Latest rantings from guru Peter Schiff

tradetime

I haven't read all the "gurus trotted out on this board" I could probably be accused of "trotting out" a few, further I am not a gold bug, far from it, I usually get accused of the opposite, however I have no doubt gold will hit $2000, and probably if you think about it you'd agree yourself, since that prediction has no time limit.
Faber's view, as one of said gurus, is that gold is a store of value against inflation, not a pump all your money into it get rich scheme, that I agree with.

As to the banks, the nasty thing about economics and government intervention, is it is a cumulative disaster, when LTCM collapsed in the late 90's had it not been bailed out by Greenspan and Co, we would probably not have the current crisis, it sent a message to the market, take all the risk you want if you are big enough the government will have to bail you out, and it seems they were right.

LTCM was small compared to this, the consequence was a much more magnified crisis 10 years later. Now whether this crisis escalates, I have no idea, but it isn't over yet, don't be fooled by a rally and politicians saying everthing will be ok now, bear markets are chacterized by spectacular rallies as the market participants gyrate between hope and dispair.

The "gurus" I read (and I do so because I like to refer to people who know more than I do) don't say a government cannot prop the financial system up in the short, even intermediate term, but in the long term, as the price you will pay to acheive it in the short / intermediate term is not worth the long term cost. Just like at the time of LTCM they would have said you cannot bail it out, not that you cannot physically bail it out, but that the costs in terms of repercussions are too high.

People speculate about whether or not there will be inflation down the road, some say, "oh the government is on top of it, they can prevent it." My view is not to argue with whether they can or can't, my view is to say inflation is guaranteed down the road, as it is in the govenments interest. The debt burden from this crisis, handled in this manner is unsustainable, the only solution is to inflate it away, so it is irrelevant whether or not the government could control inflation, they can't, because they need it.

luvpump

Peter Schiff is NOT a "Ranter" ..... watch this clip to see why ...A genius of common sence !! ..

http://www.europac.net/Schiff-MSNBC-3-25-09_lg.asp

Reaper

tradetime wrote: »

I have no doubt gold will hit $2000, and probably if you think about it you'd agree yourself, since that prediction has no time limit.

Blimey do I have to include layers T&C in my posts? I was of course talking about predictions of an imminent rise to $2000.
Here is Citibank saying it will rise above $2000 in 2009
Here is Peter Schiff saying it will rise to $2000 in 2009 and $5000 within 5 years
Both have been reported on this forum.

Faber's view, as one of said gurus, is that gold is a store of value against inflation, not a pump all your money into it get rich scheme, that I agree with.

So do I. However I do not subscribe to the view, which was being heavily posted here a short while ago, that we were headed for hyper-inflation along the lines of the Weimar Republic or Zimbabwe. There is no need for panic buying of gold.

People seem quick to post the gurus predictions but slow to point out when they get it wrong. There are 1000's of people making different predictions so inevitably some will get it right for a while if only by pure chance. That does not mean they will go on getting it right in the future.

In the end it is up to you to listen to the reasons behind their predictions and make your own mind up. To borrow a phrase "past performance is no guarantee of future results"!

tradetime

Reaper wrote: »

Blimey do I have to include layers T&C in my posts? I was of course talking about predictions of an imminent rise to $2000.

LOL. that might be helpful, but then again nobody ever reads T&C's Anyway, now I know who the "gurus" are you refer to.

Reaper wrote: »

Here is Citibank saying it will rise above $2000 in 2009

Actually what you have there is a Citi analyst speaking about the price of gold and saying

the blast-off was likely to occur within two years, and possibly as soon as 2009.

the Hack simply manipulates the headline to emphasize the 2009, so no don't think he looks silly yet, he's got until November 2010 to be proved wrong, apart from the fact that he's making a wildly speculative call that nobody could possibly make with any degree of reliability. Since he's a nobody he can get away with it, because we've forgotten who he is already.

Reaper wrote: »

Here is Peter Schiff saying it will rise to $2000 in 2009 and $5000 within 5 years

Give you that one, (now I know I was right not to watch his stuff ) although please, Schiffter's not a guru, he's a glorified IFA with a big mouth, he has no track record of anything significant, investment or trading wise, his notoriety stems from the combination of his views and his association with an outspoken Republican senator by the name of Ron Paul.

Reaper wrote: »

However I do not subscribe to the view, which was being heavily posted here a short while ago, that we were headed for hyper-inflation along the lines of the Weimar Republic or Zimbabwe. There is no need for panic buying of gold.

Agree totally, though given how much hype the media made and even ranting on here not that long ago when inflation hit a whole 4 or 5%, one could be forgiven for saying we will experience catastrophic inflation, at least those that thought 4 or 5 was something to shout and scream about will think so.

Reaper wrote: »

People seem quick to post the gurus predictions but slow to point out when they get it wrong. There are 1000's of people making different predictions so inevitably some will get it right for a while if only by pure chance. That does not mean they will go on getting it right in the future.

Kinda goes without saying in the financial speculation business, you have good calls and bad calls, you just have to be able to maximize the good ones and minimize the bad ones. But in the spirit of that, I've posted Jim Rogers stuff, (He has a proven track record though) so.....Jim Rogers was short US long bonds, just prior to the FED announcing they were willing to buy bonds, ouch.
Rogers said a few weeks ago he was short JP Morgan, now I don't know where he's short from, but that looks like a potential ouch at the moment.
Marc Faber (somebody else with a track record) is a bit harder. After calling the rally off the November low, he was on Bloomberg in March where he said he expected a short pullback off an overbought level, and the rally then to continue until April, a few days later the market sold off hard and broke the November lows to setup a false breakdown and the current rally. Unfortunatley that's all I have on him, I say unfortunately because he has a very gloomy outlook, it would be nice to have evidence that he got economic predictions wrong.

StevieJ

tradetime wrote: »

I might suggest that the current crisis is somewhat unprecidented, at least since the 30's, that's not to say that it is the 30's you understand, there are many differences but the scale of this problem is somewhat unprecidented and is far from over.
Do we need gold, if you have the resources, money wise to allocate to gold, then it isn't a bad thing to hold an amount, but I personally am somewhat dubious as to what real use a holding of gold will be to most people if their worst fears are recognized, think I'd rather have an Uzi and a basement full of ammo
But back to serious comment, for those who do not have the resources to have a holding in gold, I doubt they are missing anything.

And an address book with all the food hoarders addresses in, although I am not sure I could stomach all those beans

Myrmidon_J

luvpump wrote:

Peter Schiff is NOT a "Ranter" ... watch this clip to see why ... a genius of common sense!!

http://www.europac.net/Schiff-MSNBC-3-25-09_lg.asp

I watched this. Can anyone tell me what the female co-presenter's role is? She appears to just sit there and mutter incoherently to herself througout the whole thing!

The chap himself talks some sense, but I'm always wary of people who've "correctly predicted" 17 of the last two recessions...

sabretoothtigger

If you want the name of someone who works off facts/fundamentals but is prepared to call out unpopular views then look up Meredith Whitney, she gave a dividend warning on Citibank in the autumn of 2007 I think it was.

I dont think she could be called a guru because she studies financials not the wider economy afaik so basically her predictions would be year to year not grandiose decade long calls I guess



Marc Faber got it right in Feburary imo, he has talked about market rallys and has acknowledged counter effects like the dollar rise I think. He says a side effect of inflation would be stock price rises apparently

I will post a video that is pretty clear in faber's defence, 6th of Feb:

corporate profits at the present time are obviously tumbling and what may happen I think that near term what we could have a recovery in equity prices because the news is not quite as bad as what is discounted by the market

I dont think its time to pile in

equities in the US at least are not especially cheap

we have seasonal weakness in Feb then seasonal strength in March ,April and I think by May it will become evident that the economy in 2009 in the second half will not recover

http://www.youtube.com/watch?v=gi5QqL0iB_0


So either this guy is the next Marty McFly or he is worth a listen to, more so then anyones views on this forum or even ft.com, etc





If you look up Peter Schiff you can find back in 2002 he was saying the fundamentals of the housing market was wrong. Eventually he proven right but does that make him wrong in 2003-2007

In 1999 the NYtimes wrote an article about the dangerous of clinton deregulating the finance industry to allow self investment and the dangers of the Fannie Mae backed mortgages and sub prime. So were they were wrong for 8 years or right all along?

Dont take any of these guys literrally but its foolish to disregard them because the markets say so or even government measures. Eventually every investment has to float by itself and if these guys say its full of lead I will pay more attention

Reaper

luvpump wrote: »

Peter Schiff is NOT a "Ranter" ..... watch this clip to see why ...A genius of common sence !! ..

http://www.europac.net/Schiff-MSNBC-3-25-09_lg.asp

I've watched it, plus a bunch of other videos and I'm left with 2 impressions.

1) Peter Schiff was right about an impending crash
2) He was wrong about everything else, and still is.

Let's see just how wrong. Well if you are the only one who knows a crash is on the way making money out of it is a doddle. Presumably he and his clients are laughing. Well... no. Actually clients who followed his advice in 2008 lost between 40-70%! i.e. much more than average. He didn't even manage to preserve capital let alone return a profit.

As this article points out in 2008 he was:

• Wrong about hyperinflation
• Wrong about the dollar
• Wrong about commodities except for gold
• Wrong about foreign currencies except for the Yen
• Wrong about foreign equities
• Wrong in timing
• Wrong in risk management
• Wrong in buy and hold thesis
• Wrong on decoupling
• Wrong on China
• Wrong on US treasuries
• Wrong on interest rates, both foreign and domestic

Then there are his videos saying Keynes was wrong and didn't understand economics. He says the depression in America was bad because Hoover and Roosevelt were intervensionist and followed Keyne's advice. He says the solution is high interest rates. Wrong on every count, Peter. Time to dust off the history books.

Unfortunately Roosevelt had promised to balance the budget if elected so was not receptive to Keynes' ideas. It wasn't until WW2 forced him to go for massive spending (details here) that the Depression finally ended. Luckily for America those in charge will be ignoring his cries to put interest rates up.

I admit some gurus talk sense, but Peter Schiff is not one of them. Follow his advice at your peril.

sabretoothtigger

If you invested in 2008 that would be a pretty short term investment, none of these guys should be listened to for buying and selling day to day

Watch cramer if you want daily tips


I agree the name of that book 'crashproof' is not the best choice


IMF usually precribes high interest rates when helping a country, like Iceland and pakistan. Interests rates are the most obvious consequence of a collapse to encourage investment through deposits but its also alot tougher and harder to bear then paying everything off with debt.

Debt would work if america or the uk even had not allready run up a tab in the good times. You cant do both and call it a reasonable strategy, its just reckless.

I dont see why governments are an exclusion to common sense, if I bought a house with my credit card I would either have to pay it off very quickly or I'd go broke just because the government has access to very low rates of interest his argument would seem to be that will not always be the case.

I think a quarter of american annual budget spending goes on pure interest payments, cant you see their sinking with this policy to borrow. Seems fairly obvious to me, their self investment off borrowing is not working long term

Reaper

sabretoothtigger wrote: »

if I bought a house with my credit card I would either have to pay it off very quickly or I'd go broke

This is true for a consumer because that house is not generating revenue. It is debt. If you were a business and you bought the house, turned it into a hotel, and it made a profit then you invested the money. It is a distinction lost on many of the noisy American commentators. Exactly the same ought to be true of government. Running up a National Debt is fine provided that money is spent such that it boosts the economy leading to increased tax revenues in the long term. Infrastructure projects (road/rail/ports) are an example of this.

I think a quarter of american annual budget spending goes on pure interest payments, cant you see their sinking with this policy to borrow. Seems fairly obvious to me, their self investment off borrowing is not working long term

The American economy has been such a powerhouse for so long precisely because of this. They have always spent more than they earned which has turned them into an economic superpower. Despite that they were wrong to do this as they can't keep it up forever. What governments should do is reign in excessive spending both by consumers and themselves in the boom years and impose punishing interest rates to stop the economy overheating. Then in the bad years they do the opposite and borrow/spend to stimulate a shrinking economy.

Unfortunately Anglo-American governments did exactly the wrong thing during the good years, but if you follow Peter Schiffs advice and get them to reverse it now they will compound the problem by doing exactly the wrong thing in the bad years too!