Schiff w/ Diesen: Gold’s the Real Winner

In Peter’s latest interview with Glenn Diesen, Peter lays out why he sees gold as the clearest signal of failed monetary and fiscal policy and why mainstream economic statistics mislead the public. He takes aim at GDP and the CPI (Consumer Price Index), warns that the Fed is primed to monetize debt again, and explains why Bitcoin’s value is ultimately a faith-based bet. He closes by pitching managed strategies that he says are built for a weak dollar and rising commodity prices.

Peter opens by reminding listeners that gold’s long run performance speaks louder than political spin and that he has been recommending it for decades:

Yeah, well, it’s easy to explain it because I’ve been forecasting it for years. When I first started recommending it to my brokerage clients at Euro Pacific Capital, gold was around 300, a little bit cheaper. So it’s more than 10X from there. It’s actually done better than the S&P 500 over the course of the past 25 years or so. And that’s a reflection of the bad monetary policy and fiscal policy of the United States government that has been destroying the value of our currency.

He next ties public sentiment about the economy to lived experience rather than political narratives, arguing that presidents get credit or blame regardless of the mechanics behind growth:

I mean, usually whether the economy is good or bad, even if it’s got nothing to do with the president, the president gets the blame if it’s bad, and he gets the credit if it’s good. And so if the public is saying they’re unhappy with the way Trump is handling the economy, what does that tell you about their personal experience of the economy? The economy is not doing well, and that’s why they’re blaming Trump and saying, I don’t like the way he’s handling the economy. If we had the strongest economy in history, then Trump’s poll number should reflect that.

Peter then turns to the official numbers and explains why GDP (Gross Domestic Product) and CPI aren’t giving people an honest picture of economic reality. He notes the GDP deflator exists to strip out inflation but says neither it nor the CPI measures price increases accurately:

But one of the reasons that it’s also unreliable is because it’s skewed by rising prices. So if we’re going to look at the economy and just put a dollar price tag on it, obviously, if we have a lot of inflation, then the GDP is going to keep going up just like everything else. Now, we’re supposed to fix that with what they call the deflator. That’s supposed to take inflation out. So you don’t just get a number going up because of inflation. It’s supposed to be real growth. The problem is the GDP deflator, like the CPI, doesn’t even come close to measuring the extent to which prices are rising. So I think the GDP is a bunch of BS, just like the CPI.

That skepticism of official measures leads into Peter’s warning about the Fed’s next moves. He sees the pause in quantitative tightening as only the prelude to renewed quantitative easing — i.e., the Fed buying government debt — which he argues will further debase the dollar and push investors into gold:

Well, that’s what they’ve been doing. And now they’re going to do it faster now that they’re ending quantitative tightening. But I think that’s just the first step to the eventual resumption of quantitative easing. And that’s, you know, the government, the Federal Reserve just going out there and monetizing government debt, which they’re going to do because the government is going to have a difficult time finding buyers for that debt in the private sector. You know, the reason that gold is around four thousand dollars an ounce is foreign central banks have been buying gold instead of dollars.

Peter also addresses Bitcoin and the psychology behind speculative assets. He frames buying Bitcoin as betting on greater future belief — a dangerous form of speculation compared with owning something with intrinsic scarcity like gold:

Now it’s continued for quite some time and it’s gathered a lot of disciples– a lot of believers in this. And so when you’re buying Bitcoin you’re making a bet that more people will believe in it in the future than who believe in it now. And you know you have to really believe that nothing is something. And to the extent that you could believe that you know you may buy Bitcoin, and if more people believe it, then more people will buy it. And the people who own it will be able to sell because there’ll be new buyers that want in.