Tekowa DaSilva : Peter,
in terms of the equity market itself, what are you telling your clients
in terms of maybe them not wanting to miss the move? Are you
recommending people step out of the way before it collapses?
Peter Schiff :
I think the dollar is going to collapse before the market does. The Fed
is propping up asset prices by debasing the dollar--the currency with
which those asset prices are denominated.
So
if you’re going to destroy your currency, then asset prices are not
going to collapse. But what I’m concerned about is not the nominal asset
price but [rather] adjusted for inflation. Another way you can look at
it is expressed in gold.
I
think that stock and real estate prices expressed in gold are going to
go down significantly over time. I know we’ve had a rally in asset
prices in terms of gold recently (with the selloff in gold), but I think
that’s very temporary.
In
fact, we are launching the Euro Pacific Gold Fund which is my first
ever gold mining mutual fund and that’s going to open to the public this
week. I’m timing that to coincide with what I believe to be the
greatest buying opportunity that I’ve seen during the entire bull market
in gold stocks.
Even
though gold prices are substantially off their lows, gold prices are
still three times higher than they were a decade ago. [But] many gold
stocks are actually priced even lower than they were a decade ago.
So
you got the opportunity to roll back the clock to the time where gold
was under $300 and buy the gold stocks. I think they’re giving these
stocks away. In fact…the sentiment has probably never been this bad.
We’ve had a big collapse in price. Nobody wants to buy these stocks and
so this is when I’m launching my fund.
Gold
stocks ironically are the victims of inflation because inflation has
dramatically increased the cost of mining but the price of what they’re
mining, gold, has not gone up as fast as the cost of mining it because
everybody is convinced there is no inflation.
They
believed the propaganda from the central banks and governments and so
gold has not even gone up to reflect the increased cost of mining it. So
I think it is really undervalued right now. That makes it difficult for
the gold mining sector but I think eventually these difficulties are
going to lead to tremendous opportunities because a lot of gold mining
companies are going to go out of business.
Peter Schiff is a well-known commentator appearing regularly on CNBC, TechTicker and FoxNews. He is often referred to as "Doctor Doom" because of his bearish outlook on the economy and the U.S. Dollar in particular. Peter was one of the first from within the professional investment field to call the housing market a bubble. Peter has written a book called "Crash Proof" and a follow-on called "The Little Book of Bull Moves in Bear Markets". He is the President of EuroPacific Capital, which is a brokerage specializing in finding dividend-yielding, value-based foreign stocks.
