Euro Pacific Capital typically recommends an investment strategy which accords with Schiff's view of the U.S. economy, focusing heavily on non-U.S. stocks and precious metals, specifically gold and silver.
Peter Schiff’s Economic View
Needless to say, Peter Schiff represents the extremely negative opinion towards US economy, US Dollars, and US stock market.
To his credit, in August 2006, he was right in calling "The United States economy is like the Titanic and I am here with the lifeboat trying to get people to leave the ship... I see a real financial crisis coming for the United States."
And before the real estate bubble burst, at the end of 2006, Schiff forecasts forecast that "what's going to happen in 2007" is that "real estate prices are going to come crashing back down to Earth". He pointed out factors such as speculators and "the absence of lending standards" would contribute to the "housing crisis.
Adhering to Austrian economics, Schiff promotes savings and production as "the engine of economic growth—not consumption". Schiff holds the view that that without production, the US cannot indefinitely sustain its ongoing consumption. Schiff thinks the current economic crisis is not the problem; it is the solution.
He claims the transition from borrowing and spending to saving and producing cannot be accomplished without a severe recession, given the current imbalances of the U.S. economy.
Contrary to the views of many Investment Gurus tracked by this website, Peter Schiff believes government should stay away from economy and the government is doing no one a favor by trying to "ease the pain" with stimulus packages, bailouts and such. Schiff believes these actions will only make the situation worse and possibly result in hyperinflation.
In a March 2009, Schiff stated that it was impossible for the massive US debt to China to be repaid unless the US Dollar's value was substantially diluted by creating new dollars.
Schiff believes that gold will reach USD 5000 within a few years and that the 2009 stock market rally will not last.
The Growth Is Phony
Last week, BEA reported that US GDP grew at an unexpected strong 3.5% annualized rate. BEA would find Peter Schiff hard to please. Watch the video.
(Go to this link if you do not see the video player)
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1. Tkervin says on Nov 04, 2009 at 8:38 AM:
Difficult for me to evaluate Schiff. He clearly was spot on about the recent drop. Looking at the cash for clunkers though Schiff makes it sound as though the government bought the car for the consumer using borrowed money. While there certainly was a borrowed money component, the vast majority of the money was put into the economy by those who could easily qualify to do so. This stimulates economic growth at some level. Four thousand dollars does not an auto buy......:-)........his analysis of the future decoupling of the emerging markets and the US market is flat wrong in my view. If we found anything out from the recent slide it is that it is very hard to find investments that are not correlated during panic selling.
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