1 vote

Peter Schiff was Wrong

This is from an article by Mike Shedlock, aka Mish, who's financial blog Global Economic Analysis, was recently named one of Time Magazine's top 25 financial blogs.

The full article is well worth your read.

Schiff's Investment Thesis
* US Dollar Will Go To Zero (Hyperinflation).
* Decoupling (The rest of the world would be immune to a US slowdown.
* Buy foreign equities and commodities and hold them with no exit strategy.

12 Ways Schiff Was Wrong in 2008
* 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

Read the full article here.

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There is no arguing about it. Schiff WAS wrong and positioned his clients poorly. I think Mish lays out a VERY well reasoned argument for DEFLATION in this article.

I know there are many here who won't agree and I'd love for there to be discussion. One thing I would ask is that the banter remain civil. No name calling, no inflammatory personal attacks etc.You know, the whole treat others how you want to be treated thing is in full effect.

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He didn't say this would happen in 2008 ...

or 2009..

I do agree with a strong case for deflation..

What we will have is

Monetary inflation (defacto we have it)
Capital Asset Depreciation ( homes, cars, ect)
Commodity Inflation ( imported , consumables, commodities)
Hard Asset Inflation ( Gold, Silver, Copper )

The worst of all worlds. In the next 3 years. 75% of Americans will experience a decline in real income.

The market can go up in this scenario because the rich / the beneficiaries of monetary inflation buy up assets / while the poor / the victims of monetary inflation the middle class become poorer.

You have a "invisible" crash.
The rich get richer and the poor get poorer. More and more wealth is shifted into the hands of a few.

There is no absolutism. No abolute inflation or absolute deflation.
Further I think Shiff backed off of hyperinflation a bit. But, did not give a Time or say 2008 / 2009.

schiff has balls for speaking up.

ive made alot of money becouse of schiff.

MY guess

FACE it the only things going to deflate are things that will be out of range.( housing ). The commodities will continue to inflate as the money supply increases, The sales of which will decrease by frugality neccessity...They have to get tax monies somewhere & that would be from your needs.
.you-no

another way of saying...

"... the only things going to deflate are things that will be out of range.( housing )."

I have been thinking of this another way ... anything that requires credit and loans to purchase will get cheaper.
Houses will get cheaper.
Cars will get cheaper.
Boats will get cheaper.
Food will cost more.
Metal will cost more.
Fuel will cost more.

LOL

I would love for Peter to be wrong.
So his timeline is a little off......
I think the whole point of Peter saying those things was to get it fixed.
So if he's wrong then goal achieved!

I would'nt get your hopes up too high.

Timeline...

My father and I place a yearly bet on where the state of the economy is going to be by end-of-year. He's been pretty much spot-on, including calling the last two years within 500 on the DOW and the reasons behind it.

This year there is no bet, because he points out that "The system itself is now entirely artificial. There is no longer any way to guess the timing of what is going to happen because the rules can now be changed daily. The end result is going to be the same, of course. But the current administration and the Federal Reserve have gone so far beyond thier power that I would not have believed that the America I live in would have let them get this far."

So this year I don't have to give him a damn ounce of gold for losing a bet yet again... but it brings me little comfort.

~Live life to its fullest, with an open heart, open arms and most important... an open mind~

I have his book

and think that his predictions along with his argumentation are very accurate, except when it comes to gold and silver.
Last year when I first red the book I was entirely convinced, so I bought some gold and some silver as well as some gold and silver stocks.
At the moment the price is not much different from than, and my mining stocks gained even 30%, but depending on the gold price, these gains could be evaporated in days.
In "Crash Proof" Peter's argument for a rising silver price is the rising gold price. Which is accurate, since you can see a close relationship in every chart. And his arguments for gold are:
- the monetary premium is not yet fully priced into gold
- central banks will become gold buyers and compete for it
- when the price rises to new levels, a lot of shorts will need to be covered
- people are sitting on the fence to buy gold, while all global fiat currencies are exposed as inflationary
- after the collapse of the dollar or even more fiat currencies governments and people will seek to reestablish the gold standard

Now I want to explain why these arguments don't convince me at the moment, in short, it doesn't seem likely that any signficant government in the world will peg its currency to gold.
It is true, there are a lot of strong hands that are going into gold, you could even say that gold is being democratized, but in reality buying gold is not widespread at all.
Let's suppose gold breaks 1100USD and JP Morgan and the likes need to cover a lot of their shorts. Don't you think their friends at the FED will just print up the required amount of money for them to do that? As soon as they covered their shorts they could just continue shorting even more, for the god of wallstreet there is no limit.
I think gold was further and further demonetized to the point that most people worldwide don't think of it in terms of money anymore, after a collapse of the dollar or the euro... politicians will just set up the next fiat currency. Of course, there are a lot of people waking up to honest money who will push for it, but I fear that overall people all over the world are by far too disinterested in this topic, they don't even know this issue exists, yet alone that it's an important one. And we know that all governments and politicians (except libertarians) like the fiat system, they will just restart it.
Now it's obviously not unlikely that gold will do well in a fiat collapse scenario, even if it will not be remonetized, but I don't know. When I imagine an economy with 20%+ unemployment, high inflation, so that your income will be barely enough to buy food, and other assets like houses become worth less too, people that hold gold or silver and don't have a large reserve of cash, will be forced to sell it at a discount to get cash. I can think of a situation where we have high inflation, with still fiat money being scarce in the eyes of normal people, which makes the little money you have even more precious.
In this scenario a lot of people that bought gold in the last wave from 600USD onwards will become increasingly anxious about their investment, it might not keep up with inflation, which is essentially the reason they bought it for.

Sorry, if my English is not up to the standard of this page, I'm from Germany and don't write in English very often.

I'm not sure how this all will play out, I just wanted to express my doubts and would like to get a few responses about why may be be valid or not.

---------
"never keynes a running system"

Napolitano: "We need Ron Paul now!"
http://www.youtube.com/watch?v=3k3JNRTVI0Q

Mish

Is an epigone's epigone. Exercise care when using Mish. Mish may cause dizziness and disorientation. Do not operate any heavy investments while using Mish. Side effects may include bankruptcy, ridicule and depression. Mish is not right for everyone. People with dependents or those allergic to bovine excrement should avoid Mish. Ask your E-waver if Mish is right for you.

lol..... "When governments

lol.....

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

when are you people going to get the definition right?

Inflation is an increase in total money supply or stock. Deflation the would be a decrease in total money stock. You confuse yourself and everyone else when you start talking about what prices are doing. The market is driving home prices lower yes.

But now fuel, copper, silver, and gold are looking strong again.

Inflation of the money supply always leads to an increase in prices, but when exactly it works it way through the system is anybody's guess.

You have to be completely off your rocker or a baboon for the state if you think we are in deflation.

Peter was right, just didn't see people going to the dollar first. Unfortunately all that did was encourage more federal debt and more inflation.

How was he wrong about

How was he wrong about commodities except for gold?? Look at recent trends in commodities. Commodities are slowly on the rise...

It is impossile to be 100% accurate in the short to medium run

In a fully manipulated society.

In a free-market there are two influences on revenue: Consumers-who-Purchase (products and services) and Consumers-who-Invest (stocks, bonds, etc).

In a Corporatitst Society there is one additional influence on revenue: Gov't Subsidization (Regulatory Advantages, Fiat Credit, Tax Breaks, Bailouts)

The latter is impossible to determine -- nor is it possible to determine the effect on the industries in question.

In a free-society financial services would mostly be eliminated and the best analysts would hunt (for wealthy people) for innovation - entrepreneurialism - and intrapreneurialism. As the latter are the ONLY profit-drivers in a free-market. In such a society the currency is in perfect competition (in the medium to long run) and therefore fluctuations in prices are relatively stable -- therefore only leaps in service or products allow for profit-bursts AND only wealthy people will be able to capture it.

In a free-society middle to poor income people will not focus on investments -- they will hold commodity backed dollars which will rise consistantly over time -- their main focus will be to create the innovation AND to position themselves trade-skill rise for the future. Because there is no protectionism.

Octobox

SCHIFF MAY ANNOUNCE HIS SENATE RUN TOMORROW!!!

Please look at the big picture and TAKE DOWN THIS THREAD! Nothing but positive about the man as we all work together to get him elected. The world (including Connecticut) is watching!

THANKS

Rebuttal

A very concise but thorough rebuttal to Mish's missive about how wrong Peter Schiff was can be found at the link below.

http://neithercorp.us/npress/?p=75

Yesterday I thought I saw a forum topic devoted specifically to this rebuttal, but I searched and could not locate it.

I cringed a bit when I first saw SIERRA's replies to milocat below, but after reading this rebuttal I think I understand now why milocat posted here and why SIERRA was so quick to respond in the manner that he did.

reply

Schiff is partially right because there is definitely hyper-inflation at the Fed but our economy is locked firmly in deflation and that isn't going to change anytime soon.

Schiff...has gotten all this right, all along...

what are you talking about, this man has predicted all of this, and you call him wrong....Wait for the next wave of predictions...Look at what happens between March, and June of 2009. This man has been on the mark more than any other financial advisor. I use to read Mish, but unfortunately, I found he is tied in with all the other Globalist elitists in the scheme of the new world order. Research and see who Mish's mentors are, and who he spends his time with....then you will know he is not the guy you should be following.

OK, so I waited to "Look at

OK, so I waited to "Look at what happens between March, and June of 2009."

I am betting Schiff got pummeled in this continued non-inflationary, dollar-still-strong enviornment? And now US equities have rebounded? Ouch.

Not as easy as Mr. Schiff wants you to seem? You could have made a lot more money with a lot more money managers...

copper up.... silver up...

copper up.... silver up... gold up... dollar index down HUGE.. from 90 to 78.30...in a short period of time.. look at bonds, look at Claifornia ready to bankrupt.. etc etc etc.. if you ask me Schiff has been right on.. People will not make the same mistake of running to the dollar this next round of bad news presents...

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

lmao you have been here 10

lmao you have been here 10 minutes and 10 seconds.. actually Schiff has been right.. the dollar has dropped to below 79 in the index.. gold and silver rising. get a clue dude...

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

So Schiff was wrong???

As the printing presses are still running to cover up the up and coming decline, pure manipulation may make your post correct for the short term. When the artificial printing of monies leads to a sustained dollar, how can anyone declare what is to come. Simply because the Fed has delayed the inevitable, doesn’t mean Schiff was wrong at all, it just means that the Treasury and fed are buying more time until the real collapse. The man behind the curtain can only control the inflation for a short period, until our unfortunate reality sets in.

In the beginning of a change the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot.
~Mark Twain

Always remember:
"It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds." ~ Samuel Adams
If they hate us for our freedom, they must LOVE us now....

Stay IRATE, remain TIRELESS, an

Schiff is calling for a

Schiff is calling for a inflationary depression.. how can artificial printing of money lead to a sustained dollar?? the excess printing of dollars ruins the dollar..

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

Darryl Montgommery

I've been listening to this guy:

http://nyinvestingmeetup.blogspot.com/

He called Lehman back in Jan '08 and has been more right than wrong. He also convinced me to get into gdx which has worked out great for me.

I respect Denniger and Mish

I respect Denniger and Mish but they are misrepresenting much of what Peter says and his strategies. Yes a lot of his stock picks are down but he has stated repeatedly that it's just noise, you have to be able to look at these companies and understand that they are more valuable than what they were purchased for, even if they went down 70% in 2008. As difficult as that seems you have to trust the fundamentals. Just because the stocks are down you have to know these prices are ridiculously low based on P/E's and yields. If you own a company that is making money and isn't leveraged and paying out huge yields why be worried that the stock price is currently down ? You don't have to sell, it's just a number on a piece of paper. He understands that eventually the stock will be worth more than what you paid for it.

What stocks weren't down in 2008 ? the only way to make money would have been shorting, which Peter did quite well at with his clients that wished to, but isn't part of his investment strategy. He states repeatedly that he doesn't try to time the market, that's why he doesn't get people to buy bubbles cause he knows that they are worthless garbage. He probably could have made a lot of money on the dot.com bubble, housing bubble and now bond bubble but he states over and over again that this is not his strategy, this is why he was buying gold when people were buying the .coms (Some got out, some didn't) .... You could make the case that had he rode the .coms to the top then bought gold he'd have more gold but that would be timing the market which he's not interesd in doing.

I think the biggest difference between Shiff and the others is that while they're looking at short term gain, Peter doesn't even concern himself with that as he's looking longterm and only interested in owning good companies, and real assets.

I agree that Mish is simply trying to create clients for himself. I doubt he disagrees with Peter fundamentally, just in philosophy and strategy.

Jim Sinclair calls this

Jim Sinclair calls this static thinking... they only think in the present.. they cannot think in terms of things evolving.. these so called Schiff "losses: won't be.. we will see here around summer time!

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

Something Fishy with Mishy

I don't quite get it, if you go to his blog site, and look at his featured site links the first five are: GoldMoney, DollarCollapse, Abolish the FED, Jekyll Island, and 3 implode-o-meters. Next he has other featured links such as Dollar Collapse again, 321Gold, 24HGold, Daily Reckoning, Safehaven, Ludwig Von Mises Institute, Nouriel Roubini, and believe it or not even DailyPaul.

Now if I'm not mistaken Peter Schiff headed Ron Paul' economic team all though somewhat late in the run up to the primaries.

The point I'm making here is that the majority of Mishes blog links are all dollar negative and gold positive, and Thats exactly what Peter Schiff' has been saying all along.

As far as investment portfolios go anybody who was heavily invested in hard asset related commodity companies got whacked, and generally the same goes with foreign currencies investments.

Now why would mish pick on Ron Paul' former economics adviser and give 12 reasons why he was wrong on all the stuff that Mish trumpets on his own blog, when virtually all his links cry out for the same things that Peter Schiff stands for?

Well maybe it has something to do with the fact that he is a registered investment adviser for Sitka Pacific Capital, a would be competitor of EuroPacific Capital.

Thats all I'm going to say about these two, whats more important is what is really happening to our markets. The best word I can use to start that discussion is Goldman Sachs and if you can't see that then you are looking in the wrong direction which is exactly what they and all their hoard of goons want you to do. The are at the pinnacle of of the coming disaster because they control every market as tight as a drum.

Goldman Sachs controls every important market. Between them and their cohorts they control the Gold, oil, foreign currency, the bond market, oh and lets not forget the Govt. via the US treasury and the Fed. They also control all the important indexes. When they change the weightings in their indexes, they cause huge sell offs in these market, everybody in the big markets has to mirror their indexes and sell off along with them.

They have totally infiltrated the upper echelons of our govt. and financial markets to the detriment of this country. My belief is that their outlook is if we can't win in these markets we will reek financial havoc everywhere until all these markets succumb to our wishes. They will destroy all markets until they and their goon squads are the only ones standing.

Right on

I read and appreciate what Mish puts out, but what is up with his repeated attacks on Schiff? I have come to the conclusion that it comes down to petty egotism and jealousy, kind of like the embarassing flame exchanges that we see here on occasion at DP. While everyone is caught up in name-calling and he said/she said, the masked marauders make off with all of the wealth of this nation. I wish Mish would put some of his passion into exposing the bankster criminals at work in the financial world today and lay off of Peter Schiff. I also lost a lot of respect for Mish when he wrote a rebuttal to Ted Butler and others that laid out the case for manipulation of the precious metals markets. Something is fishy with Mishy.

It's like predicting Christ's return...

we know it'll happen, but exactly when? Peter Schiff has all these things nailed. They WILL happen. But as others have already said, making money depends on knowing when. One thing is certain, holding gold right now is not a mistake.

Timing is everything.

Good economist, not so good trader.

It's not that hard to predict things will happen. The challenge is predicting WHEN. That's the difference between losing money and making it.

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The Fed is not a private bank. PRIVATIZE THE FED!!!
"The Federal Reserve Banks should simply be regarded as governmental agencies." -Murray Rothbard
"I now call the Federal Reserve the fourth branch of government." -Ron Paul

Actually, good long term investor

Investing is for the long haul, except for the gamblers out there. Schiff is, and will be proven right.