 The stock market recovering after quite a sell-off here now is Peter Schiff, CEO of Euro Pacific Capital. And Peter, I say quite a sell-off because even a 1.5% decline in stocks is big given this low volatility environment we're in. So stocks have sort of rebounded here. What's your take on where things stand? Is this a good buying opportunity? Look, I wouldn't buy you as stocks even if they thought they were going up because there's certainly not enough upside potential to justify the downside risk. If you want to invest in stocks, do what I'm doing. Invest internationally, invest in foreign stocks. The dollar is off to its worst start of a year, maybe since 1985. So the returns that people are making internationally are dwarfing what people are making here. And the valuation gap is enormous. You've never had foreign stocks so cheap relative to U.S. stocks. But the real risk here is that this market could go down a lot. How much is a lot? Well, we could have a bear market. We haven't had one in a long time. That's a 20% decline because we've had this yell and put. The Fed wouldn't let the market go down when Obama was president. They certainly didn't want it to go down before the election because they wanted to put Hillary Clinton into the Oval Office after Obama. So they had the markets back. There was this put. But what if the put expired with Donald Trump? I don't know if the Fed has much love for Trump. And now that Trump has put his brand on the stock market and this economy, maybe the Fed is happy to allow a bear market that can be blamed on Trump. You're calling the Fed political, which is certainly a valid argument. A lot of people are saying that. But the Fed also had a recession in 2009 to deal with. So they needed those stimulative measures then to deal with that. Well, I have no doubt that they will come back with the same stimulus once this recession is fully underway and blamed on President Trump, even though it's not his fault. It's simply the mess that he inherited from Obama. But the Fed did not have to do the type of economic stimulus that it did in 2009, 2010. That's why the economy never healed. That's why we're in worse trouble today than we were back then. And remember, the Federal Reserve created the housing bubble. They're the reason we had a financial crisis. It was their economic policy that began early in the Bush era. When we burst into the dot-com bubble, they deliberately inflated the housing bubble. They kicked the can down the road and we caught up to the can in 2008. And then they kicked it again. And we're going to catch up to it now under Trump. But unfortunately, I think the powers that be including the Fed are already ready to blame this disaster on Donald Trump. He's the fall guy and he has taken their bait by talking about how great the stock market is, by talking about how great the economy is. The stock market is a bubble and the economy is a disaster. He shouldn't want to own this disaster. He should still be blaming how bad things are on Obama and the Fed, but he's not doing that anymore. All right. So what is the black swan risk coming in the next six weeks or so? We know the next six weeks are historically bad for the markets. We now have Goldman Sachs coming out saying there's a 50 percent chance of a government shutdown, which is not exactly a decisive forecast. So is it the government shutdown that could be the black swan or could it be something else? Well, I doubt the government is going to shut down. I actually think that would be a positive. I mean, if we shut down the economy, the government, we could liberate the economy. So my fear is that the government won't shut down. It'll just get bigger and bigger and bigger. But what might be the black swan is if the market surrenders the Trump euphoric rally. Remember, we've had a huge move up since the election of Trump, even though prior to the election, the expectation was if Trump won, it was a disaster. Yet he won anyway, and then the market rallied because of the idea that we were going to get all this deregulation, these significant tax reform, all this stimulus. Well, if people start to realize that that's not going to happen, that the markets built in events that are not going to transpire, we didn't get rid of Obamacare. That was supposed to happen. We're not going to get substantive tax reform. We'll be lucky if we even get tax cuts by the end of the year. We're not going to get the massive regulatory relief. So what if we price all that back out of the market, and what if there's no yell and put? That's a big drop in the market, the drop in the dollar can continue. And then this whole supposed strong economy that Trump is talking about is all based on confidence. Well, it's all false confidence. Well, what happens if all that confidence goes away? Yeah, but Peter, you have to also take into account the earnings growth we've been seeing across the S&P 500. We've had two straight quarters of double-digit earnings growth. So isn't that part of the stock market rally this year, not just Trump? Look at these retailers, one after another, coming out with awful earnings. We could footlock it here today down 25% on the day. Well, but that's one sector being hit by Amazon. No, no, no. It's not Amazon. Retail spending, right? That's 70% of our GDP. The retailers are collapsing. Amazon has been here for a long time. This is the worst year for retail. It's worse than 2008, 2009. This is because consumers are broke. They have lousy jobs. They're loaded up with debt. They can't afford to buy stuff. But even with the bad retail sector, the S&P is up 10% this year. What is the S&P 500 up 10% this year, even with the damaged retail sector? Yeah, but the profits are not really up. The market is going up. And what happens if interest rates really start to rise? Forget about the Fed. What if long-term rates start to back up? What if inflation starts to accelerate? These are things that are going to happen. And this whole bony house of cards comes tumbling down. I don't know. We saw profit growth of 10% for this reporting season. You can argue that there's financial engineering and things companies are doing cost cuts to beef up the numbers. But corporate America is doing much better than they had been. We haven't seen this kind of earnings growth since 2011. Let's see what happens if we go to a recession, which is going to impede their revenues. And let's see what happens if interest rates finally rise, despite what the Fed does, and that's going to undermine their costs. Because you have a lot of companies that have levered up their balance sheets. They have borrowed a lot of money during the Obama era to buy back their stock. That's one of the main reasons that we've been driving the stock market is with debt finance share buybacks. But all that's going to come back to bite these companies when interest rates go up. And then what happens, the stocks go down. They have to repay the debt. Now they have to go back and sell the stock that they bought. But now they have to sell at a much lower price than what they paid to buy it so they can retire the debt that they can no longer afford to service because interest rates have gone up. And then we find out how much value corporations have destroyed. Meanwhile, while they were buying back their stock, they weren't modernizing their plant equipment. I mean, we have out of date depreciated plant equipment. And so I think corporate America has gotten sick on all this cheap money. All right, Peter, I want to move away from the stock market for just a moment and talk about the surge in Bitcoin this year. It's been unbelievable. You're not a fan. Why not? Well, obviously, I wish I'd have just been a gambler. And I wish I would have realized how big the potential bubble was and was willing to take a flyer on it. Because obviously, anybody who bought Bitcoin a few years ago, to the extent that they sell out now, they're going to make a lot of money. But if they don't sell out now, all they're going to have is the memory of the profits that they never took. This is a gigantic bubble. What kept me out of it is understanding that it's not going to work. That Bitcoin or any of these cryptocurrencies are never going to be money. They're never going to achieve what everybody believes is going to happen. All that's happening now is people are speculating on something that isn't going to happen. But the fact that so many people think it might happen or are betting that other people will continue to bet that it's going to happen, you have the prices going up. But remember, there are all kinds of dot-com stocks that people thought were going to make a lot of money, and the stock prices went up and up and up until they eventually went bankrupt. So all the paper profits disappeared and the companies went to zero. And I think the same thing is going to happen with all these cryptocurrencies. They're going to collapse. Meanwhile, what people should be buying, if they don't like fiat money, if they don't like the central banks, they should be buying gold. Gold is money that will work. Not all this nonsense, all this digital gold is fool's gold. Gold is real money. And you know what? If you like the convenience of using the internet, you can go to a company like GoldMoney. You can buy gold from them. They'll store it from you. And you can use it to buy things. You can spend it just like you can spend your dollars or your euros. You can earn it if you're a businessman. You can earn in gold. You can save in gold. Gold has never been easier to use as money today than it has in the past. But gold works as money. These crypto alternatives are not going to work. They're going to collapse. This is all a big bubble. Here's another factor to layer on to your argument against Bitcoin. When you look at the price of Bitcoin and the Google searches for Bitcoin, the correlation is one. So it just kind of shows you that people are maybe doing a very thin analysis into why they're buying Bitcoin. Well, a lot of people now aren't doing any analysis. I mean, initially, there were a lot of libertarians and free market guys that got involved early on. But now it's just a bunch of specular. You've got hedge funds that are buying it. They're just buying it because it's going up. I mean, they don't care. It's just a trend and they're jumping on board. You have rampant speculation. But now it's not just Bitcoin. When Bitcoin got started, it was the only one. Now there's like 1,000 of them. They keep on creating them. There's massive inflation among cryptocurrencies. They keep on creating them one after another. So the supply is going to ultimately overwhelm the demand. And once the bottom drops out of the market and the prices collapse, that's it. I mean, they're going to destroy the brand. The whole idea that these currencies could ever be money is going to go away. And in fact, the crypto currencies are going to be so bad, they're going to make government fiat currency look good. Ultimately what's going to win out is going to be gold. And so the smart people, if they were lucky enough or dumb enough, whatever it was, to buy cryptos early enough, they need to sell now. At least take your profits out of the market and buy some real money. Peter, gold tested 1,300. Where do you see it going by the end of the year? Well, it's got to break out of this range, 13, 1350. There's still a lot of people shorting gold. There's still a lot of skepticism. The Wall Street still thinks gold's going down because they think the Fed's going to keep raising rates. They think that's bad for gold. But the rate hikes are almost over. Soon we're going to be back in recession. It's going to be rate cuts. It's going to be QE4. Forget about quantitative tightening. We're doing quantitative easing. So you don't think the Fed's, and we're running out of time, but you don't think the Fed's going to unwind the balance sheet? That's impossible. They're going to blow it up even bigger. The balance sheet's going to go to $10 trillion. There is no way that they can unload these treasuries or these mortgage factors. They just told us in the minutes that it's going to start sometime in September, they think. Yeah. I don't care what they told us. I mean, they like to talk. Let's see what they do. Look, they were talking about raising interest rates for years before they did it. In fact, I think the only reason they've been raising rates recently is because Trump is president. If Clinton were president, I don't think we would have had any of the last three rate hikes. I think the data-dependent Fed would have looked at all that lousy data, and they would have left late rates alone. But they're just talking. They want to pretend that they can shrink this balance sheet because they want to keep that pretense going. But it is impossible. Even if they just stopped reinvesting, it would send interest rates up, it would send mortgage rates up, and that would crash the housing market, the bond market. Yeah. I don't know if it's impossible. It's certainly going to take a long time to get from $4.5 trillion to whatever level they want, $3 trillion, $2 trillion. But we'll see how it plays out. A recession is coming. What are they going to do in the next recession? They're going to do QE4. Even if they manage to slightly shrink the balance sheet, they're going to blow it up again in the next recession. And then where is it going to go? $10 trillion? Then they're going to have to shrink that balance sheet? Good luck. If they can't shrink the $4.5 trillion balance sheet, how are they ever going to shrink a $10 trillion balance sheet? Well, and Peter, here's the scariest thing, that the European Central Bank and the Bank of Japan, their balance sheet actually just crossed the Fed's balance sheet in terms of size. So this is a problem that the whole global economy will have to deal with. Oh, yeah. And I think that's why some people are going into these cryptocurrencies, but they're jumping out of the frying pan into the fire. They need to be going into real money. All right, Peter, I got to go. But fascinating conversation. Thanks so much for joining us. Anytime. All right, I'm Scott Gamm, and you're watching The Street.