The Pomp Podcast - #605: Peter Schiff on Inflation, Bitcoin, Gold, and Billionaire Status

Episode Date: July 13, 2021

Peter Schiff is the Chief Economist and Global Strategist at Euro Pacific Capital. In this conversation, we discuss inflation, monetary policy, gold, bitcoin, taxes, and becoming a billionaire.  ======================= Revolut is a finance app in the US and UK, that say they're the simplest way to access crypto. Sign up today at Revolut.com/pomp and make 3 card transactions to get $15, which you can exchange for any tokens Revolut supports. As usual, when you move your money from fiat to crypto your capital is at risk. See T&C's for details. Revolut is a financial technology company. Banking services provided by Metropolitan Commercial Bank, Member FDIC. Cryptocurrency services provided directly by Paxos Trust Company, LLC. ======================= Whether you're an experienced crypto trader or just starting out, Kraken has the tools to help you achieve financial freedom. With the new Kraken app, you can easily buy and sell over 60 of the most popular cryptocurrencies in just a few minutes. Featuring a sleek new design and an easy-to-use interface, you can now take your crypto portfolio with you on the go, 24/7. Visit kraken.com/pomp to learn more or search "kraken" in the app store. ======================= With over $1B AUM, Amber Group is a world-leading crypto finance platform helping institutions and individual investors to buy and sell cryptocurrency, earn yield, manage risk and access liquidity. Amber App new users only - earn 16% APR on BTC, ETH and USD stablecoins! Click on the link to sign up now: https://www.ambergroup.io/?utm_source=10508 =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Peter Schiff is the Chief Economist and Global Strategist at Euro Pacific Capital. In this conversation, we discuss inflation, monetary policy, gold, Bitcoin, taxes, and becoming a billionaire. I really enjoyed this conversation with Peter, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Revolut. Let's go back to the basics for a second. That's why I've partnered with Revolut, a finance app in the US and the UK that say they're the simplest way to access crypto. They're putting

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and 360 days to enjoy higher yields with flexible redemptions. Right now, the returns for new users of the yields on various assets is very high. Go check it out. Whether you're a long term holder or trading on market moves on Amber app, you can earn interest on your own terms and do more with your crypto. Go click on the link in the description to check it out and let me know what you think. Ambergroup.io or click on the link in the description. All right, let's get this episode with Peter. This one was hilarious. I hope you guys enjoy it. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by

Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of his personal opinion this podcast is for informational purposes only all right bang bang we're back and we got peter schiff with us this is about to be fun my brothers have never met peter before so this is going to be their first uh interaction with peter i met his son though yeah they did meet his son spencer uh when he was here in miami uh peter's one of the smartest guys i know about the economy what's wrong with the economy uh what's going well in the economy and uh and what people should do about it minus we disagree on one specific thing which is what is sound money we'll get into that uh let's bring

peter up let's see if we can get him here and uh peter what's going on man i'm trying to get into some better lighting i can can you peter can you hear us yeah i can hear you all right hear me awesome yeah you're a little low they're gonna turn i mean i see that i'm in the shade here like like i'm gonna i'm gonna i'm like you know one of those guys speaking you know you can't see my face because i'm divulging some secrets and i'm embarrassed about it you know listen you got no secrets all right let's jump right into this thing i'm trying to see where i if i can where i can move the computer because i put it in a little desk oh there you go there you go you know what so i gotta figure out where i can put this where i can put the computer all right

I got to find something that I can set the computer on. Just hold it. Just hold it. We're only going to go for 45 minutes. There's a table over there by the, by the couch. Hold on. All right. All right.

We'll wait. We're not live or anything. We're not waiting for you. All right. Are you going to do construction right now? No, I mean, I'm in Switzerland. I'm in a hotel. Oh, my God.

That's a nice-ass hotel you got going on there. Well, we're here for a month, so it's... All right, all right, all right. Are we good now? Hold on. Make sure you have pants on. We don't want you to not have pants on or anything. No, I got pants.

They're short pants, though, but they're pants. All right, you're here. All right, hold on. You're here. You got my two brothers, Joe and John, who you may be able to see here in a second or not. We'll see. uh let's start with what are the problems in the economy right you you have been one of the most

vocal voices in terms of the manipulation of the markets and the feds actions walk us through kind of your understanding of what the hell is going on and what they're doing that uh you think is a mistake well i mean everything they're doing is a mistake i mean there's a lot of problems with the economy and the reason the economy has so many problems is because the government has made so many mistakes. But what we're experiencing now is just the consequences of all the can kicking. See, whenever the government creates a problem, they don't want to deal with the problem because that's politically too dangerous. All they care about is kicking the can down the road so that it's somebody else's problem after the next election. Well, all we've done is catch up

to the can. You know, every time we catch up to it, it's bigger. There's more problems than it had before. And so that's what we're experiencing now in the economy. Because when COVID happened, we really gave the can a big, big kick. Because COVID really exposed a lot of the problems in the economy in an even bigger way. But again, rather than dealing with those problems, just like we failed to deal with them after the housing bubble popped, or we failed to deal with them after the dot com bubble popped. We again made the same mistake, which is we printed more money. We lowered interest rates. Right. And we gave everybody more money to spend so they can buy more products that they didn't make with money they didn't earn all in order to keep this whole

house of cards from falling apart. But it is going to fall apart. It is impossible for the government to do this indefinitely because the amount of money they have to print eventually becomes fatal to the value of the dollar. So what do you think, Peter? What do you think? What do you think happens at the end? Right. So fast forward, however long it takes, whether it's two years or 200 years, what does the end look like? And are there historical examples that you point to in terms of this is likely to be what it actually looks like when when kind of the end happens or they can't keep this up? Well, I mean, it isn't going to happen in 200 years. I mean, if it takes 200 years, I'm wrong, right? I mean, there's no way it's going to last for 200. There's no way

it's going to last for 20. Can it last for two? I suppose it could last for two, but it may not. I mean, it surprises me that it's 2021 and we haven't had a bigger crisis yet in that we've been able to get away with a lot more money printing and much larger deficits than Peter Schiff a decade ago, you know, would have imagined. So like if we were doing this interview in 2011 instead of 2021, and you told me how big the national debt was going to be, how large the budget deficits would be, how much money we would be printing, you know, I would have said, yeah, you know, we're going to have a crisis, you know, before that could get that big and so i would have been wrong about that so so what do you think happens at the

end though what at the very end what happens does the dollar lose global reserve status does it go into hyperinflation like what do you think happens well i mean first of all it depends on how you define hyperinflation i mean are you talking you know weimar republic zimbabwe you know stuff like that or you know countries that have had high rates of inflation but maybe not you know like where they completely destroyed the currency, where you're talking about, you know, trillions to buy a cup of coffee. You know, we're going to have very, very high inflation at a minimum. And I'm talking about worse than the 1970s. That may not constitute hyperinflation, but it's going to be pretty bad. I do think that the dollar's days as the reserve currency are

over, I kind of have a hard time imagining a final scenario where the dollar retains reserve currency status. So I do think it's going to lose that status. I'm not sure when the date is. I meant to look that up. But we're almost at 50 years since we went off the gold standard in 1971. And the dollar should have been rejected at that time as the reserve currency, because the only reason it was the reserve currency was because it was backed by gold. And a lot of people now try to say that they're talking about the debt ceiling and we can't default on our debts and America has never defaulted. That's not true. 1971 was a default. We promised all of our creditors to repay them in gold for their Federal Reserve notes and for their U.S. treasuries. And

then we defaulted and said, we promised to give you gold and now we're going to give you nothing. And so the dollar should have lost its reserve status then, but it didn't. The dollar got marked down, but it didn't get counted out. It held on to that status. So I think the next move is for the world to totally reject the dollar and to go back to the monetary system that existed before the dollar, which was gold as the primary reserve rather than U.S. dollars. All right, hold on, hold on. Don't get into the gold stuff. Yeah, we're going to do that in a second. What do you think inflation is right now? So the main number for CPI was 5%. What do you think inflation is? Are they right? Well, first of all, inflation is the expansion of the money supply. That's the actual definition. And so money supply is growing, what, 20% a year, 30% a year. It's really, really big. Now, as far as what is the actual increase in the cost of living, the consumer prices, which is what most people think about

when you talk about inflation. Well, the way the government measures it using the CPI, if you annualize the first half or the first five months of this year, I think we're running at about 8% a year increase in the cost of living. But I don't think that accurately reflects what's really happening with prices, because I don't think the consumer price index really captures the true extent to which prices are going up. So my guess would be that right now we have annual inflation probably between 10 and 15 percent right now. That's what Americans are experiencing as far as their cost of living, which certainly rivals or exceeds the worst of the 1970s. So we've already got that. The thing is, the Fed and the government is telling us, and everybody is telling

us this, that it's all transitory, that this is all just related to the reopening of the economy. And so we don't have to worry about it. But that's not why we have this. The prices are going up because of what the government did in response to COVID, not because of COVID, not because of the reopening. It's because of all the money printing. It's because of all the deficit spending. Yes, the fact that we're not producing as much stuff is part of the problem. A lot of people aren't working, and so they didn't make stuff. But the problem is, as we made less stuff, we printed more money. That was a huge mistake. We should have printed less money. The Fed should have drained liquidity as the economy contracted, not added it. They just threw gasoline on the

fire. So deflation is going to get much, much worse. What people are experiencing now, the only way this is transitory is that we're transitioning to much higher inflation. All right. So if we're now at 10% to 15%, what do you think is likely if they continue on the path that they're on? They continue to print trillions, they continue to keep interest rates low. When you say much higher, is that a 25%, 30%, 50%? Is there a way for you to kind of identify what you actually think we could get to in the near term in terms of the continuation of their policies? Well, look, I mean, we can continue with 15 to 20 percent inflation for a number of years. And if you think about what that means, that means like the Dow Jones has to go up 15, 20 percent

just to stay even. Right. Your house has to go up 15 to 20 percent. And that's actually happening right now. I mean, if you look at real estate prices around the country, I mean, they're really going up. I mean, even more so in Puerto Rico, it's more like they're going up 15, 20 percent a month. But I mean, all around the country, you're seeing this. But it's also consumer good prices that are going up. I mean, I get emails all the time. People share with me the announcements of price increases that they're getting either from their company where it's their employer kind of letting all the employees know how much prices are going up, or they're just sending me their consumers and they've gotten notices from various companies that they buy from,

letting them know what the price increases are. And they're huge. I've never seen price increases this much. And it's not like we're just making up what we lost during the pandemic. These are huge increases from where the prices were before the pandemic started. So when you start thinking about kind of what people can do with this, right, if inflation is high, how do you think about where they can actually put capital in order to protect it? Is it something where we all know that you're into gold? Is gold the only answer or are there other types of assets that you think are worth folks looking into or kind of doing research on? Well, you know, what inflation does is it wipes out the value of paper assets. So if you have cash in the bank, inflation is bad. If you own a bond, that's even worse because

people are now going to pay you your money that you loaned them, but they're going to pay it back in the future. Well, if you have inflation, money in the future is worth even less than money in the present. So the longer the duration of that bond, the more of your purchasing power you're going to lose by the time you get your money back. So you don't want to own bonds. You don't want to have cash value in things like annuities. Let's say you have an annuity and it's going to pay you a fixed return. Well, that return is going to erode away in purchasing power as a result of inflation. So you don't want a fixed annuity. You don't want cash value in an insurance policy. What inflation does is it transfers purchasing power from creditors to debtors. So you want to

have debt that will get wiped out. But you don't want to just go out and borrow a bunch of money and buy consumer goods, because you still have that debt. The consumer goods are gone. You want to buy real assets that generate income, that can service the debt in the short run, and that will ultimately retire the debt in the long run as the debt is destroyed in value relative to the assets that you own. So you want to own real stuff in inflation. You want to own assets. And so what I own is I own a lot of stocks, a lot of common stocks. Looking around the world at what you can own, whether it's real estate or stocks or collectibles. I think that value-oriented stocks, dividend-paying stocks in countries like where I am here in Switzerland,

I think there's still a lot of value in some of the Swiss stock market and other countries that I invest in. I think that relative to other assets, I'm looking at property while I'm here, And I think residential real estate is very expensive compared to what I can buy publicly listed companies for and the dividends that I'm able to get. So I think that being an equity owner of a business in a country that is not nearly as screwed up as the United States has much sounder underlying economic fundamentals where I can see real investment value in the stocks, meaning the P.E.'s are not too high. The dividend yields are not too low. You know, well-managed companies been around for a long time. So I like owning real stuff. I don't want to buy the bonds of these companies because inflation will destroy their value. I want to be the equity owners because the stockholders benefit when the

bonds are destroyed because that transfers purchasing power from the creditors to the equity investors. But I also want to own gold as a commodity because what you're doing with inflation is you want to preserve your purchasing power. So the price of everything that I'm going want to buy in the future is going to go up well the price of gold is also going to go up because there are people who need to buy gold jewelers need to buy gold because they got to make jewelry uh computer chip manufacturers need to buy gold because they need to conduct electricity their chips you know the dental industry the uh aerodynamics you got all you know you got a space race going on right now well they need they need uh gold to get up there there's a lot of industries

where they're going to be buying gold in the future and it's going to be more expensive just like, you know, everything else. So I don't want to buy a bunch of oil because I got no place to put it. I don't want to buy a bunch of wheat because, A, I mean, where are we going to put that? It may not stay. Eventually it's going to rot. And, you know, the shelf life of a lot of the things that I might want to buy in five or 10 years, I mean, I can't buy it now, but I can buy the gold now because I can get a lot of value in a small place. And in five or 10 years, when I need to buy that stuff, I can use my gold because I could trade my gold for it. All right, but hold on. Hold on though. So I got a couple of questions from a portfolio standpoint. One, what are the

biggest stocks that you own? Like in terms of allocation of the portfolio, what are like the most popular or the largest allocation you have to individual stocks? And then two, how do you think about over the last 12 months, gold's essentially flat, right? It's kind of plus or minus maybe 50 basis points on any given day over the last few weeks. Is that a positive for gold or a negative for gold, given that they printed trillions of dollars? So what's the largest allocation to individual stocks? And how do you think about gold's performance in light of all the printing? Well, as I said, most of my personal portfolio is in individual common stocks. My largest allocation personally to a sector is mining, precious metals mining. And that's because

of how bullish I am on gold. But I also have a big weighting to energy and other natural resources, you know, basic materials. We own a lot of real estate trusts. Some of those stocks really got beaten up after the pandemic. There's a lot of value there. We own a lot of telecom. There's a lot of value in those sectors. I own a lot of pharmaceuticals, you know, a lot of different sectors and companies. You know, I have managed accounts where I build portfolios for people at Europe Civic Asset Management. And, you know, we have a professionally managed portfolio of individual foreign equities. And you probably have heard that everybody has been chasing momentum and indexing for a decade or so. It's the value stocks, the dividend yielding stocks

that have kind of lagged during this bubble. So there is investment value there, not in any one stock. I mean, we like to have a diversified portfolio of companies that work together. You know, so but as far as gold is concerned, look, gold in a short time span and, you know, for some investors who day trade, a year may seem like an eternity. But in terms of gold, the year is not very long. And, you know, so in a shorter run like that, gold is going to simply reflect what people believe is going to happen to the dollar, to inflation, to interest rates at a particular point in time. And I think the reason that we haven't seen an even bigger move up in the price of gold. And you have to remember, 20 years ago when we started this decade, gold was

under $300 an ounce, and now it's $1,800. I mean, gold has actually beaten the S&P 500 so far during this millennium. But the reason that we're not at $3,000 or $4,000 is because the vast majority of investors do not appreciate what's happening. They see inflation picking up. They are underestimating how bad it's going to be. And at the moment, they believe the Fed is going to be able to prevent the inflation from becoming too big a problem. Even if it doesn't solve itself by being transitory, the Fed will raise interest rates, it'll taper its assets purchases, and that'll be enough. And the Fed is going to save us from, you know, a repeat of the 1970s or something worse. They're completely wrong. Inflation is going to be much worse than anybody

thinks in the mainstream. And the Fed is going to do nothing about it. Even though inflation is going to be worse than everybody thinks, not only is the Fed not going to fight it, the Fed is going to fuel the fire. The Fed is actually going to get more aggressive in its monetary easing. It's going to expand its QE program, not taper it. It's not raising interest rates, despite the fact that inflation is going up. And when investors finally wrap their arms around that reality, they're going to bid the price of gold through the roof. All right. So when we start thinking about financial markets in general, we've been talking all day about people who hold no investable assets. They've been getting crushed. Minimum wage hasn't gone up since 2009, yet price

of goods is up like 125%. If you look at things like the financial markets, it seems like bear markets are banned. Market corrections are outlawed. The government's going to step in every time. What would happen if they didn't? Are we so far down the road now that if the government didn't step in and actually provide monetary stimulus in these market corrections, would there be a complete unwinding of the system? Or is it something where they don't want to find out, so they just kind of keep stepping in, but maybe that actually wouldn't happen? Well, absolutely. Again, it's like a drug addict. They don't want to stop using drugs because they want to stay high. Maybe the reason you started doing drugs is because you have a big

problem and you didn't want to deal with the problem, so you decided to get high, So you wouldn't care about the problem. But while you were all drugged up, the problems got worse. The worst thing that could happen is the drugs wear off and now you're confronted by the reality of your situation. So in order to, you know, delay having to deal with that, you just keep taking more and more drugs. The problem is, you know, you get addicted to it, you build up a tolerance and there's some limit to how large you can increase the dosage without an overdose and you die. And that's kind of where we are. I mean, have we got to the point where we overdose on QE and money printing and all that? But certainly, if the Fed were to stop and let

interest rates rise to where the free market would put them, the stock market would crash, the housing market would crash, the economy would implode, banks would fail, much, much worse than 08. And the U.S. government would be forced to default. I mean, it would have to default on its obligations to pay benefits like Social Security and Medicare. It would have to default on government pensions, on treasury bonds. I mean, all of these chickens would come home to roost. So they're not going to let that happen. Right. The politicians at the Federal Reserve are going to do everything they can to keep blowing air into this bubble until it explodes. So when that happens, you know, the dollar, you know, implodes because they can keep printing money as long as

the world keeps accepting it, right? They can keep giving everybody money to spend as long as the people that actually make the stuff are willing to exchange it for the money we print. Well, at some point it doesn't, you know, they won't want it anymore. And then, you know, the music stops. Right now, interest rates are around 0%. You said the free market kind of interest rate, where do you think that would be? Is that 3%, 1%, 10%? No, no. I mean, much higher, much, much higher. I mean, interest rates are determined by supply and demand absent the intervention, right? So if you think about the price, right, interest rates are the price of money. So where are the supply and demand dynamics there? Well, the supply is all the

people who are saving money. So think of all the Americans who are putting money in a bank, right? They're the savers. So they constitute the supply of savings that could be loaned out. What's the demand? Well, it's everybody who wants to borrow that savings. So that would be individuals who want to buy homes, who want to buy cars, who want to go to college, who want to buy stuff on their credit card. It would be corporations who want to buy back stock or they want to invest to buy some new equipment. It would be the U.S. government borrowing money to pay benefits or to build infrastructure, whatever it is. So you got everybody trying to borrow money. There's nobody saving it. So you have all this demand. You have minimal supply. Where's price going to be?

Price is going to be very high. All right. I want to talk. Hold on. I want to talk about Social Security. You mentioned Social Security. And to me, this is one of the things that people don't understand. So historically, Social Security, people contributed to it. They then took that money, they being the government, they took that money. They basically were able to generate a kind of low risk return. They use the return to pay out benefits later on. And the whole idea was as more and more people contributed, they would continue to take the return that they received on those investments from the government. And they would then pay that out as benefits. Today, we're in an environment though, where people are basically contributing. They haven't

been able to keep up with the rate of return that they need in order to pay for the benefits. And so would you consider the social security system a Ponzi scheme at this point? Aren't they just taking new capital inflow from contributors to pay out the benefits and they don't actually use the return of the capital invested to pay the benefits? Well, I mean, it's been a Ponzi scheme since it was created. My father wrote a book of social security swindle. And I think the first page, he said that the social security office should build a statue of Ponzi like right in front of the building, because that's how

the system was devised. I mean, the politicians of the day back in the 1930s lied to the American public about the nature of Social Security. They called it insurance. You didn't pay taxes. You paid premiums. You received benefits. So they tried to market it as insurance, which was a fraud. But the way the system has always worked from day one is you have people who are paying in and then you have people who are drawing out. And when it first started, right, you had people who had paid in for a couple of years and then they drew benefits for 20 or 30 years based on all the people who are paying in. The very first person who got a Social Security check was a woman named like I think was I'm a fuller or something like that. And she lived to be 100 years old and she made out like a bandit. She collected like $20,000 over her life and she contributed like 10 bucks.

I don't know what it was, some tiny amount of money. So she was a big winner because she came into the Ponzi scheme real early. But the thing is, now you've got all these people in the baby boom that are stepping in their retirement years and they're relying on the generations that succeeded them to pay in enough Social Security taxes so that they can withdraw their benefits. There's no chance of that. In fact, right now, Social Security, after years of collecting more than it paid and then using the rest to basically buy government bonds and subsidize a deficit, today, because so many Americans have left the workforce, you don't even have enough Americans paying in now to cover the benefits that are being paid. So there's already a deficit. So it's like a chain letter that's already run out of chain.

And so the government is making up the difference through the Fed QE. But what's ultimately going to happen to the people on Social Security, as I said earlier, the Social Security benefits are going to be wiped out by inflation. The government's not going to default and tell you you're not going to get your benefits. They're going to pay you your benefits with money that doesn't buy anything. And it's basically the same difference. So Social Security, if you're expecting to collect any Social Security and you're, you know, my age, even I'm 58, I would just completely assume that there's nothing there. Because even if you get paid, the amount of money is going to be trivial compared to what your cost of living will be at the time that you receive the benefits. All right. I want to have some fun with you. You ready? All right.

I think I saw you tweet. Usually you're not my type, but all right. so i think i saw you tweet this that you're pretty sure at this point just given the assets you have and kind of the rate of growth you're going to be a billionaire in your lifetime right yeah i'm pretty sure that i will be i mean i mean i'm not one yet but i'm i'm i'm i'm reasonably close all right well like how close like 100 million close or like like 500 closer than that but i'm you know but i'm i'm i'm i'm you know but i'm not a billion but i mean with it with with inflation, even without hyperinflation, it's not going to take much. It's not going to take

much given what I think is going to happen because I'm earning more money. So I'm not, not earning money and I'm investing that money in assets that I think are going to appreciate. So I do think, but you know what, what, by the time I'm a billionaire, there's going to be a lot more millionaires. So I'm not going to, I'm not going to, I'm not going to feel like a billionaire. Yeah. Well, here's the whole thing is a millionaire used to be really hard to accomplish in the United States. Right. And that was kind of like the bar everyone that was like the american dream now billionaire i think is kind of the the new thing you see it in culture you see it in uh uh kind of music all that kind of stuff billions the new million right now who's

going to be the first trillion trillionaire that's what i was going to say the first trillion that's why i say trillionaire energy like who who's got the energy to be the first trainer bezos probably got it so basically what you're telling me is that the stock market just goes a little bit higher you're going to be a billionaire what do you mean no no well i might invest it in the u.s stock i got a few us stocks i got some you i got some energy stocks in the u.s that's kind of really what does gold have to go to for you to be a billionaire you know 2500 but what gold yeah i don't know i would guess if gold were at 5000 i i that'd probably do it well that's double just so we're clear that's pretty big because i think i think for gold to get to 5000 it should have

already gone there i think it's going higher but i think if gold goes to 5000 which is what a triple call it that yeah i think gold stocks will at least 10x and so that alone would do it to me why do you think the gold stock why do you think the gold stocks the miners are going to go up so much more because their uh cash flow and kind of uh income producing and therefore people will go and buy those and and kind of move those stocks more than gold itself yeah well you remember when you buy a gold stock, you buy all the gold that they got in the ground at reserves. Most of that gold you're getting for nothing because the analysts assume it's worthless because it's too expensive to mine it. But if the price of gold really goes up much more than it costs to mine it,

all of a sudden gold that was worthless has a big value. But I also think that the value of gold stocks will rise dramatically once the typical portfolio manager realizes that he needs to buy them. I mean, right now, nobody buys them. And so they're trading relatively cheap. I think at some point, gold stocks are going to enter a bubble. I mean, we're not even really in a true bull market yet, let alone a bubble. But I think eventually gold stocks are going to get expensive. Maybe I'll be smart enough to sell them when they do. But they're going to get expensive but also by the way satoshi nakamoto may be the first trillionaire just so we're clear satoshi's got a shot there i see people in the comments assuming he's alive or whatever all right

but would you say the same thing is true thing that's going to help make make me that wealthy is if gold were to go up that much i'm assuming the dollar is also going way down and i've got all these foreign stocks that i own personally and i manage you know right now i manage i forget what it is, maybe $1.5 billion or something like that, where I generate fees. Well, if gold goes to $5,000, I think I'm going to have $5 to $10 billion under management, maybe more. So the value of my business goes up a lot, right, if I were to sell it or something like that. So in that kind of world where gold is at $5,000, the dollar is falling, there's lots of inflation, a lot of people are sending money to me to manage. And therefore, my income is up, the value of my

business goes up also shift gold you know we're going to be selling a lot more gold when gold's at five thousand dollars an ounce you know it's where it's going to be flying off the you know like off the shelves like hotcakes how many how many businesses do you have wait you have euro pacific and you got shift gold those are the two main businesses i marky i sold you know i live in puerto rico now so i kind of sold the businesses so i do marketing for shift gold i have euro pacific asset management which that's my main business all right i have a bank but and you You have a billion, you got a billion and a half is my, and my mutual funds, right? Which is part of the asset management company.

All right. You got a billion and a half in there right now. What do you charge on fees? You a two and 20 guy? No, because I don't, I don't have a hedge fund. Okay. So I don't, I don't, I don't charge people those, those outrageous fees. So I just charge a management fee.

Sometimes it's as high as 2% for the smaller accounts, but you know, but the big boys get a discount, the big boys get a discount. Yeah, well, as you get because the economy is a scale. But so I usually charge between one to two percent a year and I bill quarterly to manage a portfolio. But so it's not two and 20. It's maybe one and zero or two and zero at the most. So it's a much better deal than you would get from a hedge fund. And so what what I'm doing is really what a global macro fund would do. That's kind of the approach that I take. But I don't charge anywhere near the fees. so you're making like my biggest client you know so i mean i'm doing the same thing with my own money that i advise that people do with their money they send me so that's 15 to 30 million

a year you're like rich rich you're like you're like you know i got employees i'm not i don't take it all you know i got portfolio managers you know i got sales reps so you know i don't keep all of it but i keep a good chunk of it yeah i got you well you're in switzerland in a hotel that looks like my house like i mean you're because i live in puerto rico right i pay a four percent tax on the money i earn talk about taxes that's what that's one other thing wait that's why i get all this capital gains my capital gains rate is zero so talk about talk about taxes because i know you're big on taxes you got puerto rico residents you're doing the whole thing explain to everyone why you're so focused on taxes and trying to uh bring that tax rate as

low as possible so you can keep as much income as possible? Well, I mean, it's not what you make, right? It's what you keep. I mean, that's we all know that. And, you know, it's an American's patriotic duty to minimize their taxes, to pay the lowest tax that they could legally pay. And that's not me. That's the Supreme Court said that. So I'm being a patriotic American. And personally, I believe that any money the government gets, the government wastes. I think money in my hands is going to do better than money in the government hands. And that applies to every American. Keep the money that you earn. But it's not just the income tax, which I think is so debilitating to the economy. It's the inflation tax. We're talking about inflation.

Inflation is a tax. If you strip it of all the jargon, that's what it boils down to, because governments have two ways of taking money from us. They can take it through taxes where they take physically our money, or they can take our purchasing power through inflation. They just print money and they spend that. But that means the value of our money goes down because prices go up. And, you know, when Joe Biden campaigned on not raising taxes for anybody who earned less than $400,000, he's lying because the biggest tax increases are hitting the people who make less than $400,000 because that's where inflation does the most damage. It goes to the people who spend most of their money. So if you're spending most of your money and most of the lower

income people spend everything that they earn, well, they're hit hardest by the inflation tax and they're getting clobbered right now. But the reason that I want to avoid the inflation tax is because as an investor, inflation can create phony capital gains. So let's say I'm right. Gold goes to five thousand, ten thousand. I have gold stocks. Let's say I have even 50 million of gold stocks in that scenario that turns into a billion dollars, right? Because the gold stocks go way up, right? And now I sell and I cash out and the government says, oh, you've got this huge capital gains. Well, what if the same period of time, my cost of living has gone up five times, right? So my gains are not really nearly as big as the nominal numbers. And to make it even

simpler. Let's just say that, you know, my stocks go up 10 times, but the cost of living goes up 10 times. So the price of everything I buy is 10 times what it used to be. And my stocks go up 10 times. I haven't made any money. I'm just even. If I sell my stocks, I can still afford to buy the same exact stuff as I could buy before they 10x. But then if the government says, oh, you have a 50% capital gains tax. Now I've lost half my purchasing power. I didn't make any real capital gains. I had a phony capital gains, but the government was able to tax that. So by moving to Puerto Rico, and this was one of my primary motivating factors, they can never do that. It doesn't matter how high prices go. I don't have to pay a capital gains tax because I'm locked at

zero. And that doesn't apply to just me. It's all the people that have moved here to take advantage of the same deal so when you start to think about bitcoin versus gold would you ever consider i know you're not a fan of bitcoin we can get to why but would you buy the bitcoin uh mining stocks because there's cash flow no why wait why first of all it's cash for the business stocks first of all let's like like look they don't mine anything what are you talking about equipment there they solve math problems but the problem is they use a lot of energy to solve those problems uh but i wouldn't want to buy any of these things because when the price of bitcoin crashes these stocks are worthless because it's going to cost more to mine them than you could get for them

so no i mean if i what i would be doing if i was a company i would be selling stock to any fool who's going to buy it from me i'd be like selling new shares doing secondaries you know just trying to dump all it out there if i but i don't have any shares what would it take for you to buy bitcoin what's the one thing in the economy or any sort of uh financial markets that you would finally say all right enough is enough i won't tell pomp that he was right but i'm gonna go put a little bitcoin away i'm gonna put under the mattress not tell anybody about how much you talk about play money like i would buy like you know a lottery ticket or something but have you done that yet have you have you even speculated a little bit bought even just one just for fun

i mean you're you're almost a billionaire like one's nothing i have bought a couple of lottery tickets in my life well did you buy bitcoin as a lottery ticket yet no i haven't bought any bitcoin all right so you haven't bought any what would cause you to buy some people have given me some bitcoin or fractions of a bitcoin but i lost them all as you know yeah so well you didn't lose just so we're clear you didn't lose them my son has actually bought some you didn't lose the bitcoin you lost the password which is user error i lost access to them right i know where they are i know but i just can't i just can't get out yeah holding on to the bitcoin is an intelligence test if you lose the password it can't help you right it's like losing the password to your brokerage

account sorry i never had the password to lose that was a problem all right what would it take to get you to buy one bitcoin just one bitcoin where you actually took dollars and converted it to bitcoin what would be the thing in the market that you would finally say all right i got to do this. Well, look, right now they're what, like thirty three thousand, thirty four thousand. I never I wouldn't want to waste thirty four thousand dollars on a Bitcoin. So, you know, I mean, I could buy a lot of other things with that money. I mean, I suppose if the price got cheap enough, maybe if it got back, I don't know, below a buck, maybe I could buy one. But the question is, you know, would I want one? See, this is the thing.

I mean, if you could say, oh, I talked to a lot of these Bitcoin hodlers and they're like, oh, yeah, I would want to buy so many more. Really? If it really got down that low, wouldn't that be a signal? I mean, is there a point, you know, for you? Bob, you're asking me when I would buy my Bitcoin. I mean, I don't really know because I'm not interested in it. But the real question is, what will it take to get you to sell? If gold went to $500, would you buy more? If gold went to $500?

Well, sure. Okay. but here's the reason why because gold is an actual commodity is it and and so yes there's a lot of fake gold i want to talk to you about fake gold i saw on the internet that there's all kinds of fake gold in space yeah well so fake gold doesn't do what real gold does i don't know if you know so but how do you know how does it have the how do you know you have real gold you like are you a chemist are you are you testing it yeah it's not you know that's part of the lies that the Bitcoin pumpers tell is that it's hard to know real gold from fake gold. They've been able

to tell real gold from fake gold for thousands of years, and they didn't even have any technology. It's so much easier to tell the difference between real gold and fake gold now than we were on the gold standard. So this is all a bunch of nonsense. But to answer your question, see, since gold is an actual commodity, let's say I am a jewelry manufacturer and I know I got demand to make jewelry which all which by the way is only is less than 10 of all demand and demand for jewelry has been dropping but go ahead yeah yeah i don't know i don't i don't know who you're dating but anyway so if the price of gold goes down for 500 and i'm a jeweler i'm like whoa i can buy a bunch of gold that i need much cheaper to make these necklaces or these rings

or these whatever and so there's going to be more demand right if i'm if i need gold in my computer chips and all of a sudden the price goes down. Now I can buy more gold for the same money and put them in my chips and save money. I'm going to buy more. Right. There's there's a way to rationalize that. Like if I have a stock, I talked earlier about a stock. Let's say there's a stock that I love at ten dollars a share and it's got a five percent dividend yield at ten dollars a share. If the stock drops to five and now I got it now, you know, or it had a five percent dividend and now it gets cut in half, and now the dividend is 10%, I get twice the dividend yield by buying it at half the price. Whatever value of the assets was there, all else being equal, I can buy those

same assets for half price. When it comes to Bitcoin, I don't get any more when I buy Bitcoin at $10,000 than when I buy it at $30,000. Yeah, I get more Bitcoin, but I don't get any more dividends because it doesn't pay any dividends. I don't get any more rent, like I buy real estate on sale and I can't make any more jewelry because I've got more Bitcoin because you can't make anything with a Bitcoin. Doesn't matter how many you have. I can have all 21 million Bitcoins and I can't do anything that I couldn't do with just one. Doesn't matter how many you have. But the more gold you have, the more electricity you can conduct, the more jewelry you can make, whatever, all that stuff you can do. And so there is no way to know that Bitcoin is cheap because there's

nothing to measure it against. So my question to you is, you think Bitcoin is going to be the new money? It's going to replace gold, replace other financial assets? Well, it already replaced gold. Just so we're clear, it already replaced gold for people under the age of 35. Nobody owns gold under the age of 35. Go ahead. It hasn't replaced gold in the real world. It hasn't replaced gold in jewelry. The central banks still own gold as part of a monetary asset. They don't have Bitcoin. They were net sellers in Q4. Go ahead. but you believe that all this stuff is going to happen to bitcoin and it all hinges on

you know more adoption you know just like we talked about social security being a ponzi scheme it's kind of the same dynamic you're talking you're talking about gold right gold's price only goes up if more people want gold right and that's how it works if people want gold for all the properties that gold has but but it's demand-based the only reason why any asset hold on the only reason why any asset goes up is because it's demand-based if more people don't want Apple stock, it goes down. If more people don't want gold, it goes down. If more people don't want Bitcoin, it goes down. That's how the markets work. It's called supply and demand. I'll send you an economics 101 book. If people want to buy Apple products and Apple's earning a profit

and paying a dividend, well, people will want to buy the stock. Now, you know, obviously in a different environment with higher interest rates, they may not be willing to pay as much for Apple stock as they're paying now, but there will be demand at some price for Apple stock. That's not the case with Bitcoin. I mean, gold, even if you don't want to buy gold at $1,800, you might want to buy it at $1,000 because it may be a good deal for what you need it for. But Bitcoin is not a commodity and it's not an investable asset. It doesn't have a use and it doesn't throw off an income stream. So to get back to the question I'm asking you, you think that Bitcoin is going to continue to be adopted and more institutions are going to buy it, more people around the world

are going to start using it. What if that doesn't happen, right? At some point, so let's say Bitcoin crashes to 20,000 or then 10,000 or then 5,000, right? Is there some point where you like kind of like, all right, I was wrong. It's not catching on. The momentum has turned. I'm just going to give up on this. I'm not going to go down with the ship to zero. Is there a point where you get out? I mean, what if unicorns fall from the sky, right? No, no, no, no. Listen, that's a crazy thing. If it continues to fall. Bitcoin falling to 10,000 is not crazy. Bitcoin was at 10,000 a year ago. To say that Bitcoin can't go back to 10,000 again is ridiculous. Well, you're proving my point. Hold on, hold on. Bitcoin was 10,000 a year ago, and now it's at 35.

and for bitcoin to go from 35 to 10 about 70 75 whatever the number is right yeah i'm saying hold on that means that we would just return to prices not seen since last year if gold fell 75 it would be numbers from literally 30 years ago no it wouldn't change my mind here's why i wouldn't change my mind ready everything that you say about the economy i think generally you and i agree right we agree that the uh feds lost their mind they're manipulating markets uh people are getting hurt nobody understands that they should be investing rather than saving all the things that you say about the economy we agree on you and i both also agree that sound money is the solution right we can't have money that can just be printed at will because politicians

or other folks decide that we're going to do that or we're going to manipulate those markets so sound money is the solution there's two options hold on money well okay well just so we're clear their sound money is the definition of sound money is that it's outside the system and no one can create more of it and so gold and bitcoin first of all let me pop do you know the origin of the word sound money do you know where it comes from it's not a spelling bee but go ahead tell me well so if you take a gold coin and you drop it on a hard surface it makes a sound as opposed to when you drop a piece of paper on a surface it doesn't make a sound so hard money makes a sound when you drop it. What's the sound that Bitcoin makes when you drop it?

Peter, this is like Blockbuster saying to Netflix, oh, you have no value because when we drop the VHS tape on the table, it makes a sound. That's ridiculous. There's a difference. See, when I can watch a video that still has value. Watching a video on television, I mean, on the internet. Let's do a race. All right, hold on. We're going to settle this because we got to go in a minute. We got to go in a minute. We're going to make anything with Bitcoin. here's my challenge to you here's my challenge to you ready you want to see what has more value you send me a gold bar i'll send you a bitcoin and we'll see who gets there first that's irrelevant because i can first of all i don't have any bitcoin to send you no no you send me the gold

bar the goal i mean you can put it in the mail it'll take you seven days to get it yeah but i would be sending you something real the reason it's so cheap to send bitcoin is because you're sending nothing if i'm going to send nothing yeah i can send nothing real cheap but come back to this question I'm asking you, right? Where do you throw in the towel on Bitcoin and say, no, you're wrong. Get rid of it. I mean, if it's not 10,000, what if it goes to 1,000? If Bitcoin is at 1,000, if we're doing an interview in the future and Bitcoin is 1,000, are you going to say, well, if you bought it when it was a dollar, you still have 1,000 times your money. So it's the best performing or are you going to commit you were wrong the difference is that bitcoin is

going to be the global reserve currency because nobody can create more of it and it is already becoming the digital reserve currency of that digital economy and the whole key to this is the reason why you're so worried about price is because gold will never be the global reserve currency ever again it's over we're not going back to a gold standard but there is a much higher likelihood that we transition to a bitcoin reward uh reserve status and when that happens the u.s dollar exchange value doesn't matter right it doesn't matter because just one bitcoin equals one bitcoin here here's the problem with the gold thesis is that they printed trillions of dollars every asset in the planet literally beanie babies went up in value and gold didn't go up in value

in the last 12 months. So gold today is worth less than it was last year because it didn't even keep up with inflation. If I was holding gold, my gold didn't even keep up with inflation. Yeah. That's because we have a bubble in everything. Gold is money, right? So you have a bubble. Stocks are overpriced. Real estate is overpriced in terms of money. Gold is not currency. Gold is actual money. Currency was backed by money. The first legitimate currency was a receipt for gold. Gold was the money that backed up the currency. That's what gave currency value was that it was backed up by gold. Now, fiat currency is currency backed up by nothing. That's like what Bitcoin is. Bitcoin is backed by nothing. It has no actual value. When you say

that there's a limit to how many, there's almost 11,000 cryptocurrencies now. I mean, the supply is growing like wildflower. There is no limit to the number of virtually identical cryptocurrencies that can be created, and they keep creating them. And you think there's a limit to 21 million Bitcoin. Maybe there is, maybe there isn't. It doesn't even matter how many Bitcoins there are. It matters is how many other cryptocurrencies could people buy instead of Bitcoin, because there's nothing special about Bitcoin other than the name. And it's not even that special, because you've got Bitcoin Cash, you've got Bitcoin Gold, you've got whatever Bitcoin this, Bitcoin that. I mean, what's the difference? There really is no difference when

you basically, you know, take a step back and look at, look at what you've got. The odds of Bitcoin becoming the reserve asset for the world are zero. It's never going to happen. That's a fantasy. Peter, I love you. I just want to remind you of one fact as your friend, because I feel like it's important that you remember this. If you had sold your gold and bought Bitcoin in the last 12 months, or when you first heard about it, you would be a billionaire today. Well, there's, Well, look, if I had put all of my net worth into Bitcoin when I first heard about it, yeah, I'd- No, not your whole net worth.

Not your whole net worth. Just you had replaced your gold allocation with Bitcoin allocation. Yes, I would be a billionaire if I did that when I first heard about it. Or in the last year. Or if you did it in the last year, you'd probably still be a billionaire. But that applies to a lot of people, not just me. Probably applies to you. When you first heard about Bitcoin, if you put all your money in it,

you'd probably be a billionaire too. So no, I'm not talking about all your money. I'm talking about just gold. All right. Before I let you go, I appreciate you coming on while you're on vacation. Nice hotel. You got a nice shirt, hair combed, looking great. Where should we send people? What's your Twitter account? Where do you want us to send people? Well, you know, my Twitter account is half the size of yours. You know, you've got over a million followers now, but I know a year ago, I think I had more than you two years ago. Bitcoin left gold in the dust and I left you in the dust. yeah yeah but you know what i'll you know just let's see what happens over the next few years

you know but uh where can we send me on you can follow me on twitter and petership i finally got verified so maybe i'll do better now i got the check mark yeah i had to get i had to get more than 500 000 followers before they verified me yeah well you say crazy stuff on the internet so i had to make sure that you weren't uh you know a conspiracy theory account or something yeah all right listen thank you so much for doing this people should listen to my podcast at shiftradio.com or subscribe to my youtube channel the shift report we get a lot of uh listeners there i'm even doing my podcasts from uh from here in switzerland shift radio is the new sponsor of the best business show i did the last one from italy we were in i we were in uh

lake como over the weekend and i did my last podcast you're like an international traveler He's just like a globetrotter, jet setter. COVID's gone. Peter is off in the sky. Yeah, yeah, I know. I mean, well, people still have masks on around, so it's a little frustrating, but most people are de-masked.

All right, all right. All right, we'll catch up later. Thanks for doing this. Most important thing, though, is that, you know, if you got some money, hey, look, if you got some Bitcoin, you should take some profits. Even if, look, you know, you got people like my kid.

My son is like, I'm never going to sell any Bitcoin. Well, look, I mean, so what good is that? going to die with your bitcoin if you're never going to sell them you're never going to make any money i mean at least take something off the table sell into the rallies you can always buy it back you know if you you like it so much wait for the next dip and buy that but you know take some something off the top that's that's some good advice and bitcoin is at a minimum anthony right bitcoin is very speculative you got to admit that it's this is all a speculation it's a crap shoot right and if you're right that bitcoin is going to go to a million or a billion

A little bit of Bitcoin will go a long way. Breaking news, breaking news. Peter Schiff just said that Bitcoin may go to a billion dollars. So just keep a little bit of money in Bitcoin. The rest of the money, you can send it to me to manage for you because at least you know you're not going to lose that. You know, you're going to get some good solid stocks, you know, get some income.

You can even buy Bitcoin with your dividends. You know, if you want to do that, you want to get a nice dividend portfolio and you want to take your dividend checks that I'm sending you and you want to waste some of that income on Bitcoin, you know, at least you're going to get more, right? The dividends are going to keep coming.

So, you know, contact some of my reps. And I know I see some people like in my neighborhood in Puerto Rico because the real estate has literally gone up at least 4X since I moved there. And part of the reason is all these Bitcoin guys cashing out their Bitcoin and buying up houses, you know? Listen, they just want to live near you.

You're a wealth of knowledge. They just want to be close so that they could tell you I told you so once everything happens. But listen. Well, you can already say that now. You can say I told you so because Bitcoin is at $33,000, $34,000. But in a year or two, maybe less, I'm going to be saying I told you so because you didn't sell. Maybe. I'm going to be like, I told you so. You should have sold. I mean, look at that chart, Anthony. Take a look at that Bitcoin chart. And that thing could collapse.

I mean, look at where you are. You're up in the stratosphere here with this massive head and shoulders top. There's no support there beneath that neckline. This thing can implode even quicker. You know, there's an old saying about markets, right? They take the stairs up and the elevator down. Right. Well, Bitcoin, they're not even going to take the elevator. You're just jumping right off the top of the building. You're just free falling all the way down. Elevator is going to be slow compared to how Bitcoin goes down. all right all right all right enjoy your vacation we'll talk soon thank you so much for joining us all right all right all right bye buddy