shows the trouble America is in as a nation and as a society. The types of leaders we’re likely to elect, and the types of policies we’re likely to pursue are going to substantially undermine the economy. It’s almost like a self-perpetuating prophesy, because the more the government interferes in the economy, the more regulations we have; the more government spending we have, the more taxes we have—particularly on those with upper income—the worse the economy is going to get, the lower our living standard is going to go and the more good job opportunities are going to be diminished.
And that’s very fertile ground for politicians to promise relief in the form of more government. And, more government creates the need for more government; because the more government we have, the more poverty we have. We’re in that spiral right now; this is how democracies die. We’re in a situation, votingwise, where we have more people in the wagon than we have pulling it. The way you get elected is you promise to people who are riding in the wagon more free stuff, an easier ride; and you also promise to whip the people pulling the wagon a little harder and make them do a little bit more.
And as you do that, there are always people pulling the wagon who decide they are tired of pulling the wagon, and they want to jump in with everyone else. So you get even more people looking for something from government and you have fewer people to pay the bills. And this is where we are—a disintegrating nation.