Peter Schiff: Gold at $4,000 Is a Warning

Peter spends Wednesday’s podcast unpacking gold’s recent milestone and tracing how decades of monetary policy produced the moment we’re in now. He connects December futures breaking the $4,000 headline to the deeper story of the post-1971 dollar regime, sanctions-driven de-dollarization, and what he sees as an unavoidable market reckoning ahead.

He opens by correcting a common misunderstanding about the recent headlines and why the spot price matters more than futures for record tallies:

Well yesterday December gold futures traded above 4,000 for the first time ever. In fact I think they closed above 4,000 and that became a pretty big news story at least in the financial media. … The last time gold was up this much in a calendar year was the 1970s, and if you’ve got to go back to the 1970s to find something like this that probably means that what is happening now is likely as significant as what happened then.

He then takes listeners back to the Nixon shock and explains why the 1971 break with gold changed everything for the dollar:

Now what happened in the 1970s you got to understand this because it was 1971 that Nixon took us off the gold standard; it was supposed to be a temporary move but it’s now been better than 50 years and we didn’t go back on it but that was a very significant development. … We defaulted on those notes; the world held our notes because we promised to pay gold and then we told the world we’re paying nothing, I mean we didn’t even say we’ll give you you know 50 cents on the dollar 25 cents on the dollar we told the world we’re giving you nothing right we’re not giving you any gold for these notes. It was a hundred percent default.

To make the historical point concrete, he lays out how paying in unbacked paper pushed commodity prices sharply higher even if their real, gold-denominated cost fell:

Now of course we said you’re free to hold those dollars, they’re just not backed by gold anymore right, and so the world held those dollars but at a much lower rate and that’s why prices went up so much. … If you look at what happened to oil prices in terms of gold the real price of oil went down; it’s just that because we paid in paper the dollar price went way up.

Peter says the more important shift now isn’t only inflation or higher commodity prices, but the move away from the dollar as the planet’s reserve currency — a trend he thinks sanctions accelerated and central banks are responding to by diversifying into gold and other assets:

So getting back to gold, what I think is significant about the 2020s is that the world is going off the dollar standard. I particularly started to hammer this point after former president Biden put the sanctions on Russia for the Ukraine invasion and I said this was a huge mistake that Biden made because it was a wake-up call for all of the nations of the world that holding US dollars as a reserve is a risk because we could pull the rug out from under you whenever we want. The minute we established that precedent we basically told the rest of the world you need to get rid of your dollars if you want to eliminate this risk. 

He’s frustrated by mainstream coverage that treats the $4,000 headlines as a curiosity rather than a structural warning sign, and he compares gold’s move to the subprime canary before the financial crisis:

It’s interesting because I’m watching now the financial media discussing gold and none of the people talking about it really understood the significance of what this means; everybody is diminishing gold’s significance, saying okay gold is up but they don’t get it. It’s like back in 2007 when the subprime market collapsed I knew exactly what that meant, I knew that a bigger financial crisis was coming because I’ve been warning about it for years and I said that it would start in subprime, I knew that was the weakest link in the chain but I knew the whole chain was gonna fall apart. The canary in the coal mine analogy applies here because gold is more susceptible and if the canary drops dead you better get the hell out of that mine.

Finally, Peter lays out a specific scenario and a set of defensive moves: a big dollar drop, commodity spike, rising long-term rates, and a crash in bonds — a crisis he says policy-makers can’t cure without wrecking the economy unless people prepare now with real assets outside vulnerable U.S. liabilities:

I think we’re gonna see the fallout next year sometime in 2026: we’re gonna get the big drop in the dollar, we’re gonna get the big move up in other commodities, we’re gonna see the spike in inflation, we’re gonna see a big move up in long-term interest rates and a big drop in the bond market. By then it’s too late to worry about the crisis because you’re in the middle of the crisis, and of course the price of gold is gonna be a lot higher by then but there’s also gonna be no turning back; once the dollar really comes under a collapse there’s no turning back.