Peter Schiff: Traders are “Selling America”

On Sunday’s podcast, Peter dissects another rough stretch for American financial markets, spotlighting mounting selloffs across sectors and another breakout moment for gold. He breaks down why US treasuries are now riskier than ever, the structural problems with fiscal and monetary policy, and how tariffs are hitting American consumers harder than politicians care to admit. 

The week’s headlines were dominated by red ink, but Peter points out that there’s still one clear winner:

Anyway, it was a big week in the markets and it was a bad week for US financial markets across the board. It was another ‘sell America’ week, and I think we’re going to have a lot more weeks like this one. In fact, if you remember when Trump first won and everybody was talking about the Trump trade being ‘buy America,’ I was one of the few people that said, ‘No, the Trump trade was sell America’ because I understood the ramifications of the policies that Trump would be pursuing, and the markets are reacting exactly as I had expected them to react. The star of the week was gold. Gold rose more than 5% on the week.

Peter doesn’t mince words when discussing the supposed safety of US government bonds. He urges investors to stop pretending that treasuries are a safe haven, especially given America’s ballooning obligations:

Again, as far as I’m concerned, it’s all junk bonds. If you buy U.S. treasuries, you have no chance of making any money; you will lose for sure. The only question is how you’re going to lose. You’re either going to lose because the Treasury defaults and that is a real possibility. I’d say it’s a lower possibility, although if you happen to be in China and you own U.S. treasuries, I’d say it’s a pretty high possibility. … But either the government defaults and they don’t pay you, or they pay you by printing a lot of money. 

This shift in perception, from risk-free to risky, marks a fundamental change in global markets. Peter revisits how even after major geopolitical shocks, what used to be the “go-to” assets are looking shaky:

One of the most significant developments really this year is that treasuries have moved from a safe haven to a risk asset. That was evident after the Liberation Day announcement when treasuries got killed along with stocks. I’ve said this for a long time that eventually the only safe haven left standing was going to be gold. Gold is the only thing that really rallied during that initial week or so of collapse. Investors went into gold.

On the policy front, Peter calls out both major parties, arguing that regardless of who’s steering the ship, America’s debt trajectory is accelerating:

But so this big, beautiful bill not only doesn’t put us on a different course when it comes to the debt. We stay on the same course: we’ve just stepped on the gas. So we were on a path to a debt crisis and a dollar crisis. We’re staying on that path. We’re just driving faster, so we’re just going to get to that destination quicker because we elected Trump. Now, of course, had we elected Kamala Harris, I’m sure that whatever budget they’d have come up with– assuming the Democrats came in with her and she had both houses of Congress– I’m sure their deficits might have been even bigger.

The real-world impact hits consumers hardest, Peter explains, especially as tariffs bite and the dollar’s weakness amplifies the pain at the checkout counter:

Anyway, the bottom line is Walmart’s got to raise prices. Everybody’s got to raise prices. And as Trump realizes this, maybe that’s what’s happening; he realizes that it’s not external revenue. It’s internal revenue– that the people who pay the tariffs are the American consumers, especially with the weakness of the dollar. Because remember, one of the things that a lot of these so-called experts were saying was that the tariffs were going to strengthen the dollar and the stronger dollar was going to help offset the tariffs because we were going to import cheaper because of the strong dollar. Well, it has actually had the opposite effect.

For more of Peter’s analysis last week, check out the second episode of the revamped Friday Gold Wrap podcast!