Peter Schiff says gold will rise to $5,000. Again. But is he really a gold bug?
Filed under: People, Investing
For a gold bug, Peter Schiff's not nearly as goofy as one might think.The founder of Euro Pacific Capital who made The Call as well as anyone (and who recently announced a run for U.S. Senate), was banging on yet again on the intertubes Thursday about gold hitting $5,000 an ounce.
True, Schiff didn't say it was a certainty -- just that it wouldn't surprise him if the yellow metal hits that level in the "next couple of years."
We felt we were pretty even handed last week when we said Schiff was a smart guy with bad timing. He's clearly not dumb. His doom-and-gloom prognosis for the dollar, U.S. equities -- heck, our whole economy -- is shared by sober, thoughtful economists, analysts and fund managers. It's a credible macro call, if even we would dump it in the possible-but-not-probable file.
It's just that when Schiff makes the case, he comes of as slightly . . . um, unhinged. Probably because he appears to get too much pleasure consigning the U.S. to a totally bleak, Mad Max Beyond Thunderdome future.
And we also should have probably added the adjective "repetitive." Schiff has been sounding the alarm on gold $5,000 since at least early 2008. Maybe he's right. (Like we said, his macro view isn't so fringe that it can be dismissed out of hand.) In his latest pronouncement, Schiff contends that gold hit $1,000 by "climbing a wall of worry" (Wall Street lingo for panic buying or selling), and once it broaches $2,000, that will bring in great hordes of return-chasing investors. (You know, the same brilliant punters who helped take Nasdaq to 5,000 at the peak of the tech bubble.)
So it's rather interesting that as bullish as Schiff is on gold, it remains a pretty small and reasonable portion of his clients' accounts -- for a gold bug, anyway -- according to Andrew Schiff, a Euro Pac spokesman, broker -- and Peter's brother.
Euro Pac's accounts range anywhere from $20,000 to $10,000,000, but the exposure to gold averages only 15 percent per portfolio, Andrew Schiff says. "We never recommend that anyone go 100 percent gold," says Schiff. "Most of my clients are between 15 percent and 20 percent gold. A $20,000 account would be 10 percent to 15 percent exposure, depending on age. If people are simply interested in wealth preservation, then gold becomes a bigger part of the strategy."
It's almost as if Euro Pac has switched the one-size-fits-all traditional fixed-income part of the asset allocation model with gold.
Of course when it comes to wealth preservation, the safest investment might be TIPS, or Treasury Inflation Protected Securities. These bonds, backed by the full faith and credit of the federal government, adjust according to the consumer price index, ensuring that the yield always keeps up with inflation. Gold is also an inflation hedge, but you could still suffer loss of principal. Gold prices have been known to go down, too, you know.
But Euro Pac doesn't have any use for TIPS, Andrew Schiff says, because "we don't trust the government to ever really report an honest CPI number."
Plenty of folks quibble with the way the federal government calculates CPI, but then you'd figure the best and brightest bond guys from Pimco to China would have already priced that in.
So gold it is for Euro Pac -- though not as much as you might think.
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Reader Comments (Page 1 of 5)
9-26-2009 @ 5:23PM
Andy said...
He is right.
Reply
9-26-2009 @ 9:49PM
doc said...
he is wrong, stupidly wrong
9-27-2009 @ 12:02PM
Rich said...
Andy, notice the Obama-bots all speak..I mean "talks" the same. If this guy is "stupidly wrong", then was the Boston cop not "acting stupidly" according to the Marxist-in-Chief? LOL!
9-27-2009 @ 12:16PM
Andy said...
He has been right for years, in fact gold should be 3000.00 right now but the fed is working hard to keep it suppressed. Doc and Rich You must work NBC or just lack the foresight to see of what is to come.
9-27-2009 @ 12:17PM
Co-Conspirator said...
He must be one of Madoff's jewish pals with a big gold investment. In order for gold to reach 5K/oz in our lifetime, the DOW would have to go into negative numbers.
9-26-2009 @ 6:13PM
jack said...
"a couple of years" .. just long enough to forget about Schiff and his statement ... he sounds like anohter MADOFF fraud.
Reply
9-26-2009 @ 6:12PM
jack b :-) said...
he correctly called, on fox business news mid-summer '08, that stocks would hit 6000 just a few months down the road. everybody (literally) laughed at him...
we moved (totally) to gold then. nobody's laughing at him (or us) now.
jack b :-)
Reply
9-27-2009 @ 9:09AM
charlie said...
First of all faux news is a joke. Secondly when did the stocks hit 6000 in 2008? Once again, another uninformed fauxnews watcher. You go ahead and believe this idiot.........
9-27-2009 @ 12:01PM
Avengerguy35 said...
While it didn't hit 6,000, it did hit 6,763.29 in March of 2009, which is about 6 months after Schiff supposedly predicted 6,000 in a few months. Considering how DEAD-ON he was about the mortgage crisis in 2006, I'd say that makes him pretty dang close, libtard scumbags!
Here's video of all the times the "talking heads" laughed at him and he was proven RIGHT!
http://www.youtube.com/watch?v=Z0YTY5TWtmU
9-26-2009 @ 6:57PM
dale said...
When I here him talking on cnbc I think he should move to asia were his heart and money is so he can live like they do.
Reply
9-26-2009 @ 6:59PM
Bry said...
I wonder if he's at all connected to the recent heavy buying of gold from the public?
Also, If it does, Obama may just be able to pay down on Americas debt by dumping just a small little load of gold out on the market, just the spare gold laying on the floor somewhere. LOL
Reply
9-26-2009 @ 7:08PM
blockpusher said...
He is DEAD wrong. For gold to hypothetically hit $5000 an ounce means that the financial system, markets, economy is DESTROYED around the world, with nothing else left that has any value beside labor and food, (oh, and guns and ammo). In the past when we suffered an economic downturn, gold retained its value because there were always Governments, rich folk, etc that survived the turmoil, they still had faith in gold, they used it as a standard to base they currency on, etc, The US Gov't, leading the way, still stood strong. But for things to get so bad that gold would reach $5000 and ounce means that there is NOBODY left, no millionaires, no Governments, to keep gold's value intact. If the US falls, then the rest of the world follows, currency around the world is worthless, and with nobody to back it up, GOLD, my friends, is just a shiny yellow metal that is easy to work, and doesn't rust. $1500, maybe, $2000, I'd hate to see it - because that means people have abandoned every other form of investment and we are finished. $5000 - never.
Reply
9-27-2009 @ 7:09AM
MyKisa said...
...it could rise pretty high, because things will get so very close to what you describe. I think the value of gold, oil and carbon credits, will be closely tied together, and all value managed by IMF which ties its gold prices to $40 or so. Government has in the past, set the value of gold......as illegal to own.
9-27-2009 @ 8:43AM
mypal00000 said...
I give you OBAMA. Nothing is impossible with this idiot running the economy. Think about it.
9-27-2009 @ 11:20AM
amf said...
True very true!!!
9-27-2009 @ 1:24PM
Jim said...
Well if it's going up why is he selling his gold?? haha..I think I know...do you?
Reply
9-26-2009 @ 7:15PM
blockpusher said...
Having said that, of course, we could possibly have a "Gold Bubble" with idiots driving the price of gold up to 3-4-5 times what it is really worth, but then the bubble would burst and we be right back to where we are now..........................with the Government bailing out all the idiots...............................
Reply
9-26-2009 @ 7:36PM
urbantchr said...
Not so crazy. Gold should have hit $2,000 a year ago, if you consider the fear factor. Some think it's being was held steady artificially. If so, it is still underpriced for the market. The way prices and unemployment are climbing, and money is being printed, in 2 years the dollar could be worth half as much turning $2k into $4k. Throw in some bad news from Iran, Isreal, 'stan, Russia, (you catch my drift), $5k is not that crazy.
Reply
9-26-2009 @ 7:39PM
urbantchr said...
Jim, It actually says he is buying gold. Well, it says he is buying it with his clients money. It says nothing about him selling his gold.
Reply
9-26-2009 @ 8:03PM
carl said...
this is such a scam. there is a sucker born everyminute and if you can get them to by your gold for 5k and oz more power to you
Reply