Peter Schiff 0:00
Welcome, everybody to this event and I appreciate the opportunity to speak with everybody know, I’ve been a long term shareholder of endeavor, going way back, and I’m looking forward to much better days not just for endeavor, but for the whole sector, the mining sector, because I’m really looking forward to or forecasting the biggest rise in the price of precious metals, which would include gold and silver.
Really, that we’ve seen, I think this is going to be the biggest bull market since the bull market of the 1970s. Now, you know, we had a pretty good bull market from around 2001 to 2011, where gold rose from the floor, the bottom of a 20 year bear market, where gold was under 300. And we saw a rise up to 1900. But that really just ended the prior bear market.
Right? That’s bear market began in 1980, when gold was around 808 50 in 1980, and then was still below 320 years later, despite the fact that the price of everything else went up when you had 20 years of the CPI going up and stock prices going up, and you had this huge decline in both gold and silver silver, got to over $50, or about $50 when the hunt brothers were trying to corner the market in 1980.
And it was like four bucks or so in 2000, so a spectacular silver bear market. So we got the relief rally. In fact, silver actually got all the way back up to 50 in 2011, but of course $50 in 2011 didn’t buy nearly as much as $50 did back in 1980. So you know, adjusted for prices. It’s a shadow of its former high but nominally, we got back up there but so we ended that bear market.
We had this big rally that rally peaked out in 2011. And the reason that we saw the peak was because the Federal Reserve was able to convince the world that it could do the impossible, right that it could actually normalize interest rates after having kept them at zero for many, many years. And it could shrink its balance sheet back down to normal after blowing it up to four and a half trillion. Now, I knew that that was impossible.
I was warning anybody who would listen back then, that the Fed could not do what it claimed it was going to do that it was all bark and no bite. It was a big bluff. And, you know, the Fed bluffed about raising rates for a long time before it finally nudged him up from zero to 25 basis points. And it took a long time before they start starting to gradually shrink the balance sheet.
But as I said, for the beginning, I said at the Fed ever Tried to normalize interest rates, it would fail. If it ever took the first step on the journey of shrinking its balance sheet that the jury would never be complete, the journey would not be completed, that the Fed would have to do an about face. And I predicted that QE four would be bigger than QE One, two and three combined.
And I predicted that the Fed would be back at zero. And that’s exactly where we are. And the Fed reversed course on rates in the fall of 2018 when the market started to implode, because rates had been moved up back to two and a half percent, and that was too much for a overly indebted bubble economy to bear.
So that’s the problem when the Fed creates their phony recovery by levering everybody else with debt. They can’t remove the debt. It’s like you can’t, you know, prop the economy up and then remove the prop. Right. What are the jokes I used to tell back when I was doing that? conferences. As I said, you know, the Fed is just promising to do a difficult trick, like pulling a tablecloth out from under a table, the dishes and having the dishes stay on the table.
What the Fed is saying and can do is pull the table out from under the cloth, and the cloth and the dishes are going to stay suspended in midair. It’s impossible to do that trick. Well, it’s impossible to get everybody all levered up, and then raise rates, they can’t afford it.
And so the market started to implode. And the Fed did exactly what I said they were gonna do. They started cutting rates, they went back to QE, they didn’t admit it was QE, they said it was not QE. But it was QE because it was a distinction without a difference, that the repo market blew up.
And so the Fed had to step in and print money and buy up that paper to keep interest rates artificially suppressed, because the market rate was too high for everybody to afford because we have too much debt. But then when COVID came, then you know we went straight to zero.
The Fed you know, didn’t pass go went right to zero on interest rates and QE four is now already bigger than one, two and three combined. And we’re just getting started. Right? This is QE infinity. The Fed is now saying it’s not even thinking about thinking about thinking about raising interest rates.
So there is no way anybody in the world is going to believe the Fed, if it even tries to bluff, that it’s going to raise rates one day, or that it’s going to shrink its balance sheet. So that is what saved the dollar and put a short term top on gold. Well, we’ve now built a huge bottom in gold over the last decade, and we’re about to explode higher.
And the dollar is about to get killed not only against gold, but against all the other world’s fiat currencies. And there’s nothing that’s going to stop it. Because unlike 1980, when that bull market stopped with 800, our goal, interest rates were allowed to go to 20% to prove to stop that they can’t eat To go to 2%. Now, we already proved that 2% is too high, how are we going to go to 20.
So the Fed is never going to be able to allow rates to rise because of all the debt that enabled everybody to accumulate by keeping them so low for so long. So fighting inflation is off the table, the Fed has to surrender to inflation, inflation wins. It’s a knockout.
Peter Schiff 6:23
And it’s the dollar that gets knocked out. The dollar was crashing back in the 70s. And you know, it Greenspan mean, Volcker saved, but Powell or whoever replaces him if we, you know, post Powell isn’t even going to try the dollar is what gets sacrificed to try to prop everything else up.
The only way to prop up the stock market bubble, the real estate bubble, the bond bubble, is to sacrifice the dollar keep printing and printing and printing. And that attitude has never been, you know, more on display than it is right now with COVID-19 because the US government is baseless Nobody has to work.
Nobody has to go to the offices, nobody has to actually earn a paycheck, we’ll just send you the money, the Fed will just print up money and just replace everything that you’re no longer earning. Right. We don’t have to, we don’t have to work and produce, we’ll just consume.
And we’ll just print money and give it to everybody. And you just stay at home and buy stuff. That’s the economy we have now and we’re running for trillion dollar deficits. The government is talking about cutting taxes as it’s increasing government spending. And so what’s actually happening is the government has decided that it’s going to fund itself, mostly through inflation.
In fact, right now, if you look at how much money the government is spending, the federal government, the federal government is only collecting 40 cents out of every dollar expense. So 60 cents is coming from the Fed. Right? 50% more money is being printed and spent, then taxed and spent.
And the problem is, the public doesn’t realize what this cost they don’t realize that inflation is a tax, so they just want more free government. Give us more and more, everybody wants more free stuff. And and so that’s what the politicians are selling this bill of goods, and the world is going to have to look at this situation and like, we can’t take this no moss, we’re out of here.
We can’t subsidize this. I mean, we’ve already subsidized these deaths today, to the extent that the US national debt is, what 27 trillion, or whatever it is, we can’t take it to 30 trillion or 40 trillion, the feds got a, you know, $7 trillion balance sheet. We can’t let it go to 10 or 20 trillion, I mean, that the world can afford to underwrite this degree of prophecy.
I mean, they should have cut us off a long time ago, but they got trapped in the dynamic of you know, throwing good money after bad and being afraid of the dollar crashing and then losing the value of the dollars they have but, but in order to prevent the dog from crashing, that they keep on buying more. So in the end, they end up with a bigger loss because I have more dollars when when the bottom drops out. So what’s the balance? to happen is the world is going to reject the dollar standard and go back to the gold standard.
That’s where we’re headed. Gold beats all these fiat currencies hands down. And so gold was the reserve before the dollar, and it will be the reserve after the dollar. That’s the only monetary system that works. Right? it imposes discipline on governments, keeps them honest, prevents asset bubbles and facilitates trade because you have stability in exchange rates.
So that’s where we’re going. So how do we get back to a gold standard from $1 standard? Well, central banks need to buy a lot more gold, that’s what’s gonna happen and the price of gold is gonna have to go a lot higher. That’s it. You can’t go back on a gold standard with $2,000 Gold, maybe $20,000 Gold but not 2000 or gold. Now, you could go on a gold standard was 20,000 or gold.
If you let the price of everything else go down by 90%. But that’s probably Not gonna happen, I mean, the political realities to have that kind of deflation is just not going to happen. So rather than collapsing the price of everything else, they just let the price of gold go up. And that’s what happens. So if you get all these central banks that have very little gold that now have to come in and buy gold, the price goes up.
Now they don’t have to buy as much because the price is higher, and now the value of their gold reserves goes up. But it’s not just going to be central banks that are going to be buying gold. Gold is going to be bought by institutions, pension funds, endowments, everybody is going to have an allocation to gold in their portfolios 5% 10% it’s going to be commonplace.
Now, when you have everybody in the investment world, trying to have an allocation to gold mining stocks or silver mining stocks, even a small allocation. You’re talking about all these whales coming into a tiny little pond of stocks. Your prices are just going to go ballistic. So not only are the prices The underlying commodity are going to go way up.
But the mining stocks, the premiums that they’re going to trade at, because the whole sector is going to be in demand. I mean, one of these days, we are going to have a.com style bubble in the mining stocks. It’s got to happen. We’re not even close to that. We are still in the ground floor. We’ve just finished building this 10 year base. And we’re getting ready for the next more powerful leg up in his market.
And the great thing about the valuations, you look at these gold and silver stocks, oh, look at endeavour, what is it ever $4 something like that vast majority of the mining companies are a fraction of where they were 10 years ago or seven years ago. And and you know, so we’re still in the infancy of this market, because not only are these mining stocks, not priced to reflect all of the gains that gold and silver are going to have in the future.
They’re not even priced to reflect the gains they’ve already had in the past, because speculators don’t believe those those gains are going to Endor. They’re expecting the prices to go down. And they’ve already priced those expectations in a lot of these stocks.
So there’s so many ways the crowd is going to get this wrong. And that’s how you make a lot of money, betting against the crowd. Well, the consensus today is that the central bankers know what they’re doing that they got the situation under control that the dollar is sound, they’re completely wrong. Right? This is a much bigger bubble than the.com bubble or the the housing bubble.
And I think betting against this bubble is going to be a lot more profitable than was betting against the housing bubble. But the best way to bet against this bubble is to bet on the gold and silver mining stocks. The real way to bet against this bubble is with gold and silver and to make a bigger bet you get into the mining stocks.
And you know, a lot of people say, don’t fight the Fed. I agree. I’m betting on the Fed. That’s why I’m buying gold and silver mining stocks, I’m betting the Fed is not going to do the right thing. It’s going to continue to do the wrong thing. There is no precedent since paul volcker of the Fed ever doing anything, right, everything that’s been done since Greenspan has been wrong.
And I bet that trend is going to continue. Right. And that’s why I’m owning gold and silver and these mining stocks, because I don’t think they have the courage to do the right thing. And the longer they wait to do the right thing, the harder doing the right thing becomes because it’s a bigger bubble. And the consequences are more severe when it pops.
So I’m betting right there with the Fed. I know that they’re going to keep printing money, whenever the stock market drops, print money, or lower interest rates, print money, lower rates, whatever. That’s what they’re gonna do, and they’re gonna keep printing money until it has no value. And then what will is gold and silver, that’s real money.
And as I said, buy the stock. And by the way, in case anybody is interested, I am a broker. I do have a broker dealer, asset management company if anybody’s interested in buying some shares of endeavor, happy to work that out. For you to actually we trade all around the world so we can get you into the Australian market, Canadian market. Any place there’s a gold stock that we like we can help you access it.
So you can contact me at your Pacific capital this I got the backdrop here from my asset management company, your Pacific asset management, that’s a your Pacific funds calm is the website for that. And we trade with a lot of international clients through my asset management company. And so yeah, if you do if you have a portfolio and you’d like somebody who knows, mining and mining stocks, it’s a very specialized industry.
I’ve got Adrian day, if you haven’t heard of him, he’s been in the industry for 3040 years, got the best track record in the business. And then you know yet follow me on social media. You know, I’m doing a lot of my podcasts on Schiff radio.com. If you’re not familiar with me, you can also follow me on YouTube on the shift report.
And I’m on Twitter, Instagram, Facebook, Peter Schiff. So make sure to follow what I have to say and you know, I’m constantly talking about the financial news and the economy and I’m giving out information that you’re not going to get In the mainstream, either they don’t know it, or if they know it, they’re too afraid to speak it.