← The Peter Schiff Show Podcast
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- [00:03]
Peter Schiff
You make no friends in the pits and you take no prisoners.
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Peter Schiff
in soybeans, and the next, boom. Your kids don't go to college and
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they've repossessed your Bentley.
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Peter Schiff
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- [00:39]
Peter Schiff
The Peter Schiff Show. Hi, everybody, this is Peter Schiff and I am recording today's podcast from the British Virgin Islands. I am here for the week on a family vacation. We're celebrating Passover and Easter, I guess on Sunday we had our first ever Passover Seder. A brief version on on the boat on April 1, April Fool's Day. The US markets are closed in observance of the Good Friday holiday today. But we did get some economic data that came out earlier today. It wasn't really able to affect the markets that much, although I think futures were trading and they were off a bit on on the news. We'll have more opportunities for the markets to react next week, although I think a lot of the global markets are also closed on the Monday following Easter. Easter Monday. But US Markets will be trading on Monday. The report that we got was the jobs report for March. And before I actually get into the rest of today's podcast, I'll talk about the jobs numbers because in very typical fashion, the numbers was a beat. What was reported was well in excess of what had been expected. In fact, the expectation was for just 51,000 jobs to be added during the month. And in reality, according to the government anyway, on the original estimate, we had 178,000 new jobs added in the month of March. But there was a substantial downward revision to the month of February, which was initially reported at minus 92,000. That was revised lower to minus 133,000 jobs. So over the last two months, the average is not that many jobs. But I don't believe the $178,000 number. I believe that it will revise down once, if not twice, maybe even more times than that over the course of the next year or so. So who knows how many jobs were actually created. But part of the big problem is that I think 43% of all the jobs created were in health care. That is not a healthy economy when 43% of the jobs are in health care. I mean, ideally, people don't want to spend any money on health care. They just want to be healthy. And the sicker we are, the more health care we need. But if we're a sicker nation in need of more health care, does that really indicate a strong economy? I don't think so. I would rather have an economy that eliminates health care jobs because we don't need them because we are healthier. So this is not a good sign. One of the only good signs was that we lost more government jobs and hopefully that trend will continue because we don't want government jobs. Government jobs not only have to be supported by the private sector, but in general, they actually undermine the productivity of the private sector jobs. So the fewer government jobs we have, the less government workers we have to pay for, but the more productive the rest of us are. Manufacturing, for a Change actually added 15,000 jobs and it only shed 6,000 jobs in February. The original estimate was minus 12,000. So that was a bit of an improvement. The unemployment rate dropped a tad from 4.4 to 4.3%. But the main reason for that was a big drop in labor force participation. That edged lower to 61.9 from 62. That is a five year low. So a lot of people are leaving the labor force. That is why fewer people are unemployed. Because if you leave the labor force, even though you're not employed, because you're not in the labor force, you're also not considered unemployed because. Because you're not in the labor force. So that is helping to make the unemployment rate appear lower than it actually is because a lot of Americans are not working. Also, average hourly earnings rose less than expected.2. That was half the gain of February's.4 below the 0.3 estimate. But more importantly, the year over year gain and average hourly earnings was 3.5%. Now again, this is not adjusted for inflation. I think the real rate of inflation is quite a bit above 3.5% year over year. So real wages continue to fall. But taken on face value, that nominal gain, that 3.5% increase, that is the
- [05:50]
Pebble and Other Advertisers
smallest in about five years.
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Peter Schiff
So we have the lowest labor force participation in five years and the slowest growth in earnings in five years. The prior year over year number was 3.8%. So overall this was a weak number. I mean, even though we beat the estimate, it was a low Bar because 178,000 jobs is nothing to brag about. I mean, Trump will obviously brag about it, but there's nothing really to brag about, especially when it follows a month where 133,000 jobs were lost. So the labor market is weak, wage growth is weak, and that's because the economy is weak. And all of this is going to be exacerbated by the war. In fact, the longer the war wages, the worse it's going to get.
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Pebble and Other Advertisers
In fact, we did get some other
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Peter Schiff
economic news that came out this morning as well that may get overlooked, and that was the PMI Composite Index. And the overall index came out lower than expected at 50.3. But what is a bigger shock potentially is the service index, service sector, which is the lion's share of the US Economy, unfortunately. But the service index rose or came out at 49.8 from the prior month of 51.7 versus an expectation of 51.1. So anything below 50 is contraction, recession territory. So that is weakness. But if you dip beneath the surface and look at the prices paid, prices continue to rise sharply in that index. So we have rising prices, prices going up more than expected, and the service sector in contraction. So again, this is more evidence of stagflation. What I have been forecasting and what the Fed has been in denial about is the economic reality. In fact, we got the jolts numbers that came out earlier in the week. Again, another sub 7 million number, 6.88 million, in fact. Well, the prior month which was originally reported at 6.946 million jobs openings, that was actually revised higher to 7.24. But then in February it collapsed to 6.882. I would imagine a much bigger drop in March now that the war got started, and probably an even bigger drop in April when it becomes obvious that the war is not ending. Because remember, early on this was supposed to be over by now. And I will get to that momentarily. I want to just finish the talk a little bit about the economic data points that have been coming out. So it's obvious to me that stagflation is here and if it wasn't here before, the war is clearly here now. In fact, the big market story of the week was oil. And oil prices yesterday on Thursday rose about, I don't know, 11% or so. I think maybe on the week we were down. And one of the reasons oil prices I think might have come down a bit on Wednesday was because there was some anticipation regarding the President's speech that he gave last night, which I'm going to talk about, which I think raised some optimism that maybe there'd be some de escalation, maybe Trump was going to announce some positive development that might bring the war to a war, a more rapid conclusion. But when that turned out not to be the case, oil prices shot up and West Texas crude ended the week at $112 a barrel.
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Pebble and Other Advertisers
I think it ended the prior week
- [10:02]
Peter Schiff
at 102, which I think might have been the first close above 100. And now we're more than 10% above $100 a barrel. So oil prices and everything related to energy, gasoline, heating oil, whatever it is, prices are headed a lot higher. Diesel fuel, jet fuel. And this is going to impact the entire economy, not just the use of energy directly, but the use of energy indirectly throughout the production process, throughout the economy. Everything that is transported requires energy, whether it's transported by ship, by plane, however, stuff by truck, higher energy costs are going to bleed throughout an already weakening economy. And if you look at the way the markets reacted to the news throughout the week, and I'll get to some of these more specific numbers, I think on the other side of the first commercial break. But if you look at the way the markets were reacting, they were moving in lockstep. Stocks, bonds, gold, bitcoin. Every market has been trading the opposite of oil. You could pretty much look at the price of oil and know what everything else was doing. If oil was up, everything else was down. If oil was down, everything else was up. And the rationale behind this relationship is that oil prices going up are a reflection of the escalation of the war and the idea that the war will continue longer and have a bigger impact on the price of oil and therefore on the Fed and Fed policy in that as long as oil prices are elevated and rising, the Fed is on hold. The Fed can't cut rates even if it wants to cut rates. Even if the economic data confirms that maybe it should cut rates. The way it looks at the data, it won't because of the fear of somehow higher oil prices spilling over into higher inflation and therefore keeping the Fed on hold because of the tension between the two mandates. But I don't believe that this relationship should hold with respect to gold. Also, you can throw the dollar in there, too. The dollar goes up with, with oil and, you know, so foreign currencies rise when oil goes down and they go down when oil goes up. And again, this is the idea that a tighter Fed is going to be bullish for, for the dollar. But what traders are overlooking is the bigger picture, it doesn't matter what the Fed does with respect to rate cuts. If the Fed stays on hold or even if it notches rates up slightly, 25 basis points, 50 basis points, that is not bearish for gold, that is not bullish for the dollar because nominal rates are irrelevant. Its real rates that count. Inflation is surging by any measure. And it's not the higher oil prices that are going to cause the inflation. It's going to be the monetary policy that ultimately results from those higher oil prices because that's going to help weaken the economy. And soon investors are going to start pricing in the next round of economic stimulus, which I believe will be enacted well before the midterm elections in November. There's going to be a lot of pressure for economic stimulus going into the economy. And the higher the oil price is and the longer it stays up, the more pressure there's going to be. But the war is increasing budget deficits and all that's going to put downward pressure on Treasuries. That's going to weaken the economy. Higher interest rates, higher mortgage rates. And as the economy weakens and budget deficits widen and more money is printed, the inflation rate goes up. But immediately these higher fuel prices are going to start feeding into the CPI and especially to food. And food prices are also rising. I don't know if you've seen the price of coffee lately that's surging. But all commodity prices are going to be impacted by what's happening with fertilizer prices. And so as inflation rises, that means real rates are falling. Real interest rates in 2026 are going to be far lower than anybody had forecast. Even if we had had two or three rate cuts by, by the Fed during the year, even without those cuts, based on a massive increase in, even the way the government measures inflation, it's going to be obvious that real interest rates in 2026 are going to be much lower than anyone had forecast. And therefore the price of gold should be considerably higher and the dollar lower. Anyway, let's take a quick commercial break. We're coming right back and I'll talk more specifically about the markets on the other side.
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- [17:03]
Peter Schiff
All right, so I'm talking about the markets and let me go over what happened during the week. I already spoke about the price of oil. I want to talk about gold and silver because a week ago on Friday when I did the Shift Gold Friday market wrap and by the way, this, this podcast is gonna kill two birds with one stone. This is gonna be the Friday Shift Gold market wrap and it's gonna be the regular podcast for the Peter Schiff show. But a week ago when I did the Shift Gold Friday market wrap and again, if you're not a subscriber, make sure you go to the Schiff Gold YouTube channel and subscribe. We now do have more than 50,000 subscribers to the Shift Gold YouTube channel, but that's a fraction of the 600,000 plus I have on the main channel. By the way, if you're not a subscriber to the main channel, subscribe there as well. I want to, you know, run up the subscriber count as high as I can. But when I recorded the podcast a week ago, I mentioned that I thought the price of gold had likely bottomed. We got down to around 4,100 on Monday morning of that week before we reversed. And then we rose up. I think yesterday we got as high as almost 4800. So that's about a 17% rise. Gold ended up closing on the weekend 4676. Because we did pull back yesterday in relate in response to the President's disappointing speech which I will get into next. But we still had a 5.8% rise in the price of gold on the week. So anybody who followed my advice last weekend and went to shift gold and bought some gold and silver had a pretty good week. Silver up 7.2% on the week. Closing the week back above 70 at $72.90 but an even better performance out of the gold and silver mining stocks. This is despite yesterday's drop and the fact that the week was only three trading days long other than other than yesterday's drop. But so in the four days of the week the GDX was up 14 and a half percent and the GDXJ of 14.8%. That's after yesterday's decline. So the first three days of the week saw huge gains mostly in Tuesday and Wednesday. Most of the gain were those two days back to back. That dwarfed the gain in the stock market. The Dow was only up about 1.65% on the week S&P up about 2.4 and the Nasdaq up about 3.2. But all these indexes still down on the year. Whereas gold is still having a good year despite having its worst March since 1980. Within that it's still having a great year. But I think gold potentially could have the best April. Oh excuse me, not 1980. Gold had its worst month since 2008. 2008 in, on, on in March. But I think gold could have its best month since 1980. That's when gold had some huge gains. And of course that was the year that gold peaked out at 850. But we had some huge monthly gains. But I think the stage has been set for a huge monthly gain this April given the magnitude of the drop that should not have taken place in, in the month of March. By the way, Russell 2000 also had a pop on the week about 2%. But again all these gains are dwarfed by the gain in gold and silver. Now yields on US Treasuries did fall slightly on the week but not much. The Yield on a 10 year treasury closed at about 4.31 something and on a 30 year 4.89. So you know the highest the yields really got was about 4.4 on the 10 year and 4.99. I don't think I ever saw us touch 5%. So we're not far from the absolute highs on yields. Dollar index also had a positive week but just barely. I think it eked out about a 25 basis point gain to end the week just north of of 100. And you know I think the reason that we got the pullbacks on Friday had to do with Donald Trump's speech. Relatively short speech, if you missed it, the whole thing, you can check it out on the Internet. But the bottom line is all Trump really did is kind of rehash all of his truth social posts about the war. One of the things that Trump kept repeating was how incredible the victory was, how nobody has ever seen anything like it. Everybody is talking about it, the brilliance of the American military, how efficient we are, how devastating this victory is, how there's never been a victory anywhere as victorious. It's the greatest victory in the history of war. Again, all this puffery, braggery. The same way he talks about the economy now, of course. I mean, with all of our military might, with all of the money that we spend on the military, I mean, you would imagine that we would be able to have a decisive victory against Iran. Although he kept embellishing Iran, how they were such a big and powerful country and the big bully of the Middle east, yet we kicked their ass like there's never been an ass kicking. We killed them so fast, nobody could believe how quickly we won, how incredible the defeat is. They have no navy. It's gone. They have no Air force. It's gone. All of their defense capabilities have completely obliterated. Although if that is the case, why are we still there? If we've already won such a decisive battle and they have no navy and they have no air force, and they barely have any missiles, I mean, what's, what's there to do? I think what scared the markets, though, is he said that we're going to hit them hard, although I'm not really
- [23:19]
Pebble and Other Advertisers
sure what's left to hit.
- [23:21]
Peter Schiff
But we're going to hit them hard over the next two to three weeks. And according to Donald Trump, we are going to bomb Iran back to the Stone Age. Now, if that's the case, obviously he's going to be targeting civilian infrastructure. If we're going to bomb them back to the Stone Age, we got to get rid of their electricity, we got to get rid of their running water. I don't know what the purpose of trying to inflict all this pain on the Iranian public is. I mean, they're not in control. They have, they have no control over what their leaders are doing. Why do we want to specifically target these civilian targets? Especially if Donald Trump is true and we've completely eradicated their military threat, if there's absolutely nothing to worry about anymore, if they're a shadow of what they used to be, why do we need to do that. What is the point of bombing them into the Stone Age when that's not going to affect the government so much as affect the lives of ordinary citizens? And I think that type of rhetoric is inflammatory. It could cause more sympathy on the part of Iran and more resentment of the US Certainly in the region. And it may result in Iran retaliating against civilian infrastructure in surrounding countries where the United States has, has bases. But anyway, so not only did Trump exaggerate or, I mean, I don't know how much of an exaggeration it is, but I think he, he wants to claim personal credit. Like, the fact that we won this decisive victory is more about him because, like, he's the commander in chief. So when everybody is amazed at the brilliance of our forces, Trump really means the brilliance of Trump that he is this brilliant commander in chief who has organized the greatest victory in the history of war. And how rapid. Because he talked about how long World War I went and how long World War II ran. And of course, during those wars, we were fighting, you know, much bigger enemies than just, just Iran. But he compared the duration of those wars. Also mentioned Iraq, mentioned Vietnam and how long that thing went on. But a lot of it is, you know, because of him, because he, he is the president. And so a lot of it is he's just bragging about, about. About himself and his accomplishments. And he sees that. He sees himself in our military, which of course, he also claims credit for, for building up. But he also spoke again about the economy, and with the same lies that he continues to repeat. He said that he inherited a debt economy, the worst economy, the weakest economy in, in history, and that he built it back to the strongest economy in the history of the world. He said we have the hottest economy. This was before the war. We had the hottest economy by far. It wasn't even close. By far, we had the hottest economy with no inflation, zero inflation, and we had the highest stock market in history. And we had 18 trillion of foreign investment coming into our country, which, again, is a number that he just pulled out of thin air. But the fact that we had the highest stock market in history is irrelevant because Biden had the highest stock market in history, too. In fact, at this point in his presidency, even before the war, forget about the fact that most of the gains have been given up since the war, but even before the war, if you measure the gains in the stock market under Trump, they were lower than they were under Biden. So why are you bragging about the stock market when it's no big deal. Yes, the stock market, The Dow hit 50,000 when Trump took office. It was 44,000. It is no big deal. And the stock market is only really going up because the anticipation of the Fed cutting interest rates, that, that's, that's why it's going up. But he's repeating all this nonsense about how great this economy was, and I think that's going to be how they're going to frame this for the midterm elections. Because even though the economy, by any way you want to measure it, could likely be in recession, in stagflation, Trump is going to try to misdirect voters into believing that we had this great economy. Because what Trump said, too, is as soon as this war is over, and who knows if we're ever going to declare it over, but as soon as it's over, he said, the economy is going to come roaring back, that it's going to be stronger than ever, that even though we had the greatest economy in the history of the world before the war, that when the war is over, the economy that we're going to have then is going to be greater than that. So we're going to have an even greater economy than the greatest economy in the world. It's going to be even hot, it's going to be red hot just as soon as the war is over. So that gives him a great excuse. He also claims that oil prices are going to immediately come collapsing down the minute we declare the war over. Right. Oil prices are going to collapse, which I don't believe. I think oil prices are going to be higher for longer. I think that even after the war ends, whenever the war ends, we're going to have oil prices that are permanently higher than what they would have been, although maybe permanent, not, you know, the right word, but years and years and years to come, oil prices are going to be higher than what they would have been had had we not had the war. Anyway, got one more commercial, so we're going to take a quick break and we're coming right back.
- [28:51]
Pebble and Other Advertisers
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- [30:18]
Peter Schiff
All right, so I was talking about Donald Trump's disappointing speech that he gave on Thursday. Disappointing in the sense that he indicated that the war is going to continue for two or three more weeks and it's going to escalate. We're going to bomb Iran back to the Stone Age. The other thing that Trump said that was interesting, or maybe I don't know if that's the right word for it, was that he claimed that when the war is over, when we decide it's over, we're just, you know, going home. We're taking our, our, our troops and we're going home. And one of our missions is no longer to reopen the Gulf of Arouse. You know, that's not our problem, according to Trump. We don't need any of that oil. We have all our own oil. We're energy independent and so we're not going to worry about that. All we want to do is eradicate the threat that Iran poses to the United States or to Israel or the rest of the world, make sure they have no more nuclear capabilities, and our job is done. The rest of you, you're on your own, right? You didn't help us with the fight. So, you know, you're just going to have to be on your own. We made this mess in the, in the Gulf, in the Strait of Hormuz. You clean it up and if you want the oil, go in there and take it. Right? That's what Trump is saying.
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Pebble and Other Advertisers
We did the hard part.
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Peter Schiff
We destroyed their navy and, and their, their air force. So, you know, uk, France, Germany, any countries having problems Getting oil. Man up, send in some troops, go fight for it, take it. We're done. Right? And I think this is not going to go over very well for the rest of the world, who is looking at a situation where the United States came in there with a military that they supported by financing our trade deficits and budget deficits and created a huge problem and then just left it to the world to try to solve it on their own. And by the way, if it was so easy to open up the Straits of Hormuz, why did we already do it? Because obviously that's what Trump wanted, and he kept threatening all kinds of stuff on Iran if they didn't open it up. And now he's telling the rest of the world, it's such an easy job. Go ahead and do it. Well, if it's so easy, why don't we do it ourselves? Obviously, it's much easier said than done because it was as easy to do it as to say it. We would have already done it. Right. But I think, again, this is going to be a negative for the US Standing in the world. More resentment of the fact that the world has supported us, has enabled our trade and budget deficits, which has allowed us to have this big military. But now we're claiming it's for us. Right. When we're finished pursuing our own interests, it's up to everybody else to do their own thing. And now he's, you know, potentially talking about getting out of NATO, which. Look, I'm not a fan of NATO. We should be out of NATO. We should be out of the U.N. i don't like any of these global enterprises. They're just a cesspool of corruption. They make a lot of money for the bureaucrats from all over the world. I mean, what's the point of having NATO anyway? The whole. The sole purpose of NATO was to counter the Warsaw Pact, which was the Soviet Union and its surrounding allies. But the Soviet Union broke up years and decades ago. So the Warsaw Pact is gone. They're not maintaining that alliance. Why do we need NATO? So I'm totally fine getting out of NATO, but I'm just looking at the way this is going to be viewed on the world stage. And I think all of this stuff is going to undermine the US Dollar even more as the reserve currency. I think it's going to accelerate the preexisting trend to de dollarize. And again, all of this is going to be good for gold, is going to be good for. Good for silver. I want to talk, though, about a Few other things that happened during the week. Oh, one more just note about, about Trump. And again, I don't know, like, if anybody can, can advise the president at all. But in the middle of all this, as all this is going on, right, we're at war. And, you know, Americans are now struggling with soaring gas prices, a weakening economy, the uncertainty surrounding this war. And Trump's got some time in the middle of the day to compose a post on Truth Social urging his supporters to boycott Bruce Springsteen's concerts. And the reason is because Bruce Springsteen, I guess, posted something about being embarrassed about being American because of Trump. And so he immediately just goes ballistic. And he calls Bruce Springsteen a loser, just like he calls called me a loser. Now, I don't know how you can call Bruce Springsteen probably one of the most successful rock stars in American history. I mean, I'm not a big Springsteen fan. I mean, his music's good, but I mean, but I know he has a lot of very loyal fans. There's no way to call this guy a loser. Yet he's a loser. And he's a loser because he's critical of Trump. But not only is he a loser, he's ugly. He's ugly because he's had some bad plastic surgery. And according to Trump, his concerts suck anyway. So don't go to him. And in the same post where he talks about how this loser with botched plastic surgery sucks, he also went on to talk about how great he is, how he won the greatest landslide, how he won all the swing states, how he won all these counties. Yeah, we know that. We know that you won. He doesn't have to keep reminding everybody that he won. And it really wasn't a landslide. But the reason he won was because the economy sucked. And the reason he lost four years earlier was because the economy sucked. And the reason a Republican is going to lose in 2028 is going to be because the economy is going to suck. Then, too, the Trump economy will help the Democrats. It's not just going to help the Democrats in the midterms, but it's going to help the Democrats in the general election in 2028. Anyway, a couple of things that happened during the week that I thought were interesting. By the way, yesterday was the one year anniversary of Liberation Day. And as I said a year ago yesterday, April Fool's Day came late. It came on April 2 because Liberation Day was really April Fool's Day, because the only ones being liberated, I said, were the rest of the world. They were going to be liberated from the Burden of having to prop up the US Economy by sending their exports to us and by financing our deficits. And a year later, the US has nothing to show for those trade for Liberation Day tariffs. The trade deficits are as bad now as they were back then. The US Economy has been very weak over the past year. The stock market gains have been minimal. I think since Liberation Day. Maybe the S and P is up. I don't know what is 15% or something like that. I forget exactly, but gold's up about 50%. 50%. Not a lot of people might have anticipated that the market that would react the best to the tariffs would be gold. Because everybody said that the tariffs were going to strengthen the dollar. That didn't happen. The dollar is a little lower than it was on Liberation Day, but gold is substantially higher. And of course, if you recall the podcast that I recorded, my very first one after Liberation Day, what did I say? I said the tariffs were unconstitutional. I said it very clearly. I explained exactly why they were unconstitutional. I said the President has no authority. They're not reciprocal. They're reciprocal in name only. We weren't reciprocating against anything I said. These were across the board revenue raising tariffs. And the President had no constitutional authority to tax the American public. That Congress needed to do it, that it needed to originate in the House before the Senate had a chance to vote on it. And then only after it passed both houses of Congress could the President sign that kind of a tax hike. Well, recently the Supreme Court agreed with me in a, I think it was a 6 to 3 decision and declared those tariffs unconstitutional. Thing is, it took the Supreme Court a year. I knew it was unconstitutional day one. The problem is it took so long. There should be a quicker process to get an unconstitutional law struck down because we had a whole year where people paid an illegal tax. And now it's going to take many, many years for the people who paid that illegal tax to get their money back. And of course, a lot of businesses may have raised their prices in response to having to pay the illegal tax. The customers who paid those higher prices, they're not going to get their money back. So if there's a refund at all, it's just going to be to the businesses. They're not going to refund it to the consumer. So this is a huge problem. But it should have been obvious. It should have been obvious to Donald Trump. It should have been obvious to his advisers. I mean, how could you not know this was one of the most obviously unconstitutional taxes? So how did they not know this from day one? Why enact a tax that is clearly unconstitutional when you're going to create such a huge problem with having to refund it? So I don't know, like if the president didn't get any good advice from any of his advisors or if he was told it was unconstitutional, but just do it anyway. Who cares? Who cares about the Constitution? Who cares about your oath of office? Just enact it anyway and we'll roll the dice. I mean, maybe the Supreme Court will have a bad decision, I don't know. But I was very adamant that it was an easy call. It really should have been 6 to 0. I don't know why any of the the justices went the other. Maybe it was seven to two. I know. Was it seven to two or six? I forget now what it was. But there was a dissent and there should have been no dissent because it's so obvious. I mean, any judge justice, I mean, I know Clarence Thomas dissented. I lost a lot of respect for him. I thought he was one of the better justices on the Supreme Court. I don't know how he could have got got this one wrong.
- [40:52]
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Peter Schiff
without thinking about it.
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Pebble and Other Advertisers
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- [45:32]
Peter Schiff
Another big development though, on the week and this story has been building and I haven't really touched on it in prior podcasts, but we've had several funds
- [45:43]
Pebble and Other Advertisers
that have shut down to redemptions, meaning
- [45:45]
Peter Schiff
that investors who have asked for their money back have been told that you can't get it. And as more and more funds shut down their redemptions, that creates a moral hazard or a self fulfilling prophecy where more people want to redeem. Because now if I have money invested in a fund and the redemptions haven't been stopped, but I see other funds are halting redemptions, I may think, you know what, I better redeem my money now while I can before it gets closed. So this is going to be a big problem for the investment management industry when now you have a lot of people who are worried that if they don't get their money out now, they're never going to get it out. And of course, when if a lot of these funds own illiquid assets or maybe there's liquidity there, but if they go to sell right away, they're going to drive the price down. And if the markets realize that certain funds which have large positions and certain assets are getting big redemptions, they may front run the trade, they may start selling those assets themselves, the bids might back away and you have a real problem. But also what this probably reveals is that a lot of prices may not be the real prices. Because if companies are getting redemptions that would require them to sell assets and now they're closing the door so that people can't redeem. Assets that should be being sold are not being sold because they're halting the ability of people to sell. Well, clearly that could be distorting prices. Maybe these prices would be a lot lower. Of course they would be a lot lower if the owners were allowed to sell. But they've locked the doors and so that means the information that we have, the pricing mechanism in the markets is faulty because we're not allowing the redemption. So this is another sign too of a major financial problem that is brewing that could hit, you know, any day. But we have a problem in the financial markets. We're going to have a problem in housing, we have a problem in stocks. All of this is because interest rates have been too low for too long and they've been propped up based on the expectation that more rate cuts are coming, that we have a Fed put, that we have a Trump put. But now the markets think the war may have preempted that and that the put is no longer there and what's been holding up the market doesn't exist. In fact, I was listening to an interview of Warren Buffett and I think, I think it was on cnbc. He was interviewed and one of the most interesting comments that that Buffett made was that he said he doesn't know why and he doesn't agree with the Fed's 2% inflation target that he believes. And he wishes that the target was zero, which is true. Why should the Fed target inflation? If the Fed's goal is price stability, then why target a 2% increase every year? Buffett talked about how much damage that does if prices are going up 2% every year. Compounded, it takes its toll. It is robbing people of their purchasing power. But I'll go a step further. Why target stable prices? What if prices were going to fall? What if prices should go down 2% a year? Why not let them? Why do you have to stop a good thing from happening? It is not a bad thing if the cost of living goes down. Everybody would agree.
- [49:36]
Pebble and Other Advertisers
I mean, you could just do a
- [49:37]
Peter Schiff
random poll of people and ask them, next year when you buy gas, would you like it to be cheaper or more expensive? When you go to the grocery store next year, do you want to pay lower prices for food or higher prices?
- [49:50]
Pebble and Other Advertisers
When you get your utility bill, would
- [49:52]
Peter Schiff
you like it to go up or down? You know, when you have to renew your kids college, do you want to pay more next year or do you want to pay less? Do you think there'd be any consumer, any American who would choose higher prices over lower price? Nobody would choose that. But even when it comes to businesses, if you ask the businessman, would you like your cost to go down a year from now so that you can lower your prices to consumers, or do you want your cost to go up so that you have to charge your customers more money? Every businessman is going to say, I want my costs to go down. I want to be able to lower my prices. Because every businessman knows if they can lower prices, they'll sell more stuff and they'll make more money on higher volume. So everybody is better off with lower prices. The producer is better off, the consumer is better off. So why target price stability if prices would otherwise go down? So there is no reason to have any kind of target. Just let the market determine prices and don't try to steal the benefits of falling prices by creating inflation and using the fact that the free market lowered prices or would have lowered prices to deceive the public and steal that game. Because people have no way of knowing how much lower prices would have been if the government didn't rob them of that benefit by creating inflation. So I agree with Buffett that a 0% target is better than 2%. But I disagree that we need a target of zero. I disagree that stable prices are better than falling prices. Falling prices lead to higher living standards. And so I'd rather have that than, than stable living standards. But one thing that Trump or not Trump that, that Buffett said that I disagree with is he praised the Fed for the way they responded to the COVID crisis because he said, if it wasn't for the Fed, we would have had a real, an even bigger crisis if we didn't create all that inflation, although he didn't put it in those words, but if the Fed didn't slash rates and print all the money, we would have had this massive crisis. Now, I think the reason that the government pursued such a reckless and destructive fiscal policy and economic policy in the aftermath of the pandemic breakout was because Powell said, I got your back. Powell told the US Government, spend whatever you want, run whatever deficits you want. We're going to monetize it. We're going to print a lot of money. Had Powell not done that, had Powell said, look, we're not going to print all this money, so if you are going to have bigger deficits during the pandemic, you better figure out how to finance them. We're not going to unleash inflation because you want to shut down the economy. So if you want to shut down the economy, then bear the consequences. Stocks are going down, massive recession, rates are going up. And I think had the Fed stood its ground, I don't think we would have had that ridiculous Covid response. I don't think the government would have shut down the economy if the immediate effect would have been the collapse that Buffett claims The Fed saved us from, because the Fed is what enabled the policies. We wouldn't have shut down the economy. We wouldn't have been able to. There would have been no choice. And we wouldn't have been sicker, we probably would have been healthier had we allowed the economy to function, had we not shut all the businesses down, shut down all the schools, had just the oldest among us, those with, you know, co, you know, preexisting conditions that made them more exposed, had they just kind of self quarantined and the rest of the country just gone about its business, there would have been no crisis. So the Fed actually enabled the very crisis that Buffett believes the Fed prevented. The Fed didn't prevent it, it caused it. So the Fed has not done anything right. Every single policy decision they've made has been a mistake. You know, and this goes all the way back to the early days of greenspan following the 20001987 stock market crash. It's been one. It's a string of endless and repeated mistakes because they are operating from a flawed playbook. And so every play they run is wrong. And at least Buffett understands some of it. He apparently doesn't understand all of it. He's a great investor. I'm not going to take anything away from him. And in fact, if you look at the amount of cash on the balance sheet of Berkshire Hathaway, it's an all time record high. Now, I criticized Buffett in the past for not keeping his dry powder in gold. And I think maybe he would have preferred to kept it in gold, but I think he was very cognizant of the message that that might have sent to the world because the world really looks at the Berkshire portfolio and had Buffett maintained a large gold position, that would have been a major vote of no confidence in the U.S. and the U.S. economy. And I don't think Buffett wanted to signal that loss of confidence, even if in his heart of hearts he believed it. And I think he believed he probably understood that being in in gold would have been better than being in US Treasuries. But he took Treasuries anyway because I think he was afraid of what might happen if he loaded up on gold. But what he didn't want to do was load up on stocks because he recognizes how overpriced the US Stock market is and how there are no real good values to be had given the valuations and given the economic problems that he clearly understands are in front of us.
- [56:11]
Pebble and Other Advertisers
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- [56:36]
Peter Schiff
That's hope.
- [56:37]
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- [58:44]
Peter Schiff
Psst.
- [58:44]
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- [59:15]
Peter Schiff
I wanted to mention about Trump, too, is that the new poll numbers have come out, that the, you know, the favorability numbers. And Trump is now at the lowest level of either term. So Trump is the most unpopular now that he's ever been. Now, of course, you've got the core MAGA crowd that, you know, in their mind, Trump could do no wrong. And then you've got another crowd who Trump could do no right. So they're going to hate Trump no matter what he does. And you've got another group that's going to love him no matter what he does. But then you got a group in the middle that is trying to objectively, you know, rate the president. And what most people are doing when they're rating, whether they view the president's policies as favorable or unfavorable, they're generally looking at their own circumstances. They're opining on their personal situation. Is my personal financial situation better? Has it improved since Trump took office, or has it gotten worse? Have the problems that caused me to vote for Trump or to vote for Harris, have those problems worsened since Trump took office? Or, you know, have the problems lessened? Am I better off? That's really what it is. It's a litmus test on whether or not people think their lives are better or worse. And the fact that Trump is the least popular he's ever been shows that things are getting worse, they're not getting better. And that's why Trump is getting blamed by people instead of getting credit from people. And I think those numbers are going to get worse as, as Trump's term progresses, which is why I'm particularly negative on the outlook. In fact, I looked on the betting odds on, you know, Kalshee and what's the, you know, and polymark, and I don't know. A couple of months ago, the odds
- [61:23]
Visit Idaho and NWLC Advertiser
were
- [61:25]
Peter Schiff
pretty overwhelming that the Republicans would keep the Senate. Now it's almost 50. 50. There's still a slight favorite, but it's come down dramatically. And the odds, you know, that they lose the House, that the Republicans lose the House, were high. And now they're, you know, it's pretty much a sure thing that the Republicans are going to lose the House. But now, you know, it's almost a toss up on the Senate. And I think as time goes by, the odds are going to flip and people are going to start to believe that the Democrats are going to take the Senate. The most unpopular president in history based on opinion polls, was Harry Truman. And this is, you know, he finished out Roosevelt's final term. Roosevelt had four terms, you know, three full terms.
- [62:11]
Pebble and Other Advertisers
Then he was elected a fourth time,
- [62:12]
Peter Schiff
and then he died in office. And so Truman became president, and then in an upset, he was reelected. Remember, you know, that famous headline was that Dewey wins. So everybody thought that Truman was not even going to get elected. And he surprised the pollsters, and he pulled off an upset. And so Harry Truman won, but because of a lot of scandals and because of the unpopularity of the Korean War, his popularity was so low that he didn't even run. He could have run for reelection because the Constitution, the prohibition on a third term for him wouldn't have counted, a. Because I think he was grandfathered based on the fact he was in office when they passed it. But he had only been elected president once. And the amendment says that you can't be elected more than twice. And he wasn't elected president. He was elected vice president. So I guess he could have run. I know he could have run for a third term, but he didn't because he was so unpopular. And the second most unpopular president in history was Trump himself during his first term. And I'm talking about average rating, the average rating for the entirety of your presidency. And so Trump didn't quite become as unpopular as Harry Truman, but he was. He was number two. And so if the Biden economy was as bad as Trump describes it, and again, I was not a fan of the Biden economy. I was very critical. But if the Biden economy was so much worse than the Trump economy, why was Trump even more unpopular than Biden? But I think that in his second term, not only is Donald Trump likely to. To have a lower favorable rating than he did during his first term, but he could beat Truman. And it's not really beating him. It's letting Truman off the hook so that Truman will no longer have the lowest ratings of any president. That dubious distinction is going to belong to Donald Trump, because I think the economy is going to be so bad and the war is going to complicate this that his popularity is going to sink. And I think even a lot of the die hard MAGA supporters are going to lose confidence. Some of them are going to lose confidence because of the war, but others are going to lose confidence because of inflation and the impact that it's going to have on the cost of living. So, and all that is going to be problematic because I can guarantee you, as bad as the policies are under this administration, and they've been pretty bad in general, not all of them have been bad, but overall they've been bad. When we get a real democratic socialist as opposed to a Republican socialist as president, and the Democrats have control over
- [65:12]
Pebble and Other Advertisers
the House and the Senate, which I
- [65:14]
Peter Schiff
believe they will in 2028, it's going to be way worse. And capitalism's reputation is going to be much worse. A much bigger black eye. Both eyes will be black and its nose will be broken and its lips will be bloodied. The reputation of capitalism is going to be so beaten up by the media and by the left because they're going to blame all this stuff, all this bad stuff on capitalism. You got to make sure you have got all of your economic ducks in a row. You've got to really prepare for that by diversifying, as I've been saying, out of US assets, out of US dollars, into gold and silver. Head over to shiftgold.com, get a T Gold account. You may really need your T Gold account by the time we have the socialists running the show here in America. And it'll probably be, I'm sure will be completely functional using gold as a medium of exchange by the time, you know, by 2029, when that next administration will roll into power. So make sure and get your T Gold account set up. Get all your gold and silver bought now so you have it ready to use if you need it, and you're also ready to receive it. You're ready to earn gold and silver when that's what you're going to want in exchange for any goods that you create, any services that you provide, you'll want to be paid in real money. And, and, and tgold.com will give you the ability to do that. And even though we had this big rally in gold and silver stocks last week, almost 15%, we're still way, way below the peak from the end of February when stocks were still cheap. Even though they had a huge gain, they were still cheap. Yes, gold prices have pulled back, but by the end of April, I think we can be substantially above 5,000 again. Yes, oil prices are higher so that is on balance and negative for the miners, but not enough to offset the massive positive that never even got priced in from the big increase in gold and silver prices. So make sure and add those again. You can go to yourpack.com and get information on my gold fund. Epgix is the symbol. You can buy that fun anywhere. No load any discount broker. You can get information the prospectus at the website@your pact.com also all of my funds, the Global Value Fund, Global Dividend Payers Fund, the Emerging Market Fund, the Bond fund. You can get prospectuses on all these funds. You can invest in them. No load at all these discount brokers. Or you can call up my representatives at Euro Pacific Asset Management and set up a separately managed account. We have wrap accounts in all the funds. And again, don't forget to check out my free newsletter@shiftsovereign.com if you're not now getting our updates. They're phenomenal. You got to make sure and you're receiving them. You can sign up@shiftsovereign.com Anyway, that's it for today's podcast. Again, don't forget like and subscribe. Give me a thumbs up. Write a comment. The next time I do a podcast I will be back back onshore in my studio in a more stable environment. But I really did enjoy and I'm still enjoying our time here in the British Virgin Islands. If you haven't spent any time here, it is a glorious place to go boating. There are so many people here. There are so many different islands to visit a very short distance from from each other. So I would definitely recommend it. This is the first time we've been here in our own boat. We've been here before in boats that we chartered. This is the first time we're here in our own boat and I'm sure I'm going to be spending a lot more time here in the years ahead. And so a lot more of my podcasts will probably be from sea rather than from land. Bye for now.
- [69:09]
Visit Idaho and NWLC Advertiser
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Asana Advertiser
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