Peter Schiff: Tokenization Gold Can Remonetize Gold

Peter recently joined Alessandro from Risk Takers for an interview on gold’s recent price action, crypto, and the latest on the war with Iran. Peter stakes out a pragmatic position on the future of money: while he remains skeptical of cryptocurrencies as monetary replacements, he sees real potential in tokenized gold to make sound money usable again. Over the course of these remarks he ties that idea to his long-standing view that the dollar is weak, warns about household and government indebtedness, reflects on past crises in housing finance, and counsels crypto holders to hedge with gold.

He starts by explaining why tokenized gold could do much of what Bitcoin promised but failed to deliver for everyday transactions:

But as far as tokenized gold, and as far as helping people utilize gold as the medium of exchange, and as a unit account, you know, remonetizing gold for the public, that has potential to the extent that it’s more widely adopted and people move away from fiat and transact in gold, because tokenized gold makes gold a lot more usable without having government involvement. It makes gold a lot more portable, a lot more fungible. It does a lot of the things that Bitcoin promised to do, but really can’t deliver.

He reminds listeners that many of his views come from having correctly read prior bubbles, starting with housing, and that his market positions reflected that understanding:

I really understood the dynamics in the housing market. And, you know, I knew how it was being financed, I knew how it was being enabled, through artificially low interest rates and government guarantees. And I knew about all the fraud in the underwriting process, securitization process, you know, we were shorting the subprime market. So I understood the problems. I also understood how the economy really rested on the foundation of this housing bubble.

That experience feeds into his core portfolio stance: being short the dollar by owning gold, which he frames as an anti-dollar position that has paid off over the long run:

Well, I’ve been short the dollar for 20 years. I’m mainly short the dollar by being long gold, which is anti-dollar. And obviously, the dollar has lost a lot of value. When I first started buying gold, it was under $300. Even though it’s pulled back a lot in the last couple of weeks, it’s still above $4,500. So it’s a lot higher than it was, which means the dollar has lost a lot of value.

Peter connects the macro picture to ordinary Americans, warning that consumer finances are stretched and that both households and governments are approaching limits on borrowing:

The American consumer is already living on borrowed time. You know, they’re leveraged to the max, they live paycheck to paycheck, and they can’t even live on their paychecks; they’re living on debt, credit card debt, other forms of loans. So I think at some point, this thing is going to end, because they’re not going to be able to take on more debt, the lenders are not going to be willing to extend credit on terms that they can afford if they’re willing to extend credit on any terms. And, you know, that applies to the whole country, not just to the individual borrower, but to the US government. 

Finally, Peter offers practical advice to crypto holders: even if you are bullish on Bitcoin, don’t be all-in. He urges a simple risk-management approach—take profits and diversify into gold and other assets so you protect real purchasing power:

I would just appeal to your audience– you know, even if you don’t think I’m right and you think Bitcoin is going to be this great thing and it’s really going to go to the moon and you guys are going to get rich, don’t be all in on the trade. Hedge your bets. Take some money off the table. Even if Bitcoin goes to a million or 10 million, you’ll still make a lot of money if you sell half now, because you’ll make a lot of money on the half that you don’t sell. But on the half that you do sell, you can invest in gold and other things and you can make money there, too.

Miss Peter’s latest Zero Hedge debate? Check it out here.

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