Gold has been steadily rising in an ascending triangle trading pattern since December of 2015. It’s my belief that gold bottomed in December of 2015 at $1045.4 per ounce. I don’t believe that gold will ever trade below $1045.4 again.
The highs being around the same level and then falling combined with progressively higher lows is what leads me to describe the last three years of gold price moments as an ascending triangle.
The high since gold bottomed in 2015 is $1,377.5 which occurred on 6 July of 2016. In the time between then and now gold has failed to match this high or make a new one. The price of gold has come within $20 on five separate trading days–three of which were in 2018 and one of those breakout attempts was last week.
Gold has been trending upwards in an ascending triangle. The blue dashed line is what I’m calling the December 2015-December 2016 support trendline
Fundamentals for What to Buy and Charting for When
Charting is more of an art than a science and I don’t think it works well in isolation. The fundamentals of an investment need to be in place to determine what to invest in and charting may provide some insight into when an investment will move in a given direction.
Now commodities don’t have balance sheets or cashflow so the fundamentals are based on supply and demand.
The supply of gold, while growing, is fairly static, I anticipate the demand to increase substantially given my view that stocks and bonds are in a bubble and that the US Federal Reserve will step in with low interest rates and QE to reflate the bubble, as they did after both the 2000 “dot-com” crash and the 2008-2009 crisis which will eventually destroy the dollar.
It is also important to note that while the above ground supply of gold is growing, the supply of gold in the west is declining at least relative to China and India. The supply of gold might even be declining in the west on an absolute basis although I don’t know that for sure.
Even without a dollar crisis I think gold will still trend upwards over the years and it could go up several hundred dollars even without a dollar crisis simply based on technicals and trading.
Timing, however, is very challenging and it’s not a skill in which I am particularly adroit.
So I buy and hold and dollar cost average. For example if gold bounced off the lower leg of the triangle and I was under-allocated in gold I would consider buying more. At this time I already own too much gold so I haven’t been adding significantly to my holdings.
Despite gold continuing in the ascending triangle there have been some interesting price phenomena of late that merit comment.
Intraday Gold High of $1369 on 11 April
Gold hasn’t reached $1369 since August of 2016. Admittedly gold was not able hold that level last week and closed at $1356. This is still a large spike upwards. Because the fundamentals of gold are so strong I think that one of these days gold will make a new multi-year high and perhaps even hold it if it can confirm the breakout with a $50-100 move above $1377. At that point $1377 would very likely flip and represent a support level.
The $1362-$1377 has been the range of resistance for the past 2.5 years but I don’t think it will hold forever.
Lows are not reaching the Longer Term Trendline
The lows have not fully dropped down to the trendline drawn from the 3 December 2015 low of $1045 to the next highest low (after a high) which was made on $1124 on 15 December 2016.
The lowest gold traded at between the 2017 and 2018 highs was $1238, and it did not reach the December 2015-December 2016 dashed blue support trendline
So while gold hasn’t been able to make it back to the 2016 muti-year high (although it has gotten within $20 five times) the lows keep getting higher.
One interpretation is that gold isn’t actually in an ascending triangle and that the December 2015-December 2016 trendline isn’t useful.
Another way to look at this price action is that gold is in an ascending triangle and the fact that the lows are getting shallower is a bullish trend.
A third is that this rally off of the 15 December 2016 low has been slower and less strong and gold will go down to hit the trendline, and may even break through, which would admittedly be bearish. It’s true that the move up nearly 32% from $1045 to $1377 only took about 6 months. It took almost 8 months to go up 21% from $1124 up to $1362.
This is where charting becomes more of an art than a science.
Compression of Gold’s Trading Range
The trading range of gold is compressed, even more-so than I would expect for an ascending triangle. Again, the highs haven’t been quite as high, but the lows are much higher as well. With a few outliers gold has been trading in a fairly narrow, upward range since the start of 2017.
With just a few outliers gold has traded in a fairly narrow range since the beginning of 2017
As I’ve said above the lows have not fully retraced the December 2015-December 2016 trendline. Yet another interpretation of this is that gold is in a very weak and slow rally. That the highs in 2017 and 2018 don’t count because they didn’t make it fully to $1377 and we’ll retrace the December 2015-December 2016 support trendline.
However I don’t think this is the case when you factor in market sentiment.
Gold Climbing a Wall of Worry
While gold has been trending up since the turn of the century, it had been a losing investment for many years in the wake of the all time highs that were made in September of 2011 in the wake of the 2008-2009 financial crisis. Gold was in a bear market for 3 years in a row from 2013 to 2015. Except for a few months, anyone who bought in 2011 or 2012 and held through to today is still underwater.
Gold has been a winner since the turn of the century
The narrative touted by Barrack Obama and now Donald Trump has been that everything is great and everything is improving. Sitting presidents always talk up the economy while they are in office because they want to get re-elected or if in their second term ensure they have a positive legacy.
Obama and Trump (at least until February 2018) have simply been after to refer to a chart of the S&P 500 as proof the economy is doing great.
So, most investors think they have no reason to own gold, since everything is great, and they don’t want to miss out on the stock market, which has been going up quite a bit until recently.
At the same time, 3 years of a gold bear market has shaken out the weak hands. There aren’t very many people who still own gold at this point who are going to sell now. If they held onto their gold as it fell from $1900 down to $1045 I don’t see why they would sell at $1150, $1250, or $1350.
So while there aren’t enough buyers stepping in to bid gold up over the 2016 high there also aren’t enough sellers for gold to drop significantly. That explains why gold can’t make new highs and why the lows continue to rise.
That is how I interpret the gold price chart.
If I’m right this also means is that when sentiment does change, when more people realize that stocks aren’t going to keep going up and that the economy isn’t great, they will move towards gold, but there won’t be many sellers, at least not at these prices. I could easily see gold going up $300 to $1600-1700 just from a technical perspective.
I do think Gold trading up to the $2000-$3000 would require a full on dollar crisis.
I don’t know when such a dollar crisis will take place. In my opinion given the debt, the lack of manufacturing, and the increase the growth the debt combined with rising interest rates that will increase the amount the US has to pay in interest on the debt are all fantastic reasons for a currency crisis to have already occurred.
Gold Market Ascending Triangle Timing
If gold is in an ascending triangle, as I believe it is, gold will break out of this pattern up or down within the next two years. Perhaps as soon as early 2019 depending on how you draw the support line. In either case I would want to see a strong move $50-100 above the $1377 resistance level to confirm trend was bullish or $50-100 below the support level as confirmation the trend was bearish.
While in the minority as gold bull I’m certainly not the only person with these views. Peter Schiff talked about the gold market trading range narrowing in a recent podcast (about 17 minutes in) and a 1 March article this year from Commodity Trading Mantra draws conclusions similar to my own.
In the fallen world we live in, just war must at times be waged. The War in Iran is not a just war. The US should declare victory and leave.
I’m not defending the current Iranian government. I don’t support the current Iranian government. I’m sure you could point to many, many terrible things the Iranian government has done and is doing. They kill protestors. They support terrorists proxies throughout the middle east. The Iranian government is bad.
I hope people reading this understand I in no way support or condone the government of Iran. I condemn the government of Iran.
There is a grade school version of reality, which is basically, “these people are bad so we should stop them”. This is the approach of people like Lindsey Graham. This is sometimes dressed up as the true but incomplete maxim, “The Only Thing Necessary for the Triumph of Evil is that Good Men Do Nothing.”
A more mature approach is to ask the question and determine, will intervening here do more harm than good? There are sometimes ailments incurable by human effort in which to attempt to do so causes more harm than good. Consider the stage four cancer patient in which more chemotherapy treatment results only in more suffering with no chance of a cure.
What we’ve seen from Vietnam, Iraq, Afghanistan and many other military US endeavors is that intervening can cause more harm than good, the costs of action can outweigh inaction and there are very real limits to what can be accomplished with the sword.
One of the more recent examples: The War in Afghanistan, most importantly, this war cost many, many lives. Of lesser but notable importance, it cost untold treasure and now the Taliban is just as much in power as they were before the war, are currently being paid by the US government, through the UN and have control of a tremendous amount of US military hardware that was left behind in the badly needed, but horribly executed withdrawal.
The War in Iran will go no better, in fact it will go much worse. While not landlocked or as mountainous as Afghanistan, Iran is 2.5 times larger, twice as populated, better armed and is more closely allied with Russia and China.
People who know more than me do not think Iran is (or at least was) an imminent threat prior to the US attack. I have listened to Joe Kent’s interview on the Tucker Carlson show and I find him to be honest, trustworthy and competent. I have not heard any compelling case being made that Iran was an imminent threat to the United States, requiring military action to stop. In fact, the reason that the US attacked Iran, according to the US Secretary of State Marco Rubio, was because they were afraid of an Iranian counter-attack to an Israeli attack. So basically the US knew that if Israel attacked Iran, and they knew Israel was going to attack Iran, Iran would then attack the US and others, so the US had to attack preemptively. This is absurd circular logic.
Image you are at a bar with a friend named Joe. At the bar you and Joe see Clayton. Joe doesn’t like Clayton because he is a bad guy, frankly you don’t like him either. Clayton knows Joe, hates him and frankly doesn’t like you at all either. Your friend says “I’m going to punch Clayton in the mouth.” A rational response would be, “Hey, I don’t think we should punch Clayton in the mouth and start a fight.” Instead, what the US government did is say “Well, if Joe is going to punch Clayton, Clayton will punch Joe and probably punch me too. So I’ll go ahead and attack Clayton before he can attack either one of us.” It makes no sense.
The best thing the US could do, is declare victory and go home. “We’ve degraded all of Iran’s military capabilities, they have been defeated. Mission Accomplished.” Iran will probably continue to charge tolls for transit of the straight, but that cost will be a lot less than what would come otherwise. It would still have been an immoral mistake, but Trump could talk it up as a great victory.
I fear that what the Trump Administration will continue to do instead, is escalate into what will inevitably become a protracted ground war. Congress will unlikely step into stop this. The US will likely win this war military in that they will defeat Iran’s regular military, but at great cost of most importantly of life, but also treasure and standing in the world. The Iranian civilian population will suffer significantly. Russia will have more power in their war in Ukraine and China will be better poised in general on the world stage, but specifically better equipped, due to a weakened US, to invade Taiwan. In Iran the US will be stuck fighting an unwinnable insurgency that will make Afghanistan look like a Sunday school picnic.
Maybe Trump knows what he is doing and can defeat Iran militarily, better Iranian leadership will take over and the straight of Hormuz will be reopened. But even if I’m wrong and he does pull off the Iran War, it won’t make this unjust war right and it won’t bring back the 165 school girls killed by the US/Israel missile strike .
My first article on this website was over 5 years ago, Inflation Destroys Dollars. I certainly did not have any idea that the price inflation would be triggered by the government’s response to the COVID-19 pandemic. I certainly didn’t anticipate the lockdowns and supply chain disruptions back in 2016.
I know the fiscal and monetary policy pursued by the United States and virtually all the world: money printing, onerous regulations, taxes and spending, would eventually result in significant price inflation. Government response to COVID-19 has made the situation worse and pulled the day of reckoning forward but it certainly isn’t the largest factor.
Timing is always a challenge and I was quite early.
Price inflation is here and it is happening fast enough where people notice it and are actually talking about it. Depending on who you trust and how you measure it, prices are rising at a rate of 6-10% per year now. I think what is interesting is that the government’s own numbers (the CPI-U) shows inflation at 6%. This is far beyond the 2% the Federal Reserve has been calling for.
In Inflation Destroys Dollars I write about how gold and silver are an inflation hedge. On 16 May 2016 when I wrote that article, gold was trading at $1,252 per ounce. As I write this it is currently up to $1,864.61, an increase of 48.9%. That is an annualized return of roughly 7.5%.
On 16 May 2016 Silver was trading at $17.14. It is now trading at $25.29. That is a 47.5% increase for an annualized return of approximately 7.3%.
So, if you think that inflation has been somewhere between 4% and 8% over the past five and a half year, gold and silver have on just kept up with inflation during this timeframe. Not bad but also not great. Gold and silver remain the boring reliable hedge and that is a good thing.
Value Stocks as an Inflation Hedge
Value stocks are another asset class I mentioned in Inflation Destroys Dollars. I didn’t mention specific funds. I have made some of my own individual value stock picks with some fantastic picks, but also some not so good picks.
Vanguard’s Selected Value fund (VASVX) is a mid-cap fund that could serve as a proxy for “value stocks”. It was trading at $26.41 on 16 May 2016. It is currently at $33.39. This is a return of 26.4% and an annualized return of 4.3%. Not stellar as I would not say this has kept up with inflation.
The Vanguard Value Index is a large cap value fund (VVIAX). It started this period at $32.49 and is up to $56.68. This is a return of about 74.5% and an annualized return of 10.65%.
A final example to look at, Vanguard’s Mid-Cap Index Admiral Shares Fund (VIMAX) started in this timeframe at $150.33 and is now at $320.62. That is a total percent return of 113% and an annualized return of 14.7%. Much better.
Compare those to the Vanguard 500 (VFIAX), which started this timeframe at $184.53 and is now at $432.9. The total return of this fund was 134.6% an an annualized return of 16.77%.
So while value stock fund did beat the rate of inflation and are a good hedge, they didn’t outperform your vanilla S&P 500 index fund.
Bitcoin as an Inflation Hedge
Compared to gold and silver, Cryptocurrencies, particularly Bitcoin has had all the action.
On 16 May of 2016 a Bitcoin was trading at about $454. Today Bitcoin is trading at $64,346. That is an astounding increase of 14,073% or an annualized return of about 146%.
Clearly Bitcoin has outperformed Stocks, Gold and Silver during this timeframe in an astounding way.
I own Bitcoin and I’m not anti-bitcoin. But I’m also not a Bitcoin maximalist. I think it is possible and perhaps even likely that Bitcoin will be replaced with a superior cryptocurrency that has some combination of faster transactions, higher transaction throughput, anonymity and or additional features. In my view Bitcoin in its current state is too slow and transactions are too costly for it to work as a medium of exchange for day to day transactions. These views are very unpopular with Bitcoin maximalists that ignore or downplay Bitcoin’s weaknesses.
However, Bitcoin has provided an incredible return and far outpaces inflation.
The 14,073% return is not just a result of inflation, although it is increasingly being viewed as a safe haven alternative investment.
Bitcoin has had several great tailwinds 1) It is an emergent asset class 2) It is trendy and popular and gets media attention 3) It is viewed as a Federal Reserve / dollar debasement hedge in place of gold.
Inflation Hedges
Protecting one’s wealth and purchasing power from inflation is important. Just keeping up with inflation is not ideal either, if the assets are not tax advantages, the government will tax the “gains”, and so purchasing power is eroded.
Let’s look at a simplified example. Say you frequently buy a widget or pay a service that costs $100 per year. Say the price goes up 5% per year due to monetary inflation. You also have a $100 investment that also goes up 5% per year. You’re still not keeping up with inflation because of taxes. If your $100 investment goes up 5% to $105, the government is going to want some taxes on that $5 gain. Say you’re on the hook for 15% capital gains taxes, the government is going to take their share and leave you with a $4.25 gain.
So you now have to come up with another $0.75 to pay for the item or service. Scale this up to include all of your expenses for the year and you see that you need to not only keep up with inflation, but exceed inflation so you have the money to pay the taxes on the gains.
In order to keep up with inflation your investment would need to be in a tax advantaged account that would lower or eliminate the tax burden owed or (again assuming a 15% gains tax) you’d need the investment to go up by about 5.9%.
This also shows how insidious inflation is. Not only is money worth less, but the government taxes the gains, even if there was no gain in terms of purchasing power.
One other thing to keep in mind, in the United States at least, realized gold and silver gains are taxed at the generally higher income tax rate rather than capital gains tax rate.
Are Gold and Silver Great Inflation Hedges Anymore
Gold and silver might not be very good inflation hedges anymore. If I owned gold or silver I wouldn’t sell unless I needed to rebalance my portfolio. I would expect these assets to at least keep pace with inflation, but unless the demand for gold and silver increases in excess of new supply, I don’t think gold and silver will beat inflation in the way needed in order to truly hedge for inflation when accounting for taxes. While it has produced a positive return in excess of inflation, it certainly hasn’t been a fantastic play over the last five and half years since I started HowIGrowMyWealth.com.
The world has almost always been pretty crazy. I think there is a bias, which isn’t necessarily a bad thing, to believe that now is a special time, it’s different. Now is “the best of times” or “the worst of times.” In a very real sense the current time IS the most important because the present is the only time we can directly impact. Also as humans we seem to enjoy superlatives. But it’s important to realize that things have almost always been fairly crazy. The world has almost always been mad.
Supply Chain Breakdown
So what is the crazy du jure? Well, the US and probably other countries are realizing what was obvious to anyone who cared to think about it: if you shut down industries, print money, pay people to stay home and otherwise disrupt and destroy supply chains you get price increases, delays and shortages. As if labor wasn’t tight enough, vaccine mandates are driving more people out of the work force.
One of the scariest phrases is “I’m from the government and I’m here to help.” When I heard Biden was going to get involved in the supply chain issues, particularly the ports on the United States left coast I knew it was only going to get worse.
Their brilliant solution? Fine Shipping Companies if their shipping containers remain in the marine terminals for too long. How that will actually enable the shipping containers to get unloaded and moved faster is anyone’s guess. Perhaps the shipping companies weren’t sufficiently motivated before and that was the problem? It makes no sense to me.
But I don’t have the experience in supply chain management that Biden and Harris do. Wait, scratch that, as a kid I worked in a warehouse shipping packages for four summers. Not stellar credentials in supply chain but four more summers experience than these public “servants” have.
Government Dysfunction
Forgive me for repeating myself when I use the phrase government dysfunction. When it became apparent Biden was going to occupy the White House and the blue team was going to have both chambers of congress I thought it was going to be bad. Really bad. I thought it would be bad because I don’t think that taxing, regulating and spending work and that is pretty much all Biden can or would do.
If you do think that taxing, spending and regulating work then we’ve been deprived from the socialist paradise by two moderate Democrats (or if you’re from New York or California, right wing extremists).
I am waiting for the other shoe to drop because Senator Joe Manchin a blue team member from West Virginia and Kyrsten Sinema, another blue teamer from Arizona are actually doing things I don’t wholly disapprove of. Or to be more precise they are not doing things.
That is the standard I have for politicians: did they do one or two things I don’t wholly disapprove of? If so they’re doing pretty good relative to their peers.
When his wife was appointed to a federal position that pays some $163,000 per year for public “service” I thought for sure Manchin was bought and paid for and would march to whatever beat Biden (who whomever is actually in charge of the executive branch) drummed.
But so far he hasn’t.
Manchin has put the Kibosh down on ending the filibuster (which is a racist Jim Crowe relic when anyone but the Democrats use it), he’s stopped the IRS from violating the fourth amendment by being able to snoop on anyone’s bank account with more than $600 $10,000 in transactions in a year, which is basically everyone not on welfare. He’s stopped the carbon tax and done some other good stuff. I didn’t realize there were still moderate Democrats but there is Joe Manchin.
Kyrsten Sinema gets some credit too. See? I can say something nice about Democrats.
Politicians always fail us, usually miserably, so I’m sure it is only a matter of time before Manchin and Sinema are brought in line and they click their heels like a good party members and do as they are told. But not so far.
Biden the Lame Duck
President’s who don’t accomplish anything are great. Gridlock in Washington is great for ordinary Americans. If Biden turns out to be a lame duck that would be fantastic. If you’re on the government dole it is a bummer, if you’re connected with the right folks in government you might not make another few million which is a bummer, but I’m convinced that for everyone else government inaction is a real plus.
Biden’s approval rating is pretty bad. I’m glad the US isn’t officially in Afghanistan anymore and I give Biden credit for having actually withdrawn. Obama didn’t make it happen, Trump didn’t make it happen. Biden (or whomever is actually in charge of the executive branch) made it happen. Full credit for that.
But even still it was a disaster. Incompetent leadership is not without its costs, some of which are deadly serious.
I’m not a military man (and neither is Biden) but why wouldn’t you make sure the US civilians (and Afghan allies) were evacuated PRIOR to withdrawing most of the military? I don’t think you need to have gone to West Point or the Naval Academy to have that instinct. What happened over there makes no sense to me.
Seeing desperate Afghanis clinging to airplane landing gear so they would not be left behind to be killed by the Taliban was disturbing and horrifying. But perhaps the worst was when the United States government killed an innocent family of 10 including 7 children.
That combined with how he is “handling” COVID-19 and the economy I think Biden’s prospects at a second term, should he decide to run, are not great. Disclaimer: “In my opinion the President has more power than he should have but less than people realize. The President gets blamed when the economy is doing poor and gets credit when it is doing well. But it’s all unwarranted.” But while not impossible (as we’ve seen with Jimmy Carter, George H.W. Bush, and Trump in recent decades) it is tough to beat the President in an election.
Regardless I expect the blue teamers to do poorly in the mid-term elections. My political predictions haven’t been stellar, but if history is any guide the party occupying the White House tends to lose ground in the next election cycle, and with Biden being less popular than most things (ok that link is to a satirical news site), I don’t expect 2022 to be any different. At this point in my life, I would be content if no new laws were passed and the government was in deadlock. When either party gets control particularly bad things happen.
Gold Has Failed as an Inflation Hedge
This has been a real bummer because I’ve written about gold a lot. I’ve written about how I think it is an important part of a diversified portfolio. Well inflation is here and gold hasn’t done much of anything. Stocks are up, real estate is up, Bitcoin and Ethereum are up, plywood is up, Costco has reinstated paper towel quotas, even $163,000 a year isn’t enough to buy a US Senator anymore, the CPI for goodness sake, a metric seemingly designed to not measure inflation is up. It seems like the price of everything is up, except gold. Gold is not up. Maybe it is a “barbarous relic”. If you own any I wouldn’t sell it, but it has been a disappointment.
Sure, it had that tease-of-a-run-up in 2020 where it broke over $2,000, but since then it has dwindled and is stuck around $1,800. While it is better than a sharp stick in the eye gold going form $1,500 at the start of 2020 up $300 as of writing this isn’t going to save anyone from inflation. That is about a 20% increase. Meanwhile, the dollar has depreciated some 15% during that time. Not fantastic.
I still think gold is important. It doesn’t have counter-party risk, it’s been subjectively valued for thousands of years. It’s not liable to get replaced by Bettercoin 2.0 like Bitcoin is, but I would have expected it to go up more during COVID times.
The World Has Gone Mad
The world has gone mad, but it didn’t happen in 2020, it happened much, much earlier. Twenty-twenty was certainly crazier than other years but it could have been worse.
I don’t mean to downplay these past few years for those who have lost loved one or who have had their life dramatically impacted by COVID-19 and the ensuing government response. Almost 5 million people worldwide have passed as a result of COVID-19. If you’ve lost a friend, family member, co-worker, teammate or anyone else due to COVID-19 it is not a statistic it is a very real tragedy. If you’ve lost someone because they couldn’t get preventive care or screening because of the lockdowns, if they committed suicide as a result of the social isolation resultant from social distancing policies and lockdowns, if they’ve lost hope because of job losses these are all real tragedies. Perhaps you yourself are suffering. These are all real and tragic realities that we’ve all been coping with to one extent or another.
Having said that I want to end on a (relatively? kind of?) upbeat note. The last couple years have not as bad as the Bubonic Plague outbreak of the 14th century where perhaps 25 million people (about 2/3 of Europe at that time) perished. It’s not been as bad as the 1918 pandemic where perhaps 50 million people died. It wasn’t as bad as the mid 1940s in Europe during World War II when an estimated 50-70 million people died. Or the 1950s in China under Mao where some 30-40 million people died or were killed. Thankfully, nearly 223 million people worldwide have recovered from COVID-19. It’s not like we’ve had World War 3. And while that is a low standard perhaps that is good enough for now. And God willing, perhaps 2022 will be a little better.
Peter Schiff is Chief Economist & Global Strategist at EuroPacific Capital. He is also chairman of a gold reselling company. He appears on RT and has authored several books about the collapse of the dollar. Peter is a vocal critic of the US Federal Reserve and warned loudly about the housing bubble prior to the 2008-2009 financial crisis.
I owe much of what I know about the Federal Reserve to Peter Schiff. I’ve read some of his books and used to listen to his podcast.
But I’ve come to realize that Peter Schiff is not someone you want to listen to for financial or investment advise. The following are some key areas where I think he goes wrong.
His EuroPacific Funds are Expensive and Underperform
I invested some money with his firm, EuroPacific Capital between December 2014 and December 2020.
During that 6 year timeframe, my investments with EuroPacific Capital went up 20.5% (about a 3.8% annualized return) which doesn’t sound too bad until you consider the S&P 500 doubled in price during that same timeframe and provided an annualized return of nearly 15%.
Peter’s firm EuroPacific Capital, charges what I consider to be high load fees and they underperform. For someone who preached about inflation, you’d think he’d make sure his funds at least beat inflation. They don’t. Looking up his funds on MorningStar, you can see the poor 5 and 10 year returns.
The EuroPac gold fund has a 5-year annualized total return of 2.29%. Inflation has been well over that for the past five years.
His Bias for Gold and Silver Blinds Him
Some might consider me a gold bug. I believe gold and silver are an important part of a diversified portfolio. But with Peter being a gold salesman, he is overly biased towards gold, this has caused Peter to miss out on an emerging asset class (cryptocurrencies) that while more volatile, have far outperformed gold. He has unsuccessfully predicted many tops to this asset class.
Not only that, but he’s failed to predict where all the Fed money printing would go. It’s gone into real estate, stocks, cryptocurrencies. It hasn’t gone into gold, silver and foreign stocks the way he has been predicting.
He Can’t Time the Dollar Crash
Peter Schiff is the boy who cried wolf.
Sometimes there is a “wolf” and when there is, it’s is important to let other people know there is a wolf so we don’t all get eaten.
Peter did correctly cry “wolf” before the 2008-2009 “wolf” reared its head. But he’s been wrong ever since.
Peter is a big fan of extended metaphors. So here is one for him. Peter is the boy who cried wolf, no one believed him and it turned out there was a wolf and he was right. Then he cried wolf again over and over again for the next 12 years as if the wolf was just behind the bushes, even though the wolf was 500 miles away.
His rhetoric that the dollar crash is imminent might be an effective sales tactic in the short term, but he has been wrong since the 2008-2009 financial crisis. It weakens his message and erodes his credibility to the point that I don’t listen to him anymore.
He has not been able to time when the dollar will crash. I agree the US Federal Reserve is reckless, is a prime cause of market crashes and price inflation. There is no question the dollar will continue to lose value. But will it happen all at once in a huge crash, or will it continue to decline 2-6% per year like it has for over the past 100 years? I don’t know and Peter Schiff certainly doesn’t know.
He has had no ability to predict how long the powers that be (the big banks, the military industrial complex, the Federal Reserve, the US government) can keep the dollar charade going. He will talk and write about how “The Dollar Will Implode When The Markets Figure X Out” but the market consists of a lot of people who stand to benefit from the charade continuing.
If you listen to Peter you will probably be correct eventually, after all, reserve currencies don’t last forever, but you might not benefit from it in your lifetime. Or you might.
What Can you Learn from Peter Schiff?
I certainly wouldn’t bet the farm on the US maintaining its reserve currency status for the next thirty years. I will remain thankful to Peter for opening eyes to some very real risks the US and the dollar face. But I will never be happy that I missed out on a 100% return if I hadn’t been invested with his firm from 2014-2020. He is not the person I will be going to to figure out how to grow and protect my wealth.
The answer is to take a more diversified approach and to keep your costs down. You can own foreign stocks through a low cost Vanguard mutual fund. Most large non-US companies are listed on US exchanges anyway. Most US companies have large foreign components for their business. When you invest in large US stocks, you are also investing in their non-US sales.
I think owning 5-10% of your liquid net worth in gold and silver is important. I think if you have some extra money to speculate on with cryptocurrencies that could also result in some outsized returns. I think owning hard assets like real estate and yes even some gold and silver is important.
But thinking there is some impending dollar collapse looming on the corner doesn’t do any good. It certainly hasn’t for the past 12 years.
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Privacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
