In the interest of full disclosure, I am a Peter Schiff fan. I have been a regular listener of his podcasts for years and I think that his analysis is spot on when he discusses:
Reasons for 2008 Financial Crisis
He started warning about there being too much debt by the banks, too many leveraged derivatives, too much residential property debt in early 2007, and that he economy was in a huge, unsustainable bubble
The Fed
He calls out the Fed for saying that they are data dependent, but their policy decisions do not always reflect the data; the low interest rate policy over the past 10 years merely masked the problems in the economy from before 2008 and didn’t solve anything; the low interest rate policy led to the Top 1% getting richer at the general population’s expense; the low interest rate policy also created the very bubbles that were created in 2001, 2008 and today, and is dubious of Fed efforts to solve the problems that they created; and that the Fed seems to have their own agenda which is not necessarily in line with their stated purpose.
Government Data Manipulation
He openly questions the veracity of federal government statistics and states that the various federal government agencies manipulates data to paint the picture(s) that they want the public to see.
Inflation
He doesn’t believe that the inflation rate is less than 2%.
The State of the Economy
The economy is in much worse shape than how the Fed, federal government, and mainstream corporate media describe it and questions their motives for doing so, while presenting facts and other reports which contradict the mainstream claims.
Precious Metals
He sees precious metals not only as a store of value and inflation hedge, he sees them as a tremendous buy opportunity and expects significant price rises in the months and years ahead.
I agree with his analysis on all of these points, and most others that he raises in his podcasts.
However, I do not agree with his position on the cryptocurrencies and I wonder if his position on the “cryptos” has been influenced by his interest in BitGold.
First, I do not believe that the cryptocurrencies are in a bubble. How can they be in a bubble when most of the money that has funded the rise of the cryptocurrencies has been paid in cash?
Bubbles, by his own analysis of the topics mentioned above, result when too much debt has been introduced to a particular market. In my own research and experience, I do not believe that cryptocurrencies are being purchased with debt. Of course, there are some individuals and some companies which are borrowing money at low interest rates to buy cryptocurrencies, but I believe that only a small percentage of people/companies are doing this.
In addition, the “crypto” market is not limited to the US market – it is open to the entire world and more and more countries are allowing their citizens to buy and transact in cryptocurrencies. Most of these people are only buying small amounts of cryptocurrencies, in an effort to learn about them and understand the underlying technologies and potential benefits of using cryptocurrencies. But, these small amounts from millions of people around the globe now add up to over $100 billion.
You can understand this “small money” phenomenon more clearly when you try buying 10 BTC from an exchange and experience how long it takes and how many transactions the exchange runs in order to fill such an order – it would most likely require more than 10 small transactions.
Furthermore, most exchanges do not allow a user to withdrawal more than 5 BTC at a time, unless the user has been pre-qualified for large transactions, but most users do not operate at that level, and this reinforces the “small money” phenomenon.
Second, I do not think that Peter Schiff has spent much time studying the cryptocurrencies, as he doesn’t clearly understand their future purpose and the fundamental changes that blockchain technology is bringing to the US and global economy.
For one, he does not pronounce Ethereum correctly. Two, he doesn’t discuss the potential use cases for Etherium, LiteCoin, Dash, Monero, Steem, or others. He primarily focuses on BitCoin and sees it’s use case the same way that Jim Cramer from CNBC sees it – as a way for criminals to anonymously receive funds from people whom they extort or blackmail. And three, he doesn’t focus on how the cryptocurrencies can help humanity escape from the noose that the central bankers have placed around everyone’s neck – he sees gold as having that potential, but why not cryptocurrencies as well?
Third, I think that Peter Schiff is frustrated that the cryptocurrencies are increasing in value at a fast pace, while gold and silver are stuck in a rut. I can understand this frustration, especially since Mr. Schiff believes that gold and silver are under-valued and have been for several years. I agree with his analysis.
However, I think that his interest in BitGold influences his negative opinions about the cryptocurrencies and that he uses his podcasts to scare people out of the “cryptos” and into precious metals and especially into BitGold. I do not mind this, as he has a right to his opinion and a right to make a living, however, I do think that Mr. Schiff should be more forthcoming about his interest in BitGold and that he should more openly communicate that interest to his listeners, so that his listeners understand that he is not being completely objective in his response to the steady rise in the value of the cryptocurrencies.