Peter Schiff talks gold, Federal Reserve, U.S. dollar, oil


Peter Schiff, a well-known American entrepreneur, author, and financial commentator, recently spoke on RT’s Boom Bust about the U.S. economy, oil prices, the Swiss gold referendum, the numerous uses of gold, and more. Seeking Alpha has provided a partial transcript of the interview, which we have outlined for you below.

On the latest U.S. jobs figures

The latest ADP private payroll report showed U.S. companies added 208,000 workers in the month of November, down from October’s gain of 233,000 workers. Schiff believes we need to be adding more jobs in production, as opposed to in retail, trade, hospitality, etc. “These are not the jobs that people can support a family on, that they can buy a house on, that they can save for their retirement. We need productive, higher-paying jobs,” he says. However, he feels that we may not get an increase in those types of jobs if the Federal Reserve continues “artificially stimulating the economy with cheap money.”

On oil prices and the U.S. dollar

Schiff doesn’t think the current drop in oil prices will last. He explains what he believes is really behind the drop:

“I think what’s really driving the oil market is this perception that the US recovery is real, and that we’re going to be raising interest rates. Whereas, Europe and Asia, they’re still in recession; they’re going to be doing quantitative easing. So people think the dollar is going to rise in an environment of global weakness. So they’re looking for a big reduction in demand for oil. That’s really what’s driving the price down.”

On the Fed and the U.S. economy

Schiff disagrees with the perception that the U.S. economy is recovering – instead, he thinks the economy is “much weaker than people believe.” He also thinks the Fed is more likely to begin another round of quantitative easing rather than raising interest rates next year, which would be “a game changer for the US dollar and for the price of oil.”

On the Swiss gold referendum

Schiff had a lot to say about the recent failure of the Swiss gold referendum:

“I think [the failure of the Swiss gold initiative] is ironic, and maybe it’s going to mark the low point for gold. We’ll see. Gold sold off below $1150 on the announcement, even though it was highly expected – pretty much nobody thought the Swiss were going to do the right thing and pass this. But the crazy thing is how many people were warning the Swiss how reckless and crazy this would be. The establishment was out in force. The mainstream, the bankers, the investment firms, telling the Swiss how dumb they would be to back their reserves even one-fifth in gold, [and that] they should have 100 percent of their reserves in euros and dollars. As if there’s any real value there.

They would be much better off backing up their currency with something real, as opposed to just other fiat currencies. You know, the Swiss had 40 percent gold backing as late as 1999, and a gold-backed Swiss franc didn’t hurt the Swiss economy in the 70s , or the 80s, or the 90s. I don’t know why people think it would be so detrimental for the Swiss economy now. In fact, it would save the Swiss franc and liberate the Swiss people from the problems of the euro…” [emphasis added]

“Gold is probably the most valuable metal that is mined from the earth.”

Schiff contrasted gold with fiat currencies such as the dollar, euro, and yen, claiming they “have intrinsically no value. You can create as many as you want at no cost, and they really have no use.” Gold, on the other hand, is “probably the most valuable metal that is mined from the earth,” Schiff says. He stresses that gold has many uses beyond money, and can be found in furniture, picture frames, avionics, electronics, cell phones, and more. He adds that although gold is sometimes substituted with cheaper, less effective metals, certain industries depend on gold to ensure quality and effectiveness:

“For instance, if you’re NASA and you’re building a space ship, and you can’t have your circuits failing, you’re using gold. Gold is in cell phones. Gold is in a lot of things where you need something to work and you need a reliable metal to do it. Look at dentistry. You want to get your teeth filled with copper or lead? You want to get the best fillings…they’re going to be made of gold…”

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Photo: Gage Skidmore [CC BY-SA 3.0], via Wikimedia Commons