12/2/2009 Peter Schiff On Squawk On The Street: Will The Gold Rush Continue??

[ItsAllAboutGuitar]

@Zeldovich on degrees in Economics.

There are also degrees in Psychology, Sociology, and Political Science.

[benandreas369]

Zeldovich is a Keynesian... fuck him!

[Zeldovich]

Sorry, but i'm saving may ass for my wife.

It's interesting that Schiffites and Austrians in general don't mention monetarism. It's probably because they ignore actual research in economics, such that they are so ignorant about the field that they don't even know about entired frameworks that have been in opposition to many Keynesian arguments for decades.

You do not learn about a field without looking at the reseach, whatever CNBC guests tell you.

[Zeldovich]

These "just so" Austiran explanations assume that economics works like accounting statements,but the economy is far different and more complex than that.

He completely ignores a comprehensive supply/demand analysis of money, which concludes that losses in money velocity mean that the demand for money is growing relative to supply. Create enough money to meet that demand and the economy picks up with temporary inflation. Real wages and debt take hits, so employment stays high.

[lilbitparanoid]

Check out "U.S bank enemies at the gate could trigger sudden gold break out"

Jim Willie of the Hat Trick Letter wrote this article in August and mentioned the coming Dubai debt default.

His take on the dollar collapse is if the Dubai default causes bank failures, as it most likely will, it will result in bail outs from countries all over the world as the domino effect again takes place.

This will cause a mass influx of dollar denominated bonds into the market = instant dollar crash.

[6024691380]

TARP, Tear Apart our Republics Profits

[michaelpshipley1]

imo it would be better if the website logo was at the bottom.

[pinkcheesegreengh0st]

Why even have the shmuck on the show that argues with Peter so he can't even explain his case. I guess that is why Mark "crap in your" Hanes

was also cutting him off. CNBC is sponsored by Funds of all types that want you to buy into the belief you can only make money in a bull market scenario.

A real investor has no emotion about the direction of the market because they can make money in any market situation.

[FauxNewsIsLame]

i'm betting bubble...

they are always blind to the bubble machine until the house of cards falls then they all look around and ask what happened...

funny how that happens...huh?

LOL...time will tell...;-)

[nolan067]

peter schiff is right, again

[Intervene]

Nice vid

[itillbeme]

The guy in the white straight jacket states that there hasn't been inflation yet. Has he been to the grocery store like the rest of us. Oh yeah thats right he doesn't count food or oil as part of core inflation. Listen only to Faber/Schiff/Roubini/Prechter and the like.

[twk373]

Peter is a very smart guy, but moreover he is a very ballsy guy.

It's obvious that socialism and government intervention destroys economies, but only a few people have the guts to say so.

[lisajason111]

0:31, look at his eyes, evil insight in sight! unbelievable that America is run by scums like that!

[JessicaBelle81]

I'm poor and I convert my paper to gold and silver.

There's no possible way the dollar can survive long term. The amount of unfunded public debt is too enormous. There has to be a devaluation of the dollar.

[cas111498]

why do they have him on show ,they know he is right. when they cant win the debate they try to cut him off. lets kick there ass.remember who they are.

[Zeldovich]

Schiff is a nut.

[user392000]

He is not a nut. You need some schooling to understand what he is talking about.

[Zeldovich]

I need schooling huh? From someone who doesn't understand even basic economics? Schiff is a joke.

If you think gold is giong to $5000, go all in. Remember there were skeptics when it all comes down.

[ItsAllAboutGuitar]

For what? Pointing out all of the stupid things this country has done.

[Zeldovich]

Predicting gold at $5000... Go all in.

[ItsAllAboutGuitar]

He's basically saying the currency will collapse. Why do you think that the dollar is immune from that? It happened to Argentina, and Germany. It's a fiat currency. It can't work.

Since the financial crisis, we've done nothing but spend more. That's not going to help the currency.

Gold hovered around $18 for the first 137 years in this countries existence. It's now 66 times that. It's not that insane to say that it will quintuple.

What's insane is the status quo.

[Zeldovich]

What's ridiculous is thinking you know enough about economics to know if he's right.

Both short- and long-term interest rates are low, we have the one of the smallest debt/GDP ratios in the world, economic recovery is anemic, but has begun. It will be weak growth for at least another year or two, keeping inflation down.The government still guarantess that no systemically significant financial instiutions will fail., China, India, and Germany only talk down the $ to increase their exports.

[ItsAllAboutGuitar]

Our GDP is $14.4 trillion and falling and our debt is $12 trillion and rising. That's not a great ratio. Even if you look at CIA Factbook, we're number 61.

We're still losing jobs. Why would you believe the spin that we're losing them at a slower pace so it's a recovery?

The government guaranteeing that no significant financial institutions will fail is a huge problem. They're just going to do that same stupid things they did over the last 20 years that got us into the mess we're in now.

[Zeldovich]

First, our debt is not that high, and even if it was, it's not high by historical or contemporary standards. The US had a debt/GDP ratio of over 200% after WWII. That wasn't a problem. Japan is also at 200%, has been in recession for 15 of the last 20 years, and yet Schiff wants you to invest there.

The government's willingness to back up the financial sector, including

Second, positive verus negative GDP growth represents the beginning of a recovery, assuming it lasts.

[davincij15]

If you use GAAP the government debt is 63 trillion and thus its 400% of GDP.

The only reason the missing debt is removed is because it unfunded liabilities that the government can decide not to pay in the future. Liabilities such as social security, medicare etc you know the stuff people paid into and believe the government will pay. LOL

[Zeldovich]

Such future liabilities are easily avoided. Social Security can be made solvent simply by lifting the cap on taxable earnings which currently is out around 80,000 dollars/year. Means testing could save yet mroe money. Start to fund Medicare by shifting more of the burden to the rich while consolidating healthcare into a range of options in an exchange to lower seach costs and asymmetric informatoin problems and focus on people having HSAs and higher dedectible plans will all help save money

[davincij15]

First according to GAAP the government deficit for the last fiscal year was greater than GDP.

Thus a 100% tax will not fill the gap, ask the GAO.

Also you know that 70% of the economy is consumption and a dollar is created out of debt, thus when a dollar is created it means that the person plans to create wealth to extinguish that debt.

Americans are not producing anything and they are defaulting and instead of the banks going bankrupt they are printing the money via government debt and Fed

[Zeldovich]

Third, the government's willingness to back up the financial sector, including the commercial paper market, prevents a total meltdown and means the money never needs to be spent.

Even money we spent otherwise, such as the TARP funds are already being paid back.

You just make no sense. Go ahead and invest heavily in gold while it's at it's all time high and also invest in Japan. We'll see how things work out.

By the way, even Jim Rogers says not to buy gold right now.

[Zeldovich]

If you want to actually learn about monetary policy, let me know. Schiff doesn't know a thing about it. He doesn't understand nGDP targeting and the rationale, etc.

[benandreas369]

Schiff knows many things about monetary policy.. please just shutup and listen to the guy.. he has been right since 2005, and seems to be predicting what is going to happen dead on today.

[Zeldovich]

First, you're stupid.

Second, the only things Schiff was right about were the expansion of subprime borrowing and the fate of many major financial institutions. He's been completely wrong on the macro side.

And you think Schiff knows about monetary policy? Call into his radio show and see if he knows that nGDP targeting is, or the Tayler rule.

This idiot thinks the Fed has made the economy less stable, but look at the period before 1912, including the free banking era. Far less stable

[benandreas369]

haha... wow, you just lost all credibility because, first off, you cannot type...=).

Watch and see Zeldovich, watch and see. The Fed has devalued our dollar and we are going to have another collapse.

[Zeldovich]

Where are the numbers, stupid? The numbers don't support your case at all.

And you talk about a devalued dollar when it has little to do with the Fed. You and the nuts you follow talk about a 97% loss of the value of a dollar, but when it occurs at 2%/year it's a tiny tax to insure against deflation! My god, you're idiotic.

Are you familiar with the free banking era, and the period between that and 1913 when the Fed was established? Look at the more frequent, sharper recessions, stupid

[benandreas369]

hehe.. END THE FED!!!! Corrupt private bank that you support... go fuck yourself!!

[Zeldovich]

You're just a Schiff Bot with no thought to be left unexamined in the first place.

[davincij15]

Zeldovich:

I'm all in to gold and silver, so are my viewers of my channel and central bankers are wishing they could be all in.

Paper money more valuable than real things LOL.

[Zeldovich]

If you don't think your bills are worth anything, send them to me. I like fiat money. Have all your gold bug friends send me their worthless dollars too.

[davincij15]

I have already donated my dollars to the person that sold me gold at 700 and silver at 10 thanks.

I will continue to donate my dollars to anyone giving me cheep silver and gold.

Cheers.

[Zeldovich]

You better sell your gold soon. The world economy is starting to pick up, decreasing the demand by gold bugs and taking it back to levels determined by suooly and demand at full employment.

[davincij15]

Good luck with that trade.

[Zeldovich]

That sharp fall in gold prices last week came after the slightly positive employment numbers. That may not be a coincidence and is exactly what I'd expect as the econonies recover. The recoveries might be long and very gradual, but as total meltdown seems inceasingly less likely, you will perhaps see very sharp declines in gold prices with intermittent periods of slow decline back to trend.

[davincij15]

The employment numbers are bogus. The government said the work force shrank by 98,000 people, meaning they just disapeared. lol

Actually if look a the BLS you will see they excluded them because they stopped looking for work as they fell of unemployment.

Magic does not exist just look at how the magician did it and you will see it just smoke and mirrors. Reality stays as a constant.

[Zeldovich]

It really doesn't matter one way or another. The numbers beat expectations and it's the gap between expectations and market events that matter.

Gold is due for a hard fall. It is high relative to other commodities and interest rates going out 3-4 years likely indicate expectations for very flat GDP growth. Hence, industrial and jewelers' demand for gold should remain flat as an anemic, but definite recovery takes place. Central bank gold purchases will not be enough to stop the fall, as

[Zeldovich]

the small price increase after the Indian purchases helps to reveal.

Schiff's predictions of dollar doom and inflationary double dip are not expected by the market as revealed in interest rates and commodity future indexes. Again, Schiff thinks he knows more than the market even though he says no one knows enough to set interest rates. Yet, at the present, interest rates would have to be negative 6% to bring unemployment back down into the 5% range. Blame the Fed for doing too little.

[davincij15]

So let me get this right India's central bank and the rest that snatched up the the IMF 400 tones of gold at an average price of $1045.

These central banks that would normally buy use treasures had seen a small gain compaired to if they purchased a 10 year note?

RIGHT.

Also in September the last gold producer stopped hedging their gold production because they see lower prices....

Right.

I get the funny feeling you are buying gold and telling people this bullshit. lol good one.

[Zeldovich]

Schiff also fails to realize that even if the Fed cannot bring in eough new money through balance sheet sells to avoid inflation, they can raise interest rates are merely nold them constant to let the economy grow into the new money supply. Inflation as seen in higher prices won't wreck the econmy as the economy will have to be at or near full employment to avoid further measures to fight inflation. Hence, the economic slowdown caused by higher rates will be modest.

[davincij15]

The Taylor rule states a -6% however in Aug 07 that same Tailor rule stated we needed a 7% but the fed dropped the rate and now the Taylor rule is useless.

In reality if the fed brought the rate up to 6.25% it would be running at a zero % real rate and would recover the economy after 1 year of hell and hand basket of defaults. If they continued to raise the rates beyond that they would bankrupt the Federal government or destroy the dollar a lot faster than the course we are on now.

[Zeldovich]

of the 3% 150 year trend GDP growth rate. Hence, the recesson should have been in the 1.7% range, which is bad, but not nearly as bad as we had earlier rthis year.

[Zeldovich]

First, there is no zero bound problem as fees on Fed deposits can be charged to spur lending. If banks aren't solvent enough to lend, negative interest rates can be used.

Second, there is no need for more pain. We've had more than the loan losses justify anyway. 2 trillion in losses over 3 years represents only a 1.7 percent drop in GDP growth, which is bad, but nothing like as we saw this year. That's 2 trillion/(3x14 trillion) = 4.7 percent, compared to a rate

[Zeldovich]

Or I should say a 1.7% negative growth rate in GDP.

Inflation in a deflatonary environment is a good thing, as it lowers the real value of wages, keeping more people employed; lowers the value of real debt so bad lenders take a hit and consumer and company balance sheets are improved, and we experience pain proportionate to the malinvestment. It makes no sense to leave resources idle during such an adjustment. Money velocity has to remain constant, lest their be delfation during recessions.

[Zeldovich]

Most people fail to do a complete supply/demand analysis on money. When the economy is in recession, money hoardng begins and represents an increased demand of money, relative to supply. Money velocity goes down, as wages are sticky and unemployment goes up. Unemployment further undermines economic growth and slows money velocity even further, putting the economy far below an efficient quilibrium.

This is what the Fed let happen,. They expanded the money supply, but not at a rate that

[davincij15]

Although the velocity of the monetary aggregates have slowed to lower than 1 the reason for that slow down is the bottom of the market has not been reached for most asset classes.

The reason they are not hitting bottom is 2 fold the government propping up the market and the fed buying up the market.

This is artificial and the market knows it and will not invest until the bottom is reached.

In the mean time the fed will print, print, print to force that money out sooner.

[Zeldovich]

So, you're comforable with an arbitrary bottom that is well below that justified by the losses on junk assets? And you have things reversed with money velocity. it slows down as the bottom is approached, until the second derivative is posite. Well, that happened in March.

[davincij15]

That bottom occurred in March for equities not for other asset classes such as bonds, MBS, real estate, and CDOs much much more.

In July stock reached a peak divided by real assets and in PE ratio of 120 and still raising as corporate insiders sold record amounts of stock.

Just remember the number on the exchange is for fools who don't know that money's value is based on what real thing it will buy.

[Zeldovich]

That P/E value is demonstrably nonsense. It suggests expected earnings growth of 8 tenths of one percent, and we've seen far higher growth than that in real terms. IF you're pricing dollar assets in terms of gold, then that's silly. Gold is not a store of value, but is either used for industrial purposes, making jewelry, or as a hedge against inflation and/or uncertainty. .

[davincij15]

PE values this high on average tells you a lot since it has never happened before.

Gold is money. It has been money for every second of the 6000 years of human history. If it where not then central banks would not hold it.

[Zeldovich]

Well, there's no significant inflation anywhere on the horizon for the next few years. And industrial and aesthetic uses of gold won't pick up until the economies of the world do. Within that three or more years, many new goldbugs will start to doubt that the dky is falling and start selling their gold. Hence, godl prices will be depressed for probably at least 1-2 years.

[davincij15]

Everything is a product in a economy even money.

Every product goes from under valued to over valued, how big those oscillation are depend on public conditioning.

The dollar is headed into it's hyper undervalued stage as all 3800 paper currencies has in the last 2000 years. Its early in the game and if you think there is no inflation then you must have a butler doing your shopping for you.

Poor people are seeing the inflation very clearly and they are hurting twice as much in this down turn.

[Zeldovich]

If you're going to paraphrase Jim Rogers, you should know that he doesn't recommend buying gold right now. He says he doesn't like to buy anything that's at historic highs.

And the costs of things I buy have gone way down since last year. You really, rally make no sense. Are you paying $4.40/gallon for gasoline? Do you notice your store is out of corn due to ethynol production and food shortages, like last year?

Anecdotes don't GDP delfators make anyway.

[Zeldovich]

Goldbugs can't see the deflation right in front of their faces. Tell me, why would fuel prices be only half of what they were in dollar terms last year if we have all this inflation you're talking about? Do you boggers even think about that? Why are all commodity prices still depressed in dollar terms? lmao Amazing

This is the problem with listening to the random nut on TV. They usually don't know what they're talking about and the stupid media doesn't know enough to ask good questions.

[Zeldovich]

Let me have a few minutes with these clowns and I'll point out the contradictions in their own observations and ideas. Amazing.

Even those in the media who know better want to get ignorant people like Schiff and Rogers on, because they get ratings. They tell so-and-so stories about booms and busts, inflation, debt crises, and gold prospects that people can easily understand. But, if economics were so simple, why would there be degrees in it? Things just don't work that way.

[Zeldovich]

On MBS and CDOs, how do you know they haven't bottomed? The market isn't even transparent and the Fed may have already locked in a bottom for them.

Residential real estate prices have bottomed in number of markets, most notably in those hardest hit.

And bonds? They may also have bottomed.

[Zeldovich]

So, given that money velocity concerns the rate and magnitude of economic transactions, how can a lower rate help to reallocate resources as quickly as possible? The unemployment and money hoarding slow reallocation down, impacting areas of the economy that are far removed from the bubble areas. Meet demand for money to keep money velocity constant when GDP growth recedes and the reallocatoin occurs as quicly as possible, with the costs coming in fhe forms of temporarily lower real wages

[Zeldovich]

that was below the growth of demand.

[Shaunt1]

If gold continues rising at the current pace give or take, gold will reach $2000 per ounce by mid January.

[Zeldovich]

If the growth of fat as a percentage of my diet continues rising at the present pace, I'll gain 300 lbs by mid-January.

[ricochetVendetta]

could go higher still but only in us dollars, in a sound currency gold might not rise that much. if we bought houses with peanuts, the number would be very high but most people would laugh at using peanuts as currency so too US dollars might just cease to exist if a situation above 5000 gold were to occur

[BrainChild666]

Fort Knox is filled with bars of Tungstun.

[NicosMind]

Looks like Schiff personally added his video you your one Phil. Now thats cool :) Ive been subscribed to this channel for a long time. Since way back when your vids used to say Ron Paul supporter and advisor. I wonder if Peter even knew of your channel back then.... Memories... Its been like having a crystal ball and watching everything play out in front of you.

[karkelkhan]

The big question is is the crisis going to end and will all the problems be delayed or are all the problems going to happen in this crisis. If the last is going to happen, don't sell at 1500-1800.

[Seano71]

Read his book, watches dozens on videos online, this man is a legend. Thanks for the great advice Peter

[SilverRose09]

Gold will be 2000 easy next year. It has been manipulated down, but China does not want to suppor the shorting of commodities (specially gold and silver), so comex is in the shaking rope.

[vinny1010]

$5000 Gold is peanuts. Try over $15k

[mattgeb84]

ive been saving in gold for a year or so now

[Entropy137]

Hey guys, can anyone give me an argument for buying gold over buying silver? Thanks.

[mattgeb84]

only argument i can think of off the top of my head, is silver is more volatile and thus riskier than gold.

[kurktchian]

Smaller market... more easier to be manipulated but in general the effect on silver should be the same as gold in the long run... but currently i think the Gold to Silver ratio is high so maybe currently silver is cheaper in those terms

[Entropy137]

Yeah, the ratio imbalance compared to the historical ratio is one reason I think silver is better than gold but also because the above ground supply of silver has been declining for decades and the possibility of a short squeeze in silver. Also, historically when gold goes up a lot as we're all predicting silver goes up faster.

[ExquisiteDoom]

I don't know, i'M hearing left and right that industrial demand is diminishing, but monetary demand increasing. (though monetary demand has no real effect on the price) But i do hear gold demand is increasing , and mining costs are increasing... I'm really confused now, i'd like to know how you people figure wether silver is scarce or not for industrial use... so i can verify for myself >_>. thanks :p

[Entropy137]

First off, how can monetary/investment demand not affect price? Silver has unique industrial uses because it's the best conductor of electricity and is a natural germicide. The only area of industrial use that's waning is in digital photography but that's being replaced by rising demand from chip makers. I can't give you the most recent figures but the above-ground supply of silver has been diminishing every year.

[ExquisiteDoom]

Yea, but silver is also a by-product of copper mining; which is at pretty much no cost; all gain for every ounce. Same with many other metals. But you're right; the gold price doesn't take into account exploration costs also. Oh, and coinage is really just 5% investor demand; i don't see how this can push the price up by much compared to the industry. I do agree silver's future is bright; but i'm very skeptical about the idea of "to the moon". I'd appreciate a reply :)

[Entropy137]

No cost? Really? No need to pay for the labor or energy of drilling? And just how much silver comes out of every ton of copper mined? I think the "to the moon" expression is somewhat justified if you look at the silver chart of 1980. If physical silver runs out or nears running out it will cause another speculative demand mania that no ramping up of production or even recycling can keep up with. The price will spike and then as always crash back down to earth when production overtakes demand.

[ExquisiteDoom]

I honestly don't know. I'm simply pointing out stuff anti-silver bears are throwing at me that i wasn't informed well enough to counter. But the silver being a by-product of just about any mining resources should certainly account for quite a bit. Also, about the labor... When you have the "nugget" on hand, or whatever... And it happens to have silver but expected it to be made of copper... isn't this a gain that wasn't expected from the investment? If that makes sense...

[ExquisiteDoom]

In other words, if you were to spend i dont know , 100$ for 150$ of copper, but got a few lucky ounces out of it and made an additional 50$ due to it being silver and not copper... Isn't this already paid for? A simple extra?

[Entropy137]

Okay, I get what you're saying now. Yes, the silver is extra, which is good for the company. My point was that a lot of primary silver mines have problems mining silver profitably because the price isn't high enough. There are lots of silver reserves that can't be mined at current silver prices which means a cap on supply until prices rise. When prices do rise, the mining companies will take years(10) to put new supply on the market because it'll take take to raise capital and get gov. approval.

[ExquisiteDoom]

That makes sense. I'd like to know where you get your information though, i have so many questions i'd like to research for myself about mining.... Thank you :D

[Entropy137]

From various sources, but if you want a single source, Ted Butler is a good place to look. Jim Rogers can give you good insight on commodities in general. To give you an idea of how high commodities can go, take a look at the price charts of silver and sugar in 1980 which was followed by a 20 bear market which ended in 1999 and commodities have been in a bull market ever since. The people who called an end to the commodities boom understand neither the fundamentals nor the technical waves.

[ExquisiteDoom]

Oh, i know of them, i follow them rigorously and many others. I just wish i could be on the field, you know. Or maybe have on the field information. So i can invest a little more aggressively. I'm young, and can take the loss :) But anyway, i appreciate the reply. thanks !

[wizardseye]

Silver has a high likelihood of going way up. This is for a few reasons. Mainly, we are using more silver than we are mining. Silver is the best conductor of electricity, has the highest reflectivity and so used in high grade mirrors, and then common uses such as photographs and cd's, which use silver in such small amounts that we arent very likely to get that silver back. This causes the supply to shrink drastically compared with gold.

[ExquisiteDoom]

Good points, thanks.

[Entropy137]

contined: You talk about the mining costs of gold, but did you know that most miners can't mine silver at a profit at current prices? That's why most of the silver on the market is a byproduct from gold and zinc mines. Remember the big purchase of 200 metric tons of gold by india? That raise the gold price by about 100 that day. If an equivalent purchase was made in silver, it'll send silver to the moon.

[soundmoneyfan]

haha, the gold trader make a great point if you make the assumtion that there will be another paul volker or if our consumer economy will go back to normal......hmmm......

[soundmoneyfan]

"Will The Gold Rush Continue??" I think a better title would be "will Peter continue to make this entire 'finacial news' look foolish??" the answer of course is yes

[stealthpakfa]

who the hell is that other monkey trying to argue with peter?

erin burnett should be shot, what a repulsive and arrogant whore!

[Winst0nOBoogie]

I like how they eat up Peter's talk time with jibber-jabber over him repeating themselves... they are pros, thats not an accident. its on purpose.

Think about it.

[KwiQQer]

lol at all those peeps who first saw the dip in gold and blamed schiff... but they are turning to him again that gold is worth so much...

[TheNRA4ever]

lets see....Mr. Schiff has been right for over 4 years now...I think I will stay with his advice and keep buying gold !!!!! (and silver)

[ILovelisanova]

LOL, Mark Hains will NEVER understand

[ctfam]

Got in at $920. Holla!

[Entropy137]

I got silver at 14 and 18.

[TheLiberalssuckdick]

Biblical Money / Tradional Money =

FOOD, CLOTHING, SHELTER, GOLD/SILVER

[tomniemiller]

and pitchforks

[labartic]

1st shitheads