Transcription
If you want a safe haven, if you want a hedge against inflation, buy gold, buy silver. Gold and silver were down today in reaction to a more hawkish Fed, which has been the knee-jerk reaction. There are beneficiaries of inflation. The government benefits, Wall Street benefits, a lot of people benefit from inflation, and so it's not going to go away. Despite the fact that there are a lot of people who suffer from inflation, those people don't have the political clout. At the end of the day, it's not a new game, it's just new players. It's the same game. So, you want to take advantage of this pullback in gold and silver. You want to take advantage of the pullback in the mining stocks, and fade this idea that there is a new sheriff in town.
Gold and silver are falling, but Peter Schiff says that's exactly why smart money is buying. While investors panic over a hawkish Federal Reserve, Schiff warns that inflation is far from defeated, and the Fed will eventually choose money printing over economic pain. Could this sell-off be the last opportunity before gold and silver make their next explosive move? What Peter Schiff reveals may completely change how you view the future of wealth preservation.
If you want a safe haven, if you want a hedge against inflation, buy gold, buy silver. Gold and silver were down today in reaction to a more hawkish Fed, which has been the knee-jerk reaction. You know, gold's around 4,250, and silver is around 68 bucks, 67.80, down over two bucks today. You want to buy this. The markets still don't get it. It's all talk. Right? Uh Walsh can uh talk the talk about price stability and fighting inflation, but he can't walk the walk. He's going to have to choose inflation, because in his mind, it's going to be the lesser of the two evils. Right, there are no good choices here. The Fed has to pick its poison. And I believe it's going to pick the same poison that all central banks have been picking. That all of Warsh's predecessors, everybody can say, "Hey, I'm going to change the game. I'm going to do the right thing. I'm I'm I'm I'm going to solve these problems." Just like when Elon Musk he he came to Washington D.C. We're going to cut all the waste, fraud, and abuse. I'm going to lead those. And Trump talked about, "Yeah, we're going to cut waste, fraud, and abuse." Until push came to shove, um they shoved uh Musk out. Right, they didn't cut anything. It was all a bunch of talk because one person's waste is another person's gravy train. There is a contingent constituency. Nothing is in the federal budget by accident. It's put there by design on purpose. Somebody benefits from it. And And that's why it never goes away. And there are beneficiaries of inflation. The government benefits, Wall Street benefits, a lot of people benefit from inflation. And so it's not going to go away. Despite the fact that there are a lot of people who suffer from inflation, those people don't have the political clout that the people who benefit from inflation have. And so [music] the interests of those who benefit from inflation is why it's going to continue. And he he can make all the noise he wants, but at the end of the day, it's not a new game, it's just new players. It's the same game. So you want to take advantage of this pullback in gold and silver. You want to take advantage of the pullback in the mining stocks. And fade this idea that there is a new sheriff in town uh that's got different It's the same They just, you know, it's basically the same guy, you know, same sheriff. They just, you know, they they change the the makeup and all that stuff. But it's all the same. You know, just like we don't have regime change in Iran. All right, we got different people, but it's the same regime. We need a real regime change at the Fed. Unfortunately, we don't have that with Warsh.
>> We We're getting close to the bottom, right?
>> Yeah, I think that's right.
>> Pardon?
>> I think that's right, yeah.
>> Right. Gold rallies back to 5,500. [music] Let's say we get 6,000, 6,500. Now, for every leg up, are we going back 50%? [music]
>> No, because these um the again, back to the fractal map, these 50% drawdowns happen. They happen on greater or lesser scales. But, once they happen, then the next shot is is a moonshot. So, [music] So, the answer is no. Daily Daily volatility, 5% here, yeah, but not 50%. We're We're looking at something close to 50 Not Not Not 50% from zero, but 50% off Pick a base, say 1,800, I think would be a reasonable base for this rally.
>> Do you feel the same thesis applies Well, does apply to silver, then?
>> Yes. Yeah. Silver Silver tags along. Silver
>> [music]
>> acts the same way with with two footnotes. Number one, usually with a lag, you know, gold will take off before silver will take off, but silver's along for the ride, number one. Silver's a little more difficult to analyze because it's a precious metal as a form of money, uh store of wealth, but it's also an industrial input. Gold is not a big industrial input. Gold's not good for much except money, which is a pretty big deal. Silver, you know, it goes in catalytic converters, it goes in electronics, it goes in satellites, it goes in everything. So, um So, you have to look at industrial input, and that has to do with the business cycle and a recession. So, a recession could be a headwind for silver, but on the whole, yeah, it's going to go up to over 100 and then keep [music] going.
Strategy has purchased 100 million of Bitcoin and raised another 100 million in cash and it did that by selling common stock at a discount to NAV. The opposite of what they used to do. Strategy's original business plan, which at least made sense, was hey, our stock is trading at a 50% premium, 100% premium, let's sell stock and take the cash and buy Bitcoin because that's accretive. That's how he came up with the concept of a Bitcoin yield, which in and of itself was a bit deceptive. It wasn't a real yield in the traditional sense. It made it sound, you know, safer than it really was, but he was generating a gain so that if you owned shares of strategy over time, each share represented ownership of more Bitcoin. So, the Bitcoin per share was going up. Now, the Bitcoin per share for 2 weeks in a row has gone down and you know what? It's going to keep going down if Saylor continues to raise money to pay his dividend commitments on the preferreds and in fact, look at what's happened, exactly what I warned was going to happen. Uh Strategy today closed uh at uh let me see. I think it it closed I think at 89 and a half. This is the lowest I've seen it. Yeah, eight no, it closed at 89. Forget the half. It closed at 89. If you bought Strategy last month, you paid $100 a share. You're already down 11%. That's pretty much the entire year's yield. Again, I was talking about this. I was warning about the fraud in the marketing. Saylor was saying that retirees should put all all their retirement money into Strategy because they can get an 11 and a half percent yield. Well, they've already lost 11% in 1 month. They're going to have to wait all year just to break even assuming the price of stretch doesn't fall anymore. Now, the only way that strategy could get stretch back to 100 to get all those retirees out of jail so they can get their principal back. At this point, he has to raise the yield to 13% because that is the current yield at $89. If you buy a stretch and you pay 89, you're getting a 13% yield. Now, the people who bought it at 100, they're not getting a 13% yield. They're still getting 11 and a half percent based on what they paid. Now, if if strategy increases the dividend yield to 13%, then the people who bought it at 100 will be getting 13%. The people who bought it at 89 will be getting more than that, right? They'll be getting I haven't done the math, maybe 15 or 16% if they buy now. But, here's the problem. If Saylor raises the dividend that much, it's an even bigger burn on the common shareholders because they have to pay that. If he just leaves it at 11 and a half, then it's not any higher. But, if he leaves it at 11 and a half, he can't sell anymore because he can't sell it at 89. He has to sell it at 100, but he can't sell it at 100 unless he raises the dividend. So, he's trapped in a position where he can't afford to raise the dividend, but if he but if he doesn't raise the dividend, then the people who bought stretch are losing a lot of money. And they're going to get scared, and they're going to sell it, and the price is going to fall. But, the problem is if he does raise the dividend, it makes it that much harder to sustain it because the higher the dividend payment obligation is, the harder it is for Saylor to meet it. The more uh common stock he's going to have to sell. Now, he doesn't want to sell Bitcoin. The smart move would be to sell Bitcoin. To sell Bitcoin to pay down debt, buy back stock, to to try to get you know, get rid of the discount. But, Saylor can't sell Bitcoin. He tried to sell 32 and the market imploded. So, that if that was a test, he flunked. He can't sell. So, the only thing he can sell is common stock right now. He can't sell Bitcoin because the market won't let him. He'll crush Bitcoin. He can't sell any more preferreds because he'd have to raise the yield too high. So, all that's left is to sacrifice the common stockholders. The question is, how much longer are the common shareholders going to stand for it? Are they going to keep on marching to the slaughter and and and wait to lose or they going to start to sell? And this whole thing is going to spiral on itself. Strategy is going to start collapsing and that's going to weaken Bitcoin because the lower strategy gets, the harder it is for Saylor to sell strategy because the bigger the negative yield he creates. So, now people are going to start to think, oh you know what, maybe he's going to sell Bitcoin. And then, if he's going to sell Bitcoin, well then the Bitcoin is going to fall. And then strategy is going to fall. And and this whole thing is imploding. Right now, it's unraveling. It is the death spiral that I warned about two podcasts ago, spiraling out of control. But, nobody is really talking about it. And one of the things that's probably accelerating the move out of Bitcoin is the move into SpaceX or people trying to you know, raise money for other things. Remember, this is all risk money that's in crypto. And it's going down while there are you know, other things that are going up that is now taking away the attention. And there's almost so much capital. And of course, if you want to sell your Bitcoin or your strategy, there's got to be somebody willing to buy it. Well, who the hell wants to buy it? It's going down, right? Who wants to hop on a train that's headed off of off of track, right? You want to hop on the rocket that's going to the moon. Bitcoin's not going there anymore. Right? So, this whole thing is unloading. That's why, you know, people if you still own any Bitcoin, get the hell out. I mean, if you've listened to my podcast, I know people like to make fun of the fact, yeah, Peter Schiff told me to sell Bitcoin when it was a thousand or ten thousand. Yeah, yeah, yeah. But you know what? Bitcoin hasn't done anything in five years, right? So, it's peaked. It's over. Instead of thinking about the the the things that I got wrong, what about all the so-called experts who said Bitcoin would be 250,000 by now, 500,000 by now, a million by now. All these guys have been wrong for five years with their pie-in-the-sky predictions, which were not really predictions, it was self-serving, talking their book. They weren't saying what they thought was going to happen, they were saying what they wanted to happen, and what they wanted the public to hear. So, that was the reason that they were going to buy. Because if you buy, you're going to get rich. Well, the people who bought aren't getting rich, they're going broke. And if they want to get rich, they need to get rid of their Bitcoin and do something else. Uh and so, if you want to speculate, find something else.
Another key theme of Schiff's analysis involves the Federal Reserve's leadership. Many investors hope that changes in leadership would lead to different policies. Schiff remains skeptical. In his view, changing personnel does not necessarily change the incentives driving monetary policy. Regardless of who occupies the chair, the central bank still faces the same challenges. Massive government debt, persistent inflation pressures, financial market dependence on liquidity, political pressure to support economic growth, these realities limit the options available to policy makers.
Interest rates were going to remain unchanged. And I don't think that surprised anybody because I don't believe that anybody thought that the Fed was going to do anything at the very first meeting with the new uh Fed chairman leading the way. But, as a result of what was said and what was not said, and often the case, what's not said is more important than what is said, but the markets are now starting to brace for a much more hawkish Fed than the Fed that we had before, which of course is very ironic because the reason that Jerome Powell wasn't reappointed, the reason that Trump decided to switch horses is because Powell was too much of a hawk as far as Trump was concerned. Too late, Powell. That Powell wasn't cutting rates fast enough. He wasn't cutting them enough. He wanted to replace Powell with a bigger dove because he wanted lower interest rates. He wanted them fast. And Powell wasn't delivering. And so that's why he selected Kevin Warsh to do what Powell wouldn't do. But now it appears that he's going to be even worse from Trump's perspective than Powell, which reminds me of the saying, the devil you know, because the devil that Trump didn't know is threatening to be a lot worse than the one that he did. And it's interesting that following today's decision to leave rates unchanged, when Trump was asked about it, he didn't have any criticism for Warsh. He said, "Well, we got a good man at the helm, so whatever he decides, well, that must be the right thing." He didn't uh display that kind of deference to Powell. Had Powell still been the chair and the Fed done the exact same thing, Trump would have been all over him. He would have been talking about how he's a low IQ person, how he's not a bright or a dumb person, he's wrong, he's crazy, we need to slash interest rates, we got to get rid of this guy, we got to fire him, he's deliberately undermining the economy. But he didn't have any of that criticism for Kevin Warsh. So, we'll see how long Trump can hold his tongue uh when it comes to expressing any disappointment in what Kevin Warsh does. Remember, Powell is still there, right? He's a member, voting member of the FOMC, and he's one of the people who voted to leave interest rates unchanged uh along with um Warsh. But anyway, I want to get started by reading the statement, the prepared statement that the Fed released about a half hour before the press conference. And the interesting thing about the statement is how short it is. This is the shortest uh statement that I can recall ever reading and ever commenting on when it comes to the FOMC. So, right off the bat, that's a change, meaning that the Fed is trying to give the markets less information and and not more. And the statement is so short, I'm actually going to read it. This will be the first time I've read an entire statement because it's short enough that I can do that. So, here is what the Fed said. The Federal Open Market Committee approved the following statement for release by a 12 to 0 vote. Unanimous. Finally, a unanimous decision. Even the people that were voting for rate cuts in the past, they're they're they're okay with leaving rates the way they are. The committee decided to maintain the target range for the federal funds rate at 3 and 1/2 to 3 and 3/4%. In support of the Fed's dual mandate, the committee reaffirms its policy of maintaining ample reserves in the banking system. Now, he then goes on to talk about the Fed's commitment to price stability. In fact, before I get there, let me finish reading the statement. Economic activity is expanding at a solid pace despite elevated uncertainty that owes in part to the conflicts in the Middle East. Productivity growth and capital investments are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated relative to the committee's 2% goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The committee will deliver price stability. That's it. End of statement. But, it ends with a commitment to deliver price stability. The committee will deliver price stability. But, that commitment is in conflict with the Fed's reaffirming that it is also committed to maintaining ample reserves in the banking system. What does that mean? A lot of money, a big balance sheet, artificially low interest rates. The reason that inflation is so high, it's not because of the supply shocks, it's not because of the war, it's because of those ample reserves in the system.
Peter Schiff's message is straightforward. Don't be distracted by short-term market reactions or temporary Federal Reserve rhetoric. While gold and silver may experience volatility, whenever policy makers sound hawkish, the larger forces driving precious metals remain firmly in place. Government debt continues growing. Inflation remains deeply embedded within the economy. Central banks remain trapped between protecting financial markets and defending purchasing power. According to Schiff, when those competing priorities collide, history suggests that inflation wins.