Schiff on The Competent Investor: Even Greenspan Agrees with Me

Earlier this week, Peter appeared on The Competent Investor podcast with host Tom Bodrovics. They focus on last week’s metal sell-off, and Peter explains why investors still misunderstand precious metals and the miners that produce them. Throughout, he argues that sound money remains the sane hedge in a world of inflationary policy and fragile crypto bets.

He opens by describing what he sees as a coordinated effort to smother growing distrust in the dollar and the Fed, using both market moves and timing of political news to change the narrative:

But I think it was a coordinated attempt to basically, you know, put out the fire from gold and silver. Because I think gold and silver were basically warning that a dollar crisis was coming in a sovereign debt crisis. It was a real vote of no confidence in the administration, in the Fed. And I think they had to do something about that. So I think they coordinated the raid with the early release of Trump’s Fed pick with false talking points to disseminate to the media, that somehow this was some huge surprise.

He then turns to crypto, using an example of Michael Saylor, an overexposed Bitcoin holder and CEO of Microstrategy, to show why concentrated crypto positions are especially risky and why market support often looks like a fragile patchwork:

And the other problem is, of course, his meager gain is only on paper if he actually tried to realize the gain by selling the Bitcoin, the price would collapse and he’d have huge losses. So he’s in a very difficult position where he has a highly concentrated position that he can’t sell. And I think that’s why he keeps buying more because it’s his buying that is preventing an even bigger drop. But, you know, there’s a limit to how long he can do that.

Peter reminds listeners that gold has long served as a market signal — not as a superstition but as a practical indicator used even by reputedly “modern” Fed chairs — and that ignoring that signal is dangerous:

But when Greenspan was Fed chair, he specifically said that he followed gold as his main indicator, you know, and it was a market mechanism to let him know if the decisions they were making were correct. So if the gold price was moving higher above four thousand four hundred, that told Greenspan that we’re too loose and we need to tighten up. If gold went below 300, that would be the market saying you’re too tight. And he said that this in a way was a de facto gold standard because gold was the barometer that he was using to guide him in his decisions.

He warns that waiting for the crisis to become undeniable is a losing strategy: bond markets and the dollar will show the stress too, but by then options are limited and damage is greater:

But the next domino that’s going to fall is going to be the bond market and the U.S. dollar relative to fiat currency. It’s not just relative to gold. But the problem is you can’t wait for that. I mean, if you wait for it to get that bad and again, what are you going to do about it? If you don’t heed the warning that gold is sending and you just continue going towards the edge of a cliff, you’re going to go over the cliff.

Finally, he takes aim at the market’s dismissal of mining stocks, arguing that investors treat current high metal prices as a transient bubble and therefore underprice miners — a mistake if high metal prices are the new normal or continue to climb:

Yeah, I mean, I think that the investment community does not understand what’s happening in the precious metals. And they think that this is a bubble and probably what just happened the last couple days validates that. And so they don’t think the high prices are sustainable. And so they’re not willing to attribute a big increase in earnings, future earnings to these mining companies, if they don’t believe these high prices will last. I think they’re wrong; in fact, not only do I expect the high prices to stay, but I expect them to go even higher.

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