Peter Schiff, CEO of Euro Pacific Capital, talks with Brent Johnson, CEO of Santiago Capital, about the interaction between the dollar and gold. Schiff predicts that the Federal Reserve will ultimately have to decide between saving the dollar from hyperinflation and bailing out the U.S. government. In either case, gold is positioned to be a safe haven for investors should the worst come to pass. This video is excerpted from a piece published on Real Vision on October 20, 2017.
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A collection of interviews and documentaries focusing in on the famous store of value. The series takes a 360-degree view of the precious metal by examining gold's role in history and its proper place in modern investment portfolios. It interviews experts in diverse fields including mining, investment management and bullion storage.
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Recession, Gold and the Dollar (w/ Peter Schiff) | Gold
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Transcript:
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I think a big part of-- most people in the gold world argument is there's a finite amount of gold. But there's a lot of claims on it. But there's only so much physical gold that exists. Right? But then there's the GLDs, there's the futures contracts that aren't really backed by gold, or you know you can't take delivery, the ETFs.
So a lot of the argument is that when people scramble for gold, there's only so much actual physical that exists that'll push the price up a lot.
Yeah. It's going to go up. And of course, you know GLD, that is physical gold because the GLD, the ETF has to buy the actual gold in order to issue the shares. But yes, in the futures markets, there it's a whole different ballgame. Because there, you have people selling gold who don't have it.
Right.
And people are buying gold that don't actually want it. They never intend to take delivery. So you can have this paper market of basically gambling on the price of gold. But yes, a lot of the demand that might otherwise go into real gold ends up going into futures contracts, which is not buying any actual gold.
But where the problem is going to set in-- and maybe it's not a problem. If you're long gold, it's an opportunity, or a good thing. Right? But at some point. A lot of the owners of these futures contracts are actually going to request delivery.
Yeah.
Because just because they don't do it now doesn't mean they won't in the future. And at some point, the longs are going to want delivery and the shorts are going to get delivered a notice that says, yes. You need to deliver your gold. Now the shorts don't have any gold.
Yeah.
So now they have to go into the market and actually buy it. Well where are they going to get it?
Right.
And that's when you have a huge move up, and maybe even a bankruptcy of the COMEX Or does it have to be bailed out? Or what's going to happen? Or are the people who are requesting their gold going to be told you can't have it? You know, you're going to get paid in cash. Even though you requested physical delivery, it's not going to happen. So this could be an explosion of real buying of gold.
And there are a lot of people that own gold. That, oh, it's all manipulated. And all the paper markets are keeping it down. Maybe so, but it can't go on forever. And for me, if they are manipulating it, that means the price of gold is artificially low. That means it's a great buy. Right, we're going to get paid.
