‘I did put my Bar Mitzvah money into gold’: Peter Schiff says there’s no ceiling on the price of gold because ‘there’s no floor to the value of the dollar.’ Time to buy GLD?
Peter Schiff, the CEO and chief global strategist at Euro Pacific Capital, is widely recognized for his strong advocacy for investing in gold.
His enthusiasm for gold is so notable that during a recent appearance on Fox Business, the host humorously remarked that gold has been Schiff's favorite investment since he was a mere four-year-old.
Schiff replied with a touch of wit: “I haven't really been bullish since three, but I did put my Bar Mitzvah money into gold.”
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This early venture in the yellow metal served Schiff well.
“I sold it when I moved to California and I used my profits to buy that little sports car I used to drive around in senior year,” he recalled, “so I did well back then in gold.”
Fast forward to today, and gold prices have been surging. Schiff sees plenty of upside on the horizon.
“We hit a new all-time record high overnight — $2,135," he said. "I know we're $100 lower already, because we got some profit taking on the big spike up last night. But I think $2,000 is now the support for gold. I mean, it could trade slightly below it. But this is not the end of the bull market. It's the beginning.”
Gold prices: Is the sky the limit?
Schiff’s optimistic stance on gold stems from his skepticism towards the fiat currency system.
“There's no ceiling on the price of gold because there's no floor to the value of the dollar,” he explained. “And the dollar is going to lose a lot more value and you're going to need a lot more dollars to buy an ounce of gold.”
The U.S. dollar’s diminishing purchasing power, primarily due to inflation, is a key factor in this context. Inflation leads to higher prices for goods and services, meaning it requires more dollars to buy the same items as before.
In November 2023, the U.S. consumer price index saw an annual increase of 3.1%, down from its peak 9.1% increase in June 2022.
However, the price of many necessities remain elevated. The latest CPI report showed that, over the last year, the food index increased 2.9% and the shelter index rose 6.5%.
Inflation often arises due to the ability of central banks to freely print fiat money. Gold, on the other hand, cannot be created out of thin air. The precious metal’s inherent scarcity is a significant factor in its reputation as a reliable hedge against inflation.
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Gold vs stocks
To be sure, stocks are also regarded as a viable option for combating inflation — and they’ve also been rallying as of late.
However, Schiff still prefers the good old yellow metal for one reason: value.
“For the long run, it's better to own productive assets, especially if you can buy them cheap. The problem is right now U.S. stocks are extremely expensive and historically, it's very dangerous to overpay for stocks,” Schiff said, adding that gold is “actually very cheap historically.”
He highlighted gold’s potential to outshine stocks during times of escalating prices.
“If you look back at prior periods where inflation was a problem, like the 1970s, the price of gold, in one decade where the Dow went down, the price of gold went from $35 an ounce to $850,” he said. “So think about that percentage gain and, in fact, by 1980 the Dow Jones and gold were trading at roughly the same price — imagine a world where both of those are the same price because that's the world where we're headed.”
Schiff is putting his money where his mouth is. Euro Pacific Asset Management’s recent 13F filing revealed that the top two holdings of Schiff’s firm at the end of Q3 were Barrick Gold (GOLD) and Agnico-Eagle Mines (AEM), both heavyweight players in the gold-mining sector.
Should gold prices ascend as Schiff anticipates, these gold-mining companies could see a significant upturn.
Investors can also gain exposure to the precious metal through ETFs like the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU).
And if you want to get involved more directly, you can always purchase gold bars and coins from your local bullion shop or online dealer.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
