Peter Schiff on Defending Assets against Stock Market Bubble
Peter Schiff recently talked about his favorite way to survive what he sees as an unprecedented stock market bubble.
He noted that the Federal Reserve has inflated three stock market bubbles already in the 21st century, and sees this one as the largest and most dangerous.
Schiff says the way the government bailed out investors in 2001 and 2008 was by inflating an even larger bubble to take the place of the one that had just popped.
He says he thinks this one is too big to replace, and when it pops, the Fed will have no answer for it. This could be why it decided to reverse direction and engage in quantitative tightening, because as it is, it has little it can do without paying down its existing obligations.
According to Schiff, there won’t be a fourth one they can inflate with.
He sees the answer to the threat is to seriously look at ways to invest in gold. Owning physical gold is a key way to preserve buying power. Schiff said he doesn’t think currently “really reflect all the potential for inflation, the potential for dollar debasement.
Interestingly, he believes they’re far too optimistic about the future, which has created a sense of complacency in regard to their holdings. He points to the soaring stock market as a key example of that.
He also said the relatively low price of gold is another example of irrational exuberance.
Besides physical gold, he said gold stocks are another good option, as they are under valued and under priced in his view. Many gold stocks are cheap right now, he asserts.
If an investor can afford some risk, and they’re willing to hold during volatile seasons, while embracing a long-term investment horizon, he sees a lot of opportunity in this sector.
He doesn’t think it will be long before that opportunity arises.