Schiff on Coinage: Gold Is Heading to $7,000

Last week, Peter joined Zach Guzman on the Coinage YouTube channel to lay out why he thinks the monetary order is shifting away from the dollar and back toward real money. He walks listeners through his own vindication, the role of central banks and big investors in the pivot to gold, and how tokenized gold can give people a practical, digital way to own sound money. Throughout he frames the debate as one about policy incentives, wealth distribution, and the loss of confidence in fiat.

He begins by admitting that being right about market risk is a mixed blessing for a free-market investor and advisor, because it often means broader economic pain for others:

The entire time that I have been preparing for an economic disaster, I have advocated for policies that would either mitigate or prevent that disaster from happening, despite the fact that I was betting that it would. That’s why I tell my clients, recognize that, yes, it’s good that we’re right and we’re making money, but it’s not really something that you want to celebrate because we’re really celebrating an economic disaster.

Turning to the big-picture drivers, Peter leans on Ray Dalio’s observation about a changing reserve system and interprets it as foreign central banks moving out of dollars and into real money:

The most important thing that Dalio said, and he could have been more precise in the way he said it, is that there’s a change in the monetary order and that central banks are no longer considering fiat as a viable reserve asset. They’re moving to gold. What he really means by fiat is the U.S. dollar because the U.S. dollar is the primary reserve asset, and they’re now moving out of dollars into gold. 

He frames the widening wealth gap as an expected consequence of the very monetary and fiscal policy choices that are fueling inflation and undermining living standards for ordinary people:

It’s also important to point out that the big wealth gap is not an accident. It is a byproduct of the exact same monetary and fiscal policy that’s destroying the economy that’s created all the inflation. Government has done that.

On the question of a digital form of gold, Peter is clear: cryptocurrencies, in general, fail because they lack intrinsic backing, but tokenized gold can be a genuine bridge—digital ownership backed by physical metal in storage:

What would be digital gold is tokenized gold because tokenized gold represents ownership of gold in a digital form, but it’s backed up by the real thing. So TGold, for example, when we start issuing our tokens—right now, if you go to TGold.com, you can buy gold and silver and we will store it for you. It’s that stored gold that’s ultimately going to be tokenized if you want it tokenized. So basically, if you have an account at TGold.com and you want to withdraw your gold, we can either send you the physical metal or we can send you a token that represents ownership of that metal that you can then transfer to third parties who would have the same choice.

Finally, he blames the politicization of the Federal Reserve and its erosion of independence for accelerating the move out of dollars and into gold and silver:

The obvious politicization of the Fed, the loss of even the pretense of Fed independence, I think, is weighing heavily on the dollar and is one of the reasons that you’re seeing an acceleration into gold and silver to get out of the dollar. And you have a lot of Republicans, including Trump, that are talking about what a bad Fed chairman Powell has been. And look, I think they’ve all been bad. But on a relative scale, Yellen was probably worse. So was Bernanke and Greenspan.

What would Peter do to fix the economy? It starts with letting markets set interest rates.