#630 Inflation Is Much Higher Than You Think w/ Peter Schiff

Peter Schiff is the Chief Economist and Global Strategist at Euro Pacific Capital. In this conversation, we discuss inflation, monetary policy, gold, bitcoin, increasing wages, how to construct a portfolio, and whether Peter thinks bitcoin will increase in price. ======================= Okcoin is one of the most popular licensed exchanges. Okcoin is the first to bring new cryptos to market, offering some of the lowest fees in the industry, an easy to use app, and Earn feature--you got to check out their brand new, beautifully designed app! And as of today, they also became the first US exchange to list NEAR. It’s easier than ever to sign up, buy and trade crypto in just 2 minutes on Okcoin with credit & debit cards or just link your bank account to the best new crypto assets. So get started, and go to okcoin.com/pomp ======================= Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp ======================= Mask Network connects mainstream social media with the new, open, decentralized Web 3.0. Through browser extensions and mobile applications, users could get a glimpse of the decentralized application world, make borderless cryptocurrency transfers, display, and trade NFT collections, and participate in DeFi projects. Visit mask.io to start exploring.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  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, increasing wages, how to construct a portfolio, and whether Peter thinks Bitcoin will increase in price or not. It's a really good one. I hope you enjoy this one. But before we get into this episode, I want to quickly talk about our sponsors. First up is OKCoin. Let's talk about them because they're one of the most popular licensed exchanges. OKCoin is the first to bring new cryptos to market, offering some of the lowest fees in the industry,

• 0:46Anthony Pompliano?

  an easy to use app, and an earn feature. You gotta check out their brand new beautifully designed app as well. It really is beautiful. And as of today, they also became the first US exchange to list a bunch of different tokens. So go check it out. It's easier than ever to sign up, buy and trade crypto in just two minutes on OKCoin with a credit or debit card, or you can just link your bank account to the best new crypto assets. So to get started, go to OKCoin.com/pomp. Again, OKCoin.com/pomp. Go check them out and let me know what you think. Next up is Cosmos. Cosmos is building the internet of blockchains, marking a new era of interoperability, scalability, and usability. The free flow

• 1:28Anthony Pompliano?

  of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at Cosmos.network/pomp. Again, Cosmos.network/pomp, creating that bridge to all sorts of different chains, including Bitcoin, unleashing the potential of DeFi, NFTs, and much more. Go to Cosmos.network/pomp. Last but not least is Mass Network, the portal to the new internet that connects mainstream Web 2.0 social media with the open decentralized Web 3. Through their browser extension, users could get a glimpse of the decentralized application world. You can easily make borderless cryptocurrency transactions.

• 2:10Anthony Pompliano?

  Transfers, decentralized file storage and sharing, display and trade NFTs, participate in various DeFi projects and vote on governance proposals. Do everything in a web three way, but on top of web two. Visit mask.io to start exploring. Again, mask.io to start exploring today. All right, let's get in this episode with Peter. I hope you guys enjoyed this one.

• 2:32Speaker 01

  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.

• 2:56Anthony Pompliano?

  Bang, bang, we're back. We got Peter. He had technical difficulties. Dial up internet is hard. Let's bring them up real quick. My friend Peter, can you hear me?

• 3:03Speaker 02

  I can. Well, how do you know it wasn't technical difficulties on your end?

• 3:07Anthony Pompliano?

  Cause you just changed things and now all of a sudden I can hear you. That's exactly how I know it was on your end.

• 3:12Speaker 02

  All right.

• 3:12Anthony Pompliano?

  All right, all right. July inflation numbers have come out. 5.4% CPI and core is at 4.3%. What's your take on the inflation numbers?

• 3:24Speaker 02

  Well, you know, first of all, this is the first time this year, right? This is the seventh monthly inflation number. This is the first time we didn't beat expectations. You know, we actually met expectations for a 0.5% rise, but that's still a big increase. And even though it's not quite as big as the 0.9 from the prior month, if you add up the first seven months of the year, and then you annualize that, we're at 7.2% of CPI, which is well above the Fed's, you know, target of 2% where they say we're aiming to get a little bit above 2%. They are way more than a little bit above 2%.

• 4:08Speaker 02

  And these aren't even honest numbers. You know, a third of the CPI is rent. And even though rents are surging, the CPI only reports about a two and a half percent year-over-year increase. So if we had real rents in the CPI, we'd probably be, you know, around 10%, maybe more.

• 4:28Anthony Pompliano?

  So you think that the rent not being included in a real way in the CPI number is really kind of artificially keeping that number down compared to what it really is for the average American?

• 4:38Speaker 02

  Sure, and that's just one way because I think a lot of the other price components, the way they move them through the CPI with hedonic adjustments, or weighting, or geometric averaging, whatever they do, they have all kinds of sleight of hand to take a big number and then make it into a smaller number by the time it goes through all the machinations that are part of the CPI formula. So sure, the average American is experiencing a cost of living increase that far exceeds what the CPI shows. And you know, one of the things on rent too, I think that the fact that there is this eviction moratorium,

• 5:23Speaker 02

  this is also keeping landlords from raising rents because the people aren't even paying their rents because they can't be evicted. But I think once the eviction moratorium ends, and it eventually will end, I mean, it's clearly unconstitutional. Even the Supreme Court has said it's unconstitutional. But eventually it's going to come to an end. And then all those pent up rent increases are going to happen all at once. And you know, whether or not that gets captured in the CPI remains to be seen. But it certainly will be experienced by Americans who are renting.

• 5:58Anthony Pompliano?

  All right, let's talk about used and new cars. Earlier in the show, we pulled up the charts and it's just literally going parabolic. It's like off the chart for both of them. Used cars up 42% year over year. How do you look at those kind of such outlandish increases in prices affecting the CPI and core inflation numbers?

• 6:16Speaker 02

  Yeah, well, I mean, those numbers are in there. Although I, my guess would be it's understated, even though it's a big, you know, part of the increase. But clearly, this is the result of inflation because the Federal Reserve and other central banks can print money, but they can't mass produce automobiles. All right, so we're printing money faster than we're producing cars. And so that's why the price of cars is going up. Now, a lot of people want to say, oh, you know, this is just a supply shortage. Inflation always

• 6:48Speaker 02

  Includes a supply shortage because you have a demand surplus. Where does the demand surplus come from? Printing money. You see, the real way to increase demand for cars is to produce more cars. And so when you produce more cars, the price of cars can come down in real terms. And then that can lead to increased demand. But when you increase demand by just printing money and giving it to people to buy cars that haven't been produced. Then what happens is the price of those cars just goes up, or the cars that have been produced. And that's what we see, especially in used cars, because the used cars are already here. And so people are buying those instead of the new cars that don't exist. And they're bidding up the prices of the used cars.

• 7:32Anthony Pompliano?

  Talk to us a little bit about what some would call like a shrinkflation. So it's not just the increase in price, but also the idea that people are actually delivering less goods for the same price. They keep the price the same, but they deliver less goods. How does that impact some of these numbers?

• 7:47Speaker 02

  Well, you know, I have a feeling that a lot of these decreases in quantity are not necessarily getting captured in the CPI. These are really marketing gimmicks because a lot of companies would prefer to disguise the price increases. And so the way they do that is just they, you know, they put fewer sheets of toilet paper in the roll. Or they don't, they put a little less cereal in the box, but they don't raise the price. And sometimes they really try to fool the customers. They actually make the box bigger as they're putting less cereal inside it to really confuse you into thinking you're getting more when you're actually ending up with less. But there's a limit to how small they can make the packages, right?

• 8:32Speaker 02

  I mean, eventually, we can't buy toilet paper by the sheet. So at some point, the rolls become so short or small, it's ridiculous. And then the packaging becomes a problem. So the retailers are going to run out of smoke and mirrors. And more of the price increases are going to end up being actually higher prices. And not just, you know, smaller quantities. But I think another way. That price increases don't even get, don't even show up in the CPI is when companies just start adding fees for things that used to be free. And so those free things, you know, weren't even part of the CPI.

• 9:13Speaker 02

  So all of a sudden, companies start making up things and charging you so that you're paying money for things that you used to got, used to get for free or that were part of the service. None of that is in the CPI because there's nothing to base it on because it, it wasn't even a component.

• 9:28Anthony Pompliano?

  So what about public equities? One of the things that we talked about earlier is literally used cars are up 42%, but the S and P 500 is only up 33% in the last 12 months. So literally used cars outperformed the S and P 500. How do you look at public equities playing in alongside inflation or being served as an inflation hedge to investors?

• 9:48Speaker 02

  Well, you know, equities will ultimately be a hedge against inflation, but you know, not all equities are the same. Some will actually, you know, lose a lot of value as a result of inflation. So the companies that won't end up being good inflation hedges are high PE companies that are really bubbles and have been benefited from the ultra loose monetary policy as far as investors being willing to sacrifice current income for the probability that maybe or possibility that there may be some income somewhere in the distant future. And the fact that money was so cheap, uh, supported those excess valuations.

• 10:33Speaker 02

  So I think these stocks will deflate in an environment where we really have inflation, where we see rising nominal interest rates. We may see, we'd be seeing falling real interest rates in that environment, but we see the Fed ultimately, uh, moving rates up, you know, too little, too late, but it will happen. And I think a lot of these stocks are going to come down. The stocks that will act as inflation hedges will be companies that actually make real stuff that people need to buy, not the stuff that people buy because they want to, but more they buy because they have to. Those are the companies that will Have the best pricing power where they can increase prices. Uh, you know, along with inflation without seeing a big decline in their sales.

• 11:17Speaker 02

  I mean, a lot of the companies that are selling discretionary items, they're going to increase prices. They'll have no choice, but then a lot of their customers won't be able to afford to buy the products. But you want to own stock in companies where the customers are going to buy the products, even though the prices have gone up and where those companies can then pass on uh, those higher sales to their shareholders with higher dividends. And it's also good if the company has some debt on the balance sheet. Because inflation transfers wealth from debtors, I mean, from creditors to debtors. So the bondholders of the companies get screwed, but the stockholders are the beneficiary of that transfer.

• 12:02Speaker 02

  So if you own a good, solid company with a good balance sheet, good earnings, good dividends, where their, their debt is fixed, but now their revenues are going to go up because they're able to raise prices. And so that makes their debt uh, smaller relative to the value of the whole enterprise. And it makes it easier to service and repay the debt. So that, that's how equities can, can be a hedge against inflation.

• 12:28Anthony Pompliano?

  So one of the things we've spent a lot of time talking on here is there's companies like Chipotle that have a ton of hourly workers. Uh, and what they earlier this year said was that they were raising menu prices 3%, 4%. And that was to try to offset the increase in labor costs. Some of that is trying to attract new employees. Some of that is trying to pay existing employees more money. Um, so let's just use that as a proxy for the wage increases of Chipotle, right? 3% to 4%. But then you look at somebody like a BlackRock who increased firm-wide base salaries by 8%. And so do you have concerns that kind of the hourly worker, even if their employer is actually increasing their pay 3% to 4%? It's not actually a big enough increase to combat what we know to be the official inflation numbers?

• 13:11Speaker 02

  Yeah, I mean, if you look at the year-over-year, even the government's numbers, they're much higher than the pay raises that people are getting. And that's the problem with inflation is the price of labor generally lags the price of goods and services. So even though your paycheck gets bigger, it gets smaller in real terms. But, you know, there's an illusion that you're getting richer because you're earning more money. You don't realize that the money you're earning has less value, and so you're actually poorer, even though you're getting a raise, because your cost of living is going up faster than your salary. But I have a feeling that the menu hikes that we've seen so far at a restaurant like Chipotle, this is just the tip of an iceberg.

• 13:56Speaker 02

  I mean, they're going to be raising their menu prices quite a bit more. Now, it's possible that Chipotle has also done some of that shrinkflation stuff. Maybe they've raised the menu prices by a certain amount, but I have a feeling that their portions have been shrunk as a result, because I don't think 4% is nearly going to come close to covering the added costs of operating these restaurants now. Not just the COVID-related costs of, you know, what they're having to do to change their business model and how they serve customers and how they protect their customers and how they protect their employees, and the higher cost of doing business now for all restaurants as a result of, you know, what we've done from COVID.

• 14:38Speaker 02

  But the increase in raw material prices, the food items, energy costs, I mean, everything is getting more expensive. And if this monstrosity of a bill, this $3.5 trillion spending bill that's going to be passed potentially on the back of the $1.2 trillion, you know, infrastructure bill, not only will this create a lot more inflation, because the money to pay for all this is going to be created by the Fed, which means inflation is the mechanism of finance. So not only is there going to be a lot more inflation pushing up prices once, you know,

• 15:17Speaker 02

  these bills become law, but the laws themselves are going to drive up labor costs for small businesses, making it a lot more expensive to operate these businesses, and meaning those that survive and don't go out of business are going to have to raise their prices even further to cover these added costs.

• 15:38Anthony Pompliano?

  All right. I gotta ask you what everyone wants to know. Gold during all of this, in the last five years, gold is up 31%. Good job, gold. But in the last year, it's down 10%. And in the last 10 years, gold is down 0.2%. What's your take as to in the longest standing bull run and in the historic quantitative easing and low interest rate environment we have today, gold, has it failed? It's down 10% in the last year and it's negative for the 10-year?

• 16:11Speaker 02

  Yeah. Well, first of all, you know, you have to look at where it was 10 years ago, because 10 years ago, right, it was at a record high. And if you go back 10 years earlier, gold was under 300. So if you go back to the beginning of this century or this millennium, right, 2000, gold is still beating the S and P. So, you know, the timeframes can be, you know, very deceptive when you look at things. But gold is higher than it was, you know, five years ago. It's moving up. It's not moving up as fast as some people may have hoped or may have expected, especially in light of these, you know, inflation numbers.

• 16:53Speaker 02

  But what's really going on right now is that gold is actually a victim of higher inflation instead of a beneficiary. And that's because the big money doesn't believe that there is an inflation threat that needs to be hedged, because they believe the Fed is going to fight inflation. And they believe the Fed will be successful, because the Fed says that they will. And there's an old adage on Wall Street, don't fight the Fed. And so nobody wants to fight the Fed. The Fed says it's going to fight inflation. Everybody believes that's going to be negative for gold, because an inflation fight means tighter

• 17:33Speaker 02

  monetary policy. It means you end quantitative easing, you raise interest rates, and it's the belief that all this is going to happen that is pressuring the price of gold right now. Now, I think everybody is wrong. The Fed is not. Not going to fight inflation and even if it tried it would lose. And so people should be buying gold, not selling it. And at some point they will figure this out either because they get smart. Or because the Fed actually has to confess that it's not going to do anything about inflation. Right now it's bluffing, but at some point it may have to come clean. And admit that there's nothing it could do because the only way the Fed could fight inflation.

• 18:16Speaker 02

  Would be to crash the stock market, crash the bond market, crash the economy. Do all sorts of things that we know the Fed is not going to do. And in fact, while everybody expects the Fed to start tapering its asset purchase program. If these new spending bills get passed that I just mentioned. You know, the infrastructure bill and this three and a half trillion dollar bill. If these two bills get passed, the Fed is actually going to end up expanding. Its asset purchase program. So the markets are going to get the opposite of what they expect. And the Fed is actually going to be doing this even as inflation is getting worse. So instead of putting out the fire, they're going to pour gasoline on the fire.

• 19:01Speaker 02

  And when people, you know, figure this out, that's when you're going to see a spectacular move up in the price of gold.

• 19:08Anthony Pompliano?

  So when we look, this is a chart from a couple of days ago that shows the 10 year was at minus three. I looked at the gold miner, the Van Ech, uh, gold miners ETF. And it's down since 2006 as well. Is the thought process that it worked for a while, let's say through 2011, gold hit an all time high. Obviously there was this massive increase in something like the Van Ech gold miners ETF as well. And then now the miners are also suffering from the exact same. Uh, thing that you're talking about with gold where people just don't believe inflation is real or going to stay here. And the Fed's going to fight it and therefore gold doesn't have a place in their portfolio.

• 19:44Speaker 02

  Yeah, in fact, the miners are having an even bigger problem because the miners don't reflect where the price of gold is now. Because if people believe the price of gold was going to stay here, the miners would be a lot more expensive. Because even the current price of gold is very profitable for a lot of these gold mining companies. The problem for the gold miners right now, and obviously the opportunity for anybody who wants to buy them, is that gold stocks, like all stocks, don't reflect today's earnings. They reflect expectations for future earnings, and this is the present value of what investors expect those future earnings to be.

• 20:28Speaker 02

  So since investors expect the price of gold to be lower in the future, because they expect the Fed to be successfully fighting off inflation, the market is already pricing in a drop in the price of gold and reflecting those lower expected earnings in what they're willing to pay today to buy these gold stocks. So that's an added opportunity. Because not only are they wrong that the price of gold is going to fall, it's actually going to go way up. So none of that is being factored into these gold stocks. And if you look at gold stocks, I mean typically, the major gold mining companies on a PE basis, they normally trade at a premium to the market. Now they're actually trading at a discount to the market.

• 21:12Speaker 02

  You have gold companies that are growing their earnings and raising their dividends. Look at Newmont Mining is one of the highest yielding stocks in the S and P 500. It's the only gold stock in there, but it's one of the higher yielding stocks. I mean, that's normally not the case. So these stocks are very cheap. They reflect the mistaken belief that the majority of investors have with respect to inflation and the Fed's ability to fight it. And of course, you know, this is a bubble. Nobody wants to buy real businesses that make money. This is all about fantasy. People buy pie in the sky. People buy potential. They buy hype. You got meme stocks. You got all kinds of crazy assets, including your favorite asset, you know, Bitcoin and cryptocurrencies. That's what people are buying.

• 21:57Speaker 02

  They're not buying real stuff, right? They're still in fantasy land. But eventually, they're going to have to deal with reality.

• 22:04Anthony Pompliano?

  I think that gold was a meme asset and that meme is over. It got retired. The meme was that it served as an inflation hedge. Inflation's here, now it's failing.

• 22:13Speaker 02

  Look, no, no. Well, gold was never a meme. Gold actually has real value in 5,000 years of history. You know, memes are all about hype and promotion. I mean, that's not what you have when you have gold. But yeah, I mean, that Bitcoin or these other things are meme currencies. Look, you have a perfect marriage. You have a meme stock AMC. It's a meme stock because, you know, it trades on hype, not on the reality of its failing business model. But what are they doing? You know, you talked about it yesterday. They come out and say, oh, we're going to start accepting Bitcoin for our tickets. You know, knowing that no one's going to buy a movie ticket with Bitcoin, apart from the fact that your transaction cost would be too high to buy a $12 item or to buy some popcorn with

• 22:58Speaker 02

  your Bitcoin. None of you Bitcoin holders are going to part with your precious Bitcoin, you know, for some popcorn, right? You're going to spend your fiat.

• 23:06Anthony Pompliano?

  Listen, I just learned two things about you. One, you watched the show. I appreciate you watching the show. And two, you just called Bitcoin precious. So like, we're making progress here.

• 23:16Speaker 02

  In your mind, it's precious. In my mind, it's worthless. But I know you're not going to part with it, you know, for a movie ticket. But AMC knows that too. Why is AMC making this ridiculous announcement? Because they're hoping that the crypto guys will see this and now start buying shares of AMC. But then you came out, right? And you said, hey, this is all meaningless. What they need to do is go into the market and take that money that they earn by selling their overpriced shares and take that money and buy overpriced Bitcoin and stick it on their balance sheet so they can turn this thing, you know, AMC into another micro strategy. You know, put it on the balance sheet and get more crypto people to then want to buy

• 24:01Speaker 02

  into this nonsense. Look, this is what happens in a bubble. And by the way, gold is real money, right? In a bubble, assets are overpriced. They're overpriced in terms of real money. This bubble is going to deflate because of all the fiat that's going to be created. You're not going to see these assets crash in terms of dollars, although some of them like AMC eventually will or the cryptocurrencies. But the overall stock market, the way it's going to crash is with the price of gold going way up, not stocks going way down. And so the, the, the gold value of these assets will come down and that's how the bubble deflates. But right now people aren't buying gold because they're still chasing the bubble.

• 24:45Speaker 02

  But when the bubble pops, the money goes back into, into gold.

• 24:49Anthony Pompliano?

  MicroStrategy is up 500% in the last year, just fact check.

• 24:54Speaker 02

  Well, it's, how much is it down from its high though? It hasn't been doing, I think it's down at least 50, 60% from its high, forget, you know, exactly.

• 25:01Anthony Pompliano?

  That $1,200 was the high, give or take and

• 25:04Speaker 02

  And what's it at now?

• 25:05Anthony Pompliano?

  750.

• 25:07Speaker 02

  Yeah. So, you know, the people that paid 1,200 aren't looking so good.

• 25:10Anthony Pompliano?

  Yeah. Well, if we talk about gold, gold hadn't been doing so well either for 10 years. If you held it, you still got less money than you had then. The real return.

• 25:18Speaker 02

  It's done better than MicroStrategy since MicroStrategy hit its peak. But look, I don't think MicroStrategy is going to survive as a company. So eventually they, they're going broke. So.

• 25:29Anthony Pompliano?

  Gold's real return, gold's real return in the last year is minus 20 or worse. If you think about it.

• 25:38Speaker 02

  You know, it hasn't been a good year for gold then, you know, not every, not every year is a good year.

• 25:44Anthony Pompliano?

  That, well, that's true.

• 25:46Speaker 02

  This is crazy. This is crazy times. This is a massive bubble. People are doing everything wrong. They're buying all the wrong stuff and they're selling all the wrong stuff. But these are the types of opportunities where you can really get rich because you can go against the crowd. The crowd gives you an opportunity to do something like, you know, when I was shorting the subprime market. You know, why did the people who shorted so subprime make so much money? Because so few people were doing it. Everybody else was on the other side of the trade. Everybody else thought that these mortgages were good because they didn't understand the fundamentals. Well, the same people who don't understand the fundamentals are the ones that are selling gold.

• 26:25Anthony Pompliano?

  That, that was a big flex. That was a big flex right there that you shorted the subprime market and you made a lot of money. I hear you. Are you short anything right now?

• 26:34Speaker 02

  Now, you know, well, I'm not short anything other than the fact that I'm short the dollar and, you know, by not owning any, right? By owning gold and owning foreign currency denominated assets, that is a de facto short against the dollar. I'm not short stocks because when you short stocks, you go long dollars because you sell a stock and you get dollars. But my concern is that the dollars that I'm getting will lose value faster than the stocks that I've shorted. So I'd rather be long the assets that will go up with inflation. And therefore, if, you know, stocks go down in real terms, I make money because I own

• 27:17Speaker 02

  gold and I own, you know, foreign assets. Whereas if I short them and in nominal terms they go up, even if they go down in real terms, I've still lost.

• 27:27Anthony Pompliano?

  All right. Last question, then I'm gonna let my, uh, my wife and brother ask you a couple of questions. They'll, again, they'll beat you up a little bit about gold too and inflation. But, uh, Bitcoin was at $64,000 earlier this year and it fell. And when it fell, you said the bubble was over. You said it was going down, it was gonna go way lower. We're back to like 45, 46, maybe $47,000. What's your take on Bitcoin now? Are we going up? We going down? Or did you buy any?

• 27:54Speaker 02

  I thought there was a lot, gonna be a lot of resistance at 42,000. And so the fact that it got above that level, which to me, you know, looked like, you know, a nice symmetrical head and shoulders. It was the, you know, the right shoulder, the head and shoulder. Now, head and shoulders can have a hunch, right? You can have a head and shoulder like, like that, you know, doesn't have to be straight. But now that we took out 42,000, look, yeah, maybe the, the rally could be bigger. We'll see. Uh, but, you

• 28:22Anthony Pompliano?

  So you think, is Peter Schiff, is Peter Schiff predicting Bitcoins going up?

• 28:27Speaker 02

  Well, look, obviously it can go up, but, you know, um, but

• 28:32Anthony Pompliano?

  Say, just say it, just say it. We know you wanna say it. Just say it.

• 28:37Speaker 02

  Just because something could go up doesn't mean you should buy it. There's a lot of things that could go up. But the thing with Bitcoin is we don't know for sure if that $65,000 level is just that one stop on a road to 100,000, which all you guys with laser beam eyes are hoping for.

• 28:57Speaker 02

  Maybe it's the total top. I mean, we don't know. You know, I know that that high coincided with the Coinbase IPO, with Elon Musk going on Saturday Night Live. So there's a lot of stuff that was going on that maybe, you know, in hindsight, you know, to a lot of people may, aha, those were the bells that were ringing. Although I talked about those potential bells, you know, while they were being rung. To me, it looked like, you know.

• 29:23Anthony Pompliano?

  Can I ask a favor? I have a request. I feel like we're friends now. We know each other well enough where you were sending me last night YouTube videos of you and Max Kaiser talking, and there's controversy here. Did Max tell you about Bitcoin at $10 and you just didn't want to buy it?

• 29:40Speaker 02

  Max is full of shit.

• 29:44Speaker 02

  You know, I mean, Max lies about a lot of things. I mean, I guess, you know, and sometimes that's part of what happens, you know, when you're pumping Bitcoin. I mean, look, I showed you these clips and anybody could find these things. I might put some together and just like, you know, put out a YouTube video. But I was doing Max Kaiser's show, you know, back, you know, when he was a lot more polite and didn't, you know, call me all kinds of names. But I was doing his show in 2009, 2010, 2011, 2012, you know? And this is the timeframe where he claims that he told me to buy Bitcoin, you know? I said I told him to buy it when it was under a dollar. I didn't have any conversations with Max Kaiser about Bitcoin at those levels.

• 30:29Speaker 02

  If you look at my interviews in 2011, 2012, 2013, right? Where I'm interviewed for him, you know, 15 minutes, I'm on his show, Kaiser Report, we're talking about inflation, fiat money, central banks, hyperinflation.

• 30:46Speaker 02

  The return to a gold standard, buying gold, all these conversations and not once does Max Kaiser mention Bitcoin or anything about Bitcoin. In fact, you can look at the entire shows where I'm on and even before I come on, he doesn't mention Bitcoin, doesn't talk about Bitcoin. Uh, so I mean, he may have been mentioning it, you know, occasionally during those years, but he certainly never mentioned it to me, not publicly, not privately. The first time I can recall Max ever kind of like giving me some crap about Bitcoin was around 2014. Now, yeah, it was maybe 300, 400 dollars of Bitcoin and I was probably saying some negative things about it.

• 31:30Speaker 02

  And I think at that time, he started, you know, promoting it, but not just Bitcoin. He was telling people, buy all the cryptos. I mean, he liked Bitcoin the best, but he said, you know, buy Ethereum, you know, buy, you know, whatever coins. He was like, build a portfolio, buy them. So yes, he was recommending that people buy them when they were several, several hundred dollars a coin. Right? I mean, he could credit himself for that, but he certainly didn't tell me about it and he didn't tell me about it when it was under $10 or under a dollar. Now, other people did. I mean, I, you know, I'm not saying that I didn't know about it back then. I did. People told me about Bitcoin. I don't remember if it was as low as below a dollar. It was definitely below $10. It could have been below a dollar when I first heard about it.

• 32:15Speaker 02

  There were people telling me about it, but Max Kaiser wasn't one of those people. So if somebody wants to come out and say, hey, I told Peter to buy Bitcoin below $10. He didn't do it. There are people who could say that. Max can't. You know, he could lie and pretend, but, but, but he, but we never had those conversations.

• 32:30Anthony Pompliano?

  If you bought Bitcoin under $10, you'd be a trillionaire. You already know that. All right, Paulino, what question, what question you have for Peter?

• 32:36Speaker 02

  Well, it depends on how much I bought. If I, you know, I mean, but yeah, I mean, but you know, the question is, you, you don't know what you would have done. So I don't know. I mean, I tend to hold on to things. I mean, I own a lot of stocks that I bought 20 years ago and I haven't sold. Uh, you know, so I tend to buy stuff and not sell it. I mean, I'm a much better buyer generally. Only that I'm a seller. Sometimes I ride stuff, you know, round turn. So there is a chance that had I bought this stuff, I'd have held on to it. But I don't know. I mean, maybe I would have had diamond hands, but maybe I would have blown out of it. You know, at a much earlier rally. There's no way to know what I would. Probably the best thing that could have happened to me was what I would have put. Maybe I would have thrown, you know, 10 grand into it, you know, just as a laugh.

• 33:19Speaker 02

  And then lost my Bitcoin and just found him. Lost my, lost, they put him on some kind of thumb drive.

• 33:25Anthony Pompliano?

  You're rich. You would have put more than 10K. You're rich. You would have put more than 10K. What question do you have for Peter?

• 33:30Speaker 03

  Hi, Peter. How's it going? So unlike our friend over here, I'm a, you know, connoisseur of both Bitcoin and, and gold. I got some right here.

• 33:43Speaker 03

  But my question for you is more about, um, so during the pandemic, the top 1% saw their net worth increase by 23% during the pandemic. And while the bottom quintile, quant, how do you say this quintile of households? Of households increased their net worth only by 2.5%. And you tweeted that it's price is not wealth that's rising. And people only have more money because the Fed created it. Stocks and real estate are not more valuable, just more expensive. And inflation creates the illusion of wealth. Where do you think that like you, average US household wealth is going in the near term?

• 34:22Speaker 02

  Well, real wealth is going to go down. I mean, for the entire nation. I mean, the nation is poorer. I mean, we're working less. We're less productive. People who had jobs are not in the workforce. Look at our trade deficits. They've never been this big. So this shows you that we don't have the industrial capacity to produce the goods that we're consuming. And so we're relying on stronger economies abroad that can produce what, what we can't. And, and we're focusing a lot of our resources. You guys will disagree with me, but you know, a lot of the resources that we have, a lot of the manpower, a lot of the creativity is being focused into the cryptocurrency industry, which I I think it's a complete waste.

• 35:08Speaker 02

  And so instead of funding industries that actually make us wealthier, we're just blowing our money, you know, on what I believe is just a fad. And so, you know, we're just gonna see all this evaporate. And, and we're growing government. Government is getting much bigger. We're on the verge of another FDR, LBJ style growth of government. And a much larger government coming at a time when we're broke. You know, when Franklin Roosevelt came up with the New Deal, it was a bad deal, but we at least were rich enough to afford it. We were a wealthy country back then. And we were wealthy, or even wealthier potentially during the 60s.

• 35:52Speaker 02

  That was kind of the peak of our real wealth. And we've been going downhill ever since when we came up with the Great Society programs. But we're broke now because of the New Deal and the, the, the, uh, the Great Society and stuff like that. The country is broke. We used to be the world's biggest creditor. Now we're the world's biggest debtor. Uh, you know, we have, you know, huge budget deficits and trade deficits. I mean, so we're now adding this huge cost of government to burden an economy that's already broke from having to shoulder the burden of big government in the past. So, uh, this is going to make us all collectively even poorer. Uh, and, and so, you know, people are gonna unfortunately have to deal

• 36:37Speaker 02

  uh, with a decline in their standard of living that is going to come with this dissipation of wealth.

• 36:45Anthony Pompliano?

  John, what questions you got?

• 36:46Speaker 04

  Yeah, Peter, thanks for doing this. I see you again. Um, so my question is, what, what does an individual do then, right? I know, buy gold, um, but besides buy gold, what, what should an individual do to protect their wealth, grow their wealth? Is it stocks, real estate? Is it alternative assets, um, foreign currencies? Like, what do you suggest without directly giving financial advice without knowing their situation?

• 37:12Speaker 02

  Yeah, well, I mean, what I'm doing with my, with my own wealth and with the income that I earn that I don't spend, which is the majority of it, is I'm buying real assets. I mean, I'm, I'm buying businesses around the world, generally through publicly traded securities. But these are businesses that I think will do well in the future. They're almost exclusively outside the United States because I think the business climate inside the United States is going to continue to deteriorate, you know, as a result of higher inflation, higher taxes, higher regulation. So I want to stay away from the U.S.

• 37:53Speaker 02

  And I also think American consumers are not going to be great customers in the future when the dollar is no longer the reserve currency. And so I want to have businesses that have customers that are in better financial shape than Americans are going to be in. So I want to own, you know, those businesses, those businesses have real assets, plant and equipment, goodwill, you know, whatever they have, and they generate income, they pay me in good dividends. So I own that, I own real estate, I own some properties, I look at buying more property because again, property is real, you know, I, you know, I could use it personally, I can vacation in it, I can live in it, or I can rent it out, or whatever I want, it's

• 38:35Speaker 02

  real, you know, and it takes real resources to construct and you get the land, you know, so I, I want to own real stuff. I own some physical gold and silver, just, you know, to keep dry powder, because I don't want to own fiat currencies, because I think that they could, you know, lose a lot of value. Even the currencies I like, I still think will lose value, because I only like them relative to other fiat currencies that I like less. But all fiat currencies are going to lose value, right? They all sink at different rates, and they're all going to sink against gold. Now, you know, maybe not every single year, but over a longer timeframe, you know, gold

• 39:18Speaker 02

  is going to be a preserver of purchasing. Power, much better than a fiat currency. And one of the reasons I don't just go all in on on stocks or real estate is because they may get cheaper in terms of gold in the future. And I want to have the dry powder to buy more, right? I don't want to be all in. So that if real, if you know, all of a sudden, there's a big drop in something and I don't have any way of, you know, profiting from it. Or in case I need some money for something at a time when a lot of my stocks are down. And you can't just, you know, sell your real estate at a good price immediately. I want to have something very liquid that's not going to fall very much. Uh, that if I need the, the, to spend, I, I have it.

• 40:02Speaker 02

  And so I'd rather hold physical gold, uh, for that, uh, than just currency, although I'd still have some dollars. I mean, I'm living in the U S, even though I'm in Puerto Rico. So I still have some cash to pay my bills. But I don't, I don't want to keep that much in dollars. I mean, not, you know, money that I'm thinking that I might need in a year or two years. I mean, that money I don't want to keep in dollars, but stuff I'm going to use, you know, this week, next month. Yeah, I mean, you know, how much is it going to lose in that shorter time horizon? Probably not that much, although one day it will lose a lot during that time period. I just don't know when that time period is going to start.

• 40:39Anthony Pompliano?

  All right, we got two more questions for you. Pliny's got one and I got one to finish up.

• 40:42Speaker 03

  Um, Peter, have you ever sold your gold or are you just long forever?

• 40:48Speaker 02

  Well, I, I don't know that I'm long gold forever. But no, I haven't been a seller of gold.

• 40:55Speaker 03

  Ever?

• 40:58Speaker 02

  Well, you know, the physical gold that I've been buying, no, I actually haven't, I actually haven't sold any of it. Uh, yeah, in hindsight, you know, I could have sold it and bought it back, but you know, I wasn't buying it to trade it. I'm just accumulating now, I tend to buy on the declines and, and, and not buy into the rallies. So I use, uh, declines. And, and the thing is that I'm earning money. I'm still at the stage of my life where I'm earning money and saving. I'm not winding down and spending. So as I keep earning more money. Then I would, you know, need more gold because I have more money to invest. And if I want to maintain a certain allocation, then I am going to put into gold.

• 41:41Speaker 02

  But if I was retired, let's say I had stopped retired and no longer was working and didn't have sources of income, then I probably would be a seller of gold because I would need to sell my gold to pay my bills. But I'm working right now and I'm earning money, so I don't have to save my bills. I don't, I don't, I don't have to draw down my, my savings in order to fund my lifestyle because I still have plenty of current income to, to fund my lifestyle. But you know, if I ever saw gold get to the point where I thought it was really, uh, you know, overpriced or expensive, if I thought assets looked cheap in terms of gold, I would want to use that gold to accumulate other assets.

• 42:21Speaker 02

  But I'm hoping that I'll accomplish that more with my mining stocks. I think that the last bubble is going to be in the mining stocks, particularly the junior mining stocks. So that's what I'm hoping to really liquidate. You know, before I really start buying a bunch of stuff, I'd like to sell my mining stocks. And I'm hoping I can sell a lot of these stocks, not only 10x, but you know, 50x, some 100x, some of these small ones for what I paid for them. I think they'll be way overpriced by then, but I think at some point there will be a huge bubble. I think a lot of these institutional investors that have no exposure to this sector will eventually have exposure. And it's a small sector and I think the prices are going to go way up.

• 43:06Speaker 02

  There'll be a real sexy story at that time. And you know, I think it'll be like the 1980s or the 1970s rather, leading up to 1980. You know, it's interesting, we're very close now. We're about a week away from the 50th anniversary of Nixon's 1971 decision to temporarily take us off the gold standard. You know, it's been 50 years, still waiting to go back. But you know, when he took us off the gold standard, he set off a massive rally in gold and an even more spectacular rally in mining stocks. And, and so I think we're going to see something similar to that happen again.

• 43:47Speaker 02

  Not because the US goes off the gold standard, but because the world goes off the dollar standard. And when that happens, I think the dollar is going to finish the big decline that it started in the 1970s. And you may think that, you know, the world's going to turn to Bitcoin. I don't see that happening at all. I think people are going to leave the dollar and Bitcoin, and they're ultimately going back to gold.

• 44:13Anthony Pompliano?

  Peter, I'm gonna leave you with one thing. You almost said it earlier. I can read your mind. You and I have this connection. I can read your mind. Once Bitcoin broke $42,000, I know that you know and think that it's going higher. Gold is not going to go higher this year. Please, please, please, buy some Bitcoin. Just buy it. Worst case, if it doesn't work, hold on. Worst case, if it doesn't work, then you can say, my kid did it. Pomp did it. All my other friends did it. I just wanted to have the entertainment of losing money alongside them. But if it works, you'll send me a Christmas card at the end of the year and tell me thank you.

• 44:54Speaker 02

  Yeah, so pure pressure. You think that's gonna, that's gonna get me to get me.

• 44:58Anthony Pompliano?

  Do you think, today we're sitting at $46,000. Look me square in the eye and tell me you don't think Bitcoin's gonna be higher at the end of the year?

• 45:06Speaker 02

  Look, higher than it is today? Look, I don't know. I mean, look, but there are a lot of things that I think could be higher at the end of the year. That's what I'm buying. You know, I, I, I want to buy stuff that I have confidence in. I want to buy stuff with real value. You know, I buy businesses that pay me good dividend income. You know, I, I don't want to just gamble on Bitcoin. Sure, it could go up, but you know what? Let's say I buy it and it goes up. What if I don't sell it and then it goes down? And I didn't even make any money. Even though it went up, I hold, I held on to it. I followed your advice. I bought it. I held on to it and then it crashed. So even though it went up, who cares? So I don't want to, you know, play in that sandbox with you guys, you know?

• 45:48Anthony Pompliano?

  If you put 5%, if you put 5% of your net worth in Bitcoin, you'll become a billionaire and then I can run around and tell everyone I made Peter Schiff a billionaire.

• 45:56Speaker 02

  You want me to put 5% of my net worth in Bitcoin to make you a billionaire?

• 46:00Anthony Pompliano?

  No, no, no, no, no. Pomp made Peter Schiff a billionaire after he buys Bitcoin. That's going to be the story, no problem at all.

• 46:07Speaker 02

  You know how, you know how to make a fortune in Bitcoin? No, I don't know. You know how to make a small fortune in Bitcoin?

• 46:13Anthony Pompliano?

  What?

• 46:14Speaker 02

  Start out with a large fortune.

• 46:15Anthony Pompliano?

  Yeah.

• 46:16Speaker 02

  You'll see, I don't, I don't want to do that. I mean, look, I don't need to get rich in Bitcoin. I'm rich enough, you know, so, um, but I don't want to go broke. And I think that if I put, you know, well, obviously if I put a, you know, a 5%, I'm not going to go broke.

• 46:30Anthony Pompliano?

  Okay, so then put 5%, you'll be a billionaire and then you'll send me a Christmas card?

• 46:34Speaker 02

  There's, I just don't believe there's any way that's going to happen.

• 46:38Anthony Pompliano?

  Okay.

• 46:38Speaker 02

  There's no, I mean, I, I don't think Bitcoin, could Bitcoin go up from here? Sure. Can it go to a million? I think the odds of that are so minimal, right? I know everybody just assumes that it's going to go up there. Everybody that owns it, that's why they're not selling.

• 46:55Anthony Pompliano?

  Peter Schiff said there's a possibility Bitcoin may go to a million dollars.

• 46:59Speaker 02

  No, no, I don't think it will. I think the odds are that, you know, I mean, maybe if the, if there's hyperinflation and a gallon of gases a million dollars, maybe it could happen, right? Or like, anything is possible. But in real terms, that's not going to happen. But you know, I've never seen a asset class where the people that were invested had such strong conviction as to how much it was going to go up, right? And so it's very rare that everybody turns out to be that right. I mean, you have so many people that are in Bitcoin and are so confident that they are going to get rich, that they're going to be millionaires or billionaires. All they have to do is hold on to this asset.

• 47:41Speaker 02

  Um, you know, people, the markets have a way of disappointing people. Most people end up getting disappointed. It doesn't work out that way. And, you know, I even think that even if Bitcoin is going to make a big move, which I doubt, I think it's going to have a much bigger shakeout first. I think there's far too many people who have lever up their Bitcoin, who have borrowed against their Bitcoin because they don't want to sell, because they're afraid of losing out on the big gains, but they needed money. And so they borrowed against it. I think this is an accident waiting to happen. Even if I wanted to buy Bitcoin, I'm going to wait until everybody gets flushed out of this market. You know, I want to see, I want to see MicroStrategy go under. You know, I want Micro- strategy to sell their Bitcoin, then maybe I'll consider buying something. I doubt it,

• 48:27Speaker 02

  but at least from a market timing point of view, I want blood in the streets, right? I ain't gonna buy into a mania, into a hype. And I know people try to say, oh no, this is still the ground floor. Uh-uh. I knew about the ground floor. I had an opportunity to get on the ground floor. This ain't the ground floor. This looks nothing like the ground floor. So if I didn't get in at the ground floor, I sure as hell aren't getting in now.

• 48:50Anthony Pompliano?

  Peter, I respect your deep conviction on never capitulating. I do respect that. No problem.

• 48:57Speaker 02

  Yeah, that's, you know, go down with the ship. I got no doubt that you're doing that. But don't say, but you know, like, I wouldn't even have to say I told you so, because you'll, you'll, you'll think about me. But you know, but you know what? Just in case you're wrong, you know, don't put all your money. You keep talking about how you got almost everything in Bitcoin. You know, you've also like, your whole life revolves around it. You need some diversification. Because see, if you're right, if Bitcoin really is going to go so high, you don't need to have so much of it. A little bit is all you need. Put the rest of your money. And this goes for everybody else who has listened to this podcast, right? And whether you want my help or not, right? Whether you want to use your Pacific Asset Management to build a portfolio, you want to

• 49:40Speaker 02

  go to Shift Gold and buy some gold and silver, it doesn't matter. But anybody that's listening to this, you know, take something off the table. If Bitcoin does do what you think it's gonna do, you don't have to bet at all. Don't bet the farm, because if you're wrong, you're broke. So, take a good chunk of that Bitcoin money off the table and invest it in something real, something sensible, that if you end up being wrong on Bitcoin, you're not broke. You still have some assets that will have value. And if I'm right, the stuff that you're gonna buy, that I'm recommending is eventually gonna go way up, and it will more than make up for what you lost in Bitcoin or other cryptocurrencies.

• 50:21Anthony Pompliano?

  I allowed you to do free advertising on here. Don't say I never did anything for you. I appreciate you coming on. We will do this again. Maybe we'll have you come on once a month when inflation numbers drop, just so you can explain it to everyone, because most people don't understand inflation. You understand it very, very well. Any last parting words for the people?

• 50:41Speaker 02

  Um, you know, just, you know, watch, uh, listen to my podcast too, you know, we keep on battling, you know, where, you know, where's, uh, you know, your podcast or, you know, my podcast on the, uh, on the, on the ratings of Peter Schiff Show, although I get a lot of viewers on YouTube. So that, that kind of depresses my, my, my rankings on, uh, you know, Apple or whatever, because so many people listen on, on my YouTube channel, because I really started out on YouTube. And so I still have a pretty good audience that just listens to the Peter Schiff Show on, uh, on YouTube. But I'm going to be, uh, recording another podcast today. Uh, and so if you're not now listening, you can go check it out at shiftradio.com. It should be up sometime later this evening, uh, because by the time it gets uploaded, it takes a while. And I'm probably

• 51:26Speaker 02

  not going to record it until the market closes. So, but it will be there and then you can make a habit of, uh, watching, listening to it. I generally do, uh, two a week, but sometimes three or four. It just depends on what's going on and how much free time I have.

• 51:39Anthony Pompliano?

  All right. That was another free ad. No problem.

• 51:42Speaker 02

  Yeah. Well, you know, might as well take it back. Does anybody listen to this show by the way?

• 51:46Anthony Pompliano?

  No.

• 51:47Speaker 02

  Right?

• 51:48Anthony Pompliano?

  Only people who own Bitcoin and have been outperforming you for a decade. I'll see you later, buddy.

• 51:55Speaker 02

  All right.

• 51:56Anthony Pompliano?

  All right. See ya.