Exclusive Interview: Jim Rickards & Peter Schiff Discuss Global Gold Markets [Full Discussion]

this is Peter Schiff I'm sitting here with Jim Rickards best-selling author of currency wars and now the New York Times best seller the death of money welcome Jim thank you Peter nice to be here sure well let's talk about some of the recent developments in the currency war which by the way I think the United States is going to win and of course when it comes to a currency war the last thing you want to do is win because the winner is in fact the biggest loser but I think we've been doing things to advance the ball down the field one of them of course is all the weight that we're now throwing around in the world we are threatening or leading the charge to sanction Russia we are fining foreign banks in Europe most recently a French bank big fines for violating American laws and were able to punish them because they're using the dollar as the reserve currency and more recently the fact that went into effect in July which makes it even more expensive for the world to use the dollar as the reserve currency but we count on the world embracing the dollar stockpile on our dollars because America's standard of living is dependent on our ability to export dollars that never come home and to import capital and consumer goods yeah that's exactly right Peter I like to say that the only way you were in occurrence or is by keeping out of it basically if you're in the concert was everyone loses although it can kind of take different templates but you make a very important point a lot of people say the US dollar is not backed by anything it actually is backed by one thing which is confidence if people have confidence in it they think it's money then it's money the problem is if they lose confidence that it can cease to be money very quickly it can collapse very quickly now the problem with confidence is it's fragile it's very easily lost once it's lost is very difficult to regain and that's something the Fed doesn't understand the Fed the Treasury other branches of government that are using the dollar as a weapon exactly as you described they take confidence for granted they assume because the dollar is king it will always be king nothing can stop it so they as you say throw their weight around but they're actually in the process of undermining the dollar they're giving the rest of the world reasons to for the exits now it's easier said than done you can't get out of the dollar overnight it is the largest you know Treasury bond market is the largest liquid pool of investable assets in the world by the way that's that's a source of a lot of confusion when people look at the Chinese you want what's going on there they see these bilateral deals with China and Brazil China Russia where they're going to take payments in yuan or people will buy their goods in you want or they can use you onto my other people's goods etc well that's a trade currency but that's not the same as the reserve currency to be a reserve currency you need a vegetable assets because your reserves are just for saving so you export a bunch of stuff you buy stuff abroad if you export more than your import you're going to have a surplus those your savings no different than any one savings account well you can't stick it under a mattress you have to invest in something what makes a reserve currency is the pool of investable assets so right now the Treasury market is still cane but the whole world is looking around saying how can we get out of this how can we create new assets perhaps new currencies developments for the BRICS banks people once you start accepting yuan you're gonna look for something to invest in so all these let's get let's get into because first of all it's not like there are plenty of reasons to already want out of the dollar it's not like we have to create new ones but it's so ironic that that's how arrogant we are I mean how much we really don't understand the precarious position that we're in when it comes to the rest of the world that we're actually antagonizing them when we should really be sucking up to them but you mentioned in BRIC banks I mean here there's an effort now going on with China predominantly but also some of the other BRIC nations to create their own version of the IMF which is going to be mainly backed by China which has got trillions of dollars of course in reserves or China can really do what it wants but to really create some independence and to allow China to increase its influence among other nations by said look you don't have to suck up to the United States or you don't or the or the IMF because we're here we're an alternative to that well you're right here a lot of people do want to get out of the dollar but it's like saying a lot of people want to get out of prison but it's easier said than done they so what the world is doing is organizing a jailbreak if you will to get away from the dollar and all the things you mentioned and a lot more are all sort of straws in the wind but if you connect them all you can see this pattern emerging so number one the BRICS Bank so Brazil Russia India China South Africa five bricks members started this bank with 100 billion dollar contingent reserve arrangement so let's say your Brazil and I'm India I have a currency crisis where I can borrow money from you you could lend money China could lend money to either of us etcetera and that prevents these sort of run on the bank you know a member back in the early 90s when George Soros famously broke the Bank of England well these reserve banks are going to make sure that they can't be broken or the currencies can't be broken because they've got a big brother who will live to the rescue not interestingly no sooner was this BRICS Bank set up then China entered into a bilateral swap agreement with Switzerland and I found that fascinating because now the Swiss National Bank in China can swap you on the Swiss francs suddenly China can get their hands on as many Swiss francs as they want they could land Swiss francs to Brazil because a lot of people say well what good is a duty of China lends you on to Brazil what's Brazil going to do with you want nobody takes them fine but now suddenly they could show up uh Swiss francs there's nobody in the world who won't take the Swiss franc so I don't yeah of course there's a lot more francs now because of all the euros the Bank of Switzerland has been buying exact to keep the Swiss franc down much the way the Bank of China has had to buy dollars to keep the yuan down but also you know you mentioned these bilateral currency deals these are happening all over the place now you're seeing a lot of countries now particularly with Russia and you know their desire now to get out from under the us's pressure that we're putting on them by necessity now they have to find ways to conduct commerce without involving dollars but you're seeing it in Asia are seeing it in South America I mean this is a big trend it is we're in a financial war with Russia there's no other way to understand this is not just sort of you know superficial economic sanctions we're at war with Russia without firing a shot using financial weapons now President Obama spoke about something hasn't done this yet but he spoke about something and Putin was more fearful this than anything else has been talked about which is cutting off Visa and MasterCard dollar processing in Russia because Russia in the 90s when you know communism fell in 1991 they went to free-market is very chaotic well they didn't have a mature banking system they don't have a car system consumer credit semester credit visa came in and set this whole system now they're utterly dependent on it today now Putin's what we supposed he was a wise Putin doing what he's doing he doesn't care what Obama thinks but does kill it the Russian people think his popularity is about close to 90% the opposite of Obama's which is now I'm at 40 Obama record lows in the 40s pushing 90 but if you cut off with Visa MasterCard watch the Russian people turn on because that hits them in the pocketbook they said well I read something that he's working out a deal with the Chinese a credit card company he's doing a couple things number one he's told MasterCard Visa they have to put up a multi-billion dollar security guarantee so if they do suddenly cease payments he's going to seize that guarantee and use it to kind of keep the wheels motion but it wheels in motion but the other thing is doing your way at Japan China and others who do have mature credit cards in China I think it's called the unit card if I'm not mistaken like they have a they have a very well developed quite a code you could bring that to Westar so combine that with the petrodollar deal the Saudis feel stabbed in the back because of us date on with Iran so all the legs of the store being pulled out China wants to get off onto the dollar they're buying gold that's very clear why she wants to get out from the dollar so they're not victimized in the financial war Saudi Arabia wants to get off under the dollar because we don't guarantee their security any more and there's a lot else going on the Swiss for joining in so it doesn't happen overnight it happens in small stages but at the end in the endgame it could happen very quickly and the investor doesn't have some gold as insurance policy is taking an interest and I think I think that Obama is overestimating our strengths you're under estimating our weaknesses we're you know we're not equipped to fight this financial war given how dependent we are on foreign capital flowing into the country so we really can't win this war and it seems like you know the president is very arrogant and you know just like he made mistakes about Obama care and the assumptions that he made there and even the assumptions with Iraq I mean he was so confident when we pulled out of Iraq that everything was going to be fantastic over there how arrogant and ignorant at the same time to not understand the situation that existed there despite all of the military intelligence and all the experts that he had and so I think he's making an even bigger mistake playing with fire here by trying to challenge world to a financial war that we can't win that we can only lose but I want to you mentioned gold and I want to of course talk a little bit about gold and first of all what about internationally if the world really wants to get out from under the dollar which of course is the single largest reserve currency I mean not as big as it was I mean you would think that they would want to be building up their gold reserves that the countries that have the biggest dollar reserves would have the biggest vested interest in accumulating as much gold as they can to replace the dollar as a reserve backing up their own currencies well they actually are that's going on I talk about this in my book the death of money and China is a very good example now China officially says they have about 1,000 tons of gold but we all know that's not true they have some number no one knows exactly what it is but you can make a reasonable estimate that they actually have three or four perhaps even five thousand tons of gold that no that's not just guess or how do we know that well we know what their mining output is it's over 400 tons a year we know what their imports through Hong Kong are they're about 700 tons a year so you add that up there's 1,100 tons and I have information I talk about my book that they're bringing gold and actually through military convoys coming in through Central Asia that could be coming from back to Russia or Kazakhstan or elsewhere so add that to the mix so they're getting you know probably 1500 tons a year this has been going on for five years that's 7,500 tons what we don't know how much of that is going to private investment in China how much that is going to the government we don't know that number but yeah just use half and half as a first approximation so right there that would add over three thousand times the Chinese reserves so they're probably close to four thousand times it's been a lot of speculation the reason they're doing this is they want to launch a gold back you want currency to defeat the dollar that's not going to happen that's not even close the reason is that you want it's not ready to be a reserve currency because they don't have invested less there's no rule of law there's no mature bond market in China but what they are doing is creating a very simple hedge position you're a trader you certainly understand how this works so you've got four trillion dollars of paper reserves mostly in US dollars you can't dump them I mean if you even tried to sell a fraction Treasury markets big it's not that big if they try to do something more aggressive the President of the United States and actually stop them just by freezing their accounts but what you do is you build up a pile of gold so now the Chinese actually want a stable dollar they would love a stable dollar but if the US tries to devalue the dollar tries to cheapen the dollar through inflation remember every ten percent of dollar inflation is a three hundred billion dollar wealth transfer from China to the United States so if we cheapen the dollar with inflation they lose money on the paper but they'll make money on the goal so they're building a head's position they're not done yet and of course for the hedge to work gold has to move up spectacularly we're at the very very biggest their gold position is going to be very small relative to their dollar position but if gold moves enough to offset the decline the purchasing power of the dollar I think it's interesting this I think that's why China is trying to really lie about how much gold it has and how much it's been buying because if the truth were out there on how much gold they have I think the price would already go up uh and you know so if you really want to buy something you don't want people to know how badly you want it or how much you want because they're going to raise the price so I think China is trying to quietly buy as much gold as they can because they need a lot of gold because they got a lot of dollars so they're trying to buy as much as they can as cheaply as they can so they lie about how much they have I think we also lie but maybe we we pretend we have more than we do that could be you know so we say we have all this gold and maybe we don't and China claims they barely have any but they probably have a lot more well I think we're good reasonably we have the physical gold now is at least out yes that's the thing now so it's hypothecated we we have the physical gold in Fort Knox and West Point where we say we do but it is leased out the gold manipulation by the way is so blatant at this point if I were the manipulator I'd be embarrassed because it's very clear to me that's not debatable and also branchless mats a professor at NYU Stern School has done some excellent research on this she's an expert on this there are other published studies so this isn't something we have to speculate about anymore last question is who's doing it and people like to point a finger at the Fed and maybe through the BIS they have a hand in it but my number one suspect is China for the reason you mentioned Peter if you're out to buy three thousand tons you don't want the price to be high yet maybe later you do but for now you want the price to be yeah you do not while your son buys but you know you can bring up that I mean I mean why didn't I mean the situation with germ and Germany's called so not only you know do we spy on Angela Merkel but you know we don't even have their gold I mean why isn't there a bigger uproar on what do you think is going on when Germany basically says look your guys are storing our bolt we'd like half of it back right and then we come back and say okay we'll give you half back but it's going to take like ten years right where here's our timetable right and at the end of the first year we give them one-tenth of what we promised we're going to give them and now all of a sudden they've changed their mind and say okay we don't need it you can keep it that's another thing that's not very well understood that the dirty little secret there is Germany doesn't want the gold back they asked for it but that was only because it was a political issue in September 2013 Angela Merkel was up for election it was a minority party that was making noise about this and why is our gold New York why are we risking the US could confiscated which I think we might at the end of the day in desperation so they wanted so that was only announced to appease that party to help Merkel's coalition once she won the election they didn't need those guys anymore the Deutsche Bundesbank doesn't want the gold but here's why they're part of the manipulation but the manipulation is centered in London in New York London and New York have mature leasing markets Frankfurt doesn't so if you move that goal from New York to Frankfurt it actually reduces the floating supply available for lease because there nobody's going to do a German language lease there's no leasing mark in Frankfurt so if you're part of the manipulation which they are you actually want the gold in New York because that's where the manipulation centers so it's sort of the Germans don't want the goal but the reason they don't want it is a bad reason which is they're part of the manipulation in New York is the center but the question is could we have delivered it or did we did Germany know that we weren't going to deliver it well for the physic again there's a lot of confusion about it because people don't understand gold leasing they think of JP Morgan leases from the Fed which they do that somehow they back up a Trump can take big all the way they don't the goal is there but they get paper title to it and that's all you need and then you go out and sell ten times ten times the paper title and it's so-called unallocated gold through the London bullion market Association now you're flooding the world with gold contracts all these people out there say well I own gold they don't own go they have a paper bilateral contract with JP Morgan if they all showed up for the gold JP board would terminate the agreements under force majeure clause give everyone a check at yesterday's price you would not get today's spike and there's nowhere near enough gold to go about so there's manipulation go yeah well basically we're sophisticated solace basically they've sold the same gold over and over again and you have all these people that doesn't think they don't it's kind of kind of like that the movie the producers yeah the guy to see a suit he assumes the movies going to flop so he selves interest to so many people and then I said you know they all come back and they want their share but of course they've oversold the deal and it's the same thing or me looks like a little bit of a Bernie Madoff or some kind of a scam but you know what about Switzerland because I don't know when this vote is supposed to come up but now the Swiss right they have they have a referendum coming on the ballot to back to Swiss franc I think ten percent by goal I think that it used to be legally backed by gold twenty percent it wouldn't want to do two things number one this referendum and but you know they have an open system you get enough signatures on a petition you can get on the ballot I think this vote is scheduled for early 2015 I was in Switzerland recently visited Switzerland I didn't see any bags I went to gold stored I went to gold vaults and gold refiners the people handling physical but I bumped into a very senior Swiss banker at the time we just asked him about this he said Oh it'll never pass but you know what there's a little nervousness in his voice that I detected so let's watch that space but what this referendum would say is that first of all Switzerland cannot sell any more gold so it soon has been a big seller of gold the last ten years and they've been part of the price of price suppression mechanism but then it would furthermore say exactly disappear that the Swiss franc has to be backed by gold in such a proportion that they would actually have to go out and buy gold to fulfill that backing well especially because they bought so many euros in the past four or five years they had to press tracks look it's interesting that all the bankers and politicians are against this right and these are the same guys that would have been in favor of it you know 20 years ago when Switzerland really was the last country to you know leave a gold standard or break any tie between its currency and golden Swiss franc really was you know the gold standards of currencies right until until then but the Swiss people pride themselves on sound money the Swiss banking system you would think that they would they would embrace it but they're scared because they you know the bankers want to play ball with the European bankers they want to play you know with the Americans they don't want their hands tied but from the point of view of a citizen of a saver that's exactly what you want to do you want to tie up the central banks hands you want to tie the government's hands down bind it into golden handcuffs so they can't create all this inflation they can't under bind your economy no delayed bubbles no doubt no doubt that the bankers in the elites are against this but the people of Switzerland might support it there might be an interesting connection actually between what happened in Germany and what's going to happen in Switzerland because the Swiss are sitting this I hate the Germans couldn't get their gold back they've got a bad reasons for that but they couldn't get their gold back so that might cause the Swiss people actually to vote in favor of this so let's watch it but I think it'll be early 2015 we'll know then plus you know the price of gold has been trending up for the last 13 14 years last year you know notwithstanding it's up again in 2014 right and so the Swiss are selling their gold and they're losing money the goal that they're selling is more valuable actually so all these calculations are in my book but they've lost billions dumping their gold and by the 2013 you right it was the first year in 11 years when gold was down but that's because the the big banks looted the GLD warehouse the GLD with a CTF that warehouse disgorged 500 tons of gold onto the market that's open above mining output in other sources well you can't do that twice you take another 500 tons out of GLD there's not enough left to pay the bills so that was a one-time event we're not going to see that you're right well the other problem for the speculators you know because the people who bought GLD you know they're gonna be back once the trends change the hot money is going to want back into gold correct the problem is the Gold's not going to be there for the GLD to buy right so when the speculators want in and a lot of these guys are actually now short so wait till they have to cover not only the divine for the short covering but you've got buying from the new investor hot money you know typically right when things go wrong right people seek out a safe haven in the US Treasury market has been to safe haven but at some point it can't be the safe haven you can't bid Treasury prices to the moon the yields are too low because pretty soon the safe asset becomes so risky that nobody can touch it so at some point you the flight to Treasuries can't go on so what are you going to buy in when you're worried when it's too dangerous to buy Treasuries especially if the next crisis is a dollar crisis you can't hedge dollars in Treasuries right right so you gotta buy the going down so that you got which you know bravely - I wanted to ask you also about the the ending of the the the London fix the scandal every Bob involving the am/pm fix in London now the silver fix and you know what does that mean for the gold market if we if we move beyond that and and was that part of the the manipulation that it did that in any way help to suppress the price called what did I mean the London fix was a sort of a manipulation within a manipulation so that was a little ring manipulation within the much larger manipulation conducted on the column accent through leasing and intermediator through the BIS you know the BIS are bunch of sweethearts they they they fronted Nazi gold during world war two the nazis were selling gold the be is to get currency to buy weapons and other imports and the president of the bis at the time was an american so you had an american president of the bank funding nazi gold to get money to kill GIS that's how corrupt they are so a bunch of sweethearts over there at the BIS but they're in the heart of this thing but ya know I think you're I think you're exactly right this so uh the other London gold fix is less and less significant look the whole gold market not just the gold but the gold market is moving to Shanghai the vaults are there are the refineries are starting to crop up they redefined good delivery you know good delivery is the old four hundred ounce bar the four hundred ounce bar was specified almost a century ago because it was so inconvenient they didn't want people with gold in their pockets and so they came up with a good delivery that nobody could carry around the Chinese are going to the 1 kilo bar 400 ounce bars can be what they call two 9s three nines you know 99% pure the one kilo bar that the Chinese like is four 9s that's 99.99% pure that's the new standard so the vaults the refineries the gold standard the trading are all moving to Shanghai they're rewriting the rules well it makes sense look this the savings are there the productive capacity is there the economic freedom is there and just like America you know what we became the most powerful nation because we embraced freedom in a way that had never been embraced before and we became wealthy because of our free markets we had all the gold right that's why the dollar became the reserve currency because we had so much of the world's gold but we've lost all of that and it makes sense that the nations that have gained what we lost are now going to take the goal the gold is going to flow from the debtor nations of the West right the welfare states to the new freer markets dynamic savings producing nations and ease great 1950 the united states of 20,000 tons of gold today we have about 8,000 tons so that tells you the story right there yeah now also you know there are some people that argue that look the new goal are these digital currencies that you know bitcoin people are saying is you know this is gold for the digital age Gold 2.0 that you know as these paper currencies fail right as always we have these currency wars and you know I think the ultimate winner is is gold and certainly the death of money is the best thing for gold because gold will never die gold is real money but now you have people claiming that no no that bitcoin or you know maybe some other currency but certainly the most people are behind bitcoin you have the most the biggest user base the most fanatics behind Bitcoin say no no this is Bitcoin can work Bitcoin can now replace the dollar the euro you on the end that the world can have confidence in in this and so the currency wars or those inflation is going to ultimately move everybody into cyber currencies that are created privately that are not beholden to governments and central banks what are your thoughts on on Bitcoin well look anything can be a currency the quest but you put your finger on up here do people have confidence and at various times in history shells have been currency feathers of and currency beads of in currency so anything can be come and see and Bitcoin can be a currency but only if people have confidence in it and the same is true of the dollar or the Euro or anything else and now I have a number of positive Bitcoin number one if you have somebody what a bitcoins worth will say it so it's worth five hundred dollars or two hundred dollars well also wouldn't say if you're talking about dollars so it's even even the diamond the world Bitcoin advocates will express the value in dollars something you're really tied to the dollar standard whether you like it or not number one number two Bitcoin has hopping through a business cycle it's just been a very weak recovery but the economy has only gone up since the invention of Bitcoin so we don't know how Bitcoin will perform in the panic we don't know how it will perform downturn because we haven't seen that third problem I have is that people don't understand the tax aspects of it if I buy a Bitcoin for $200 and I cash it in for $300 of goods and services because it went up I have to take the hundred difference and put it on my tax return as a gain no different than if I bought IBM and sold in a profit I've got to report the Bitcoin game well I daresay no one's doing that or practically no one's doing that which means all the Bitcoin users are tax evaders we know the IRS is used for selectively political enforcement we know how to up the Justice Department the IRS are so I had to be a Bitcoin guy with unreported Bitcoin gains my tax return the just profit selectively comes after me so that's been especially when they get you with your interests and late penalties that ends up being or no the NSA is looking over your shoulder so there's a lot to think about well the real problem that I have with the first of all you have over 400 now other digital currencies so the supply of digital currency seems to be infinite because they keep coming up with them sure maybe they'll come up with one that's better than Bitcoin maybe they already have I mean who knows just because you're the first doesn't mean you're the best but the real problem is absent a unit of exchange there is no value in Bitcoin because there's nothing that you can do with it except give it to somebody else people overlook the historic value of gold as a standalone commodity because people desire the physical properties of gold even if you aren't going to give your goal to somebody else in a transaction you can use it right gold has a use there is there are properties that make gold desirable even if it wasn't used but if you have a Bitcoin and if people lose confidence in them because you know they no longer want them correct then what can you do it absolutely nothing there's no there's no there's no floor on that absolutely our gold is genuinely scarce you know people talk about rare earths you know these these particular minerals that are used in certain applications and manages gold is more rare than rare earth first of all and the other thing is people think their coin is cool because it's a digital currency the dollars of digital currency you and I may have a few bucks in our pocket when we walk around but credit cards are digital payment online is digital electronic bank account wire transfers the Treasury market hasn't had a paper Treasury certificate since 1982 so the dollars of digital currency bitcoins are digital currency good luck to all of them they're all based on that same when confidence is under stress people go to gold yeah I mean people say hey we don't want dollars so they don't have any intrinsic value so let's take a Bitcoin but neither does it and yeah ultimately I think is it's going to collapse to me it's like tulip mania and I think you know what really empowered Bitcoin in 2013 I think was the fact that that was the year that gold did poorly and since Bitcoin kept rising people could make the argument you see Bitcoin is better than gold because look gold is going down Bitcoin is going up it's a better store value it's a better hedge and of course you had a big vested interest among the early adopters who got these things for nothing right to spend money drumming up a market to create the sense of value and greed because they need an exit strategy yeah they have to be able to sell their bitcoins so they have to create a lot of hysteria you know a lot of enthusiasm among as many people as possible but I think the problem now for Bitcoin is that you have a lot of people that bought bitcoins for $1,000 $900 $800 they're not so excited about it maybe they're hoping they don't come back up but when it rolls over and they're back down to 400 300 200 you know we know how people act I think there'll be a big sell out and then when there's a real crash and in Bitcoin and a lot of people have lost a lot of money as you said once you lose confidence you really can't rebuild it but I think the one store value would have something that has a historical precedent as being money for thousands of years gold I think gold is going to shine very very brightly in this environment hopefully I think if we can return to a monetary system based on bold instead of the Fiat system that we have now we'll have much sounder economy we'll have smaller government's will have more freedom will have more prosperity we won't have all these trade imbalances and you know big current account deficits and we won't have booms and busts with all these big bubbles with spectacular rallies and even more spectacular collapses right I agree how much longer do you think we're going to wait though that's a lot of people want to know our clients who have been buying gold sure you know when do you how much longer do you think this can go on well the thing is it could it might go on longer the people expect and here's why I think that sovereign banks and essential central banks and sovereign governments are on their last legs but there's one I left one trump card left for the international leads to play and that's the IMF and the SDR the Special Drawing right now I know the Special Drawing right is just another form for your currency I know it's not backed by anything I'm an expert on STRs but it's new it's a new kid in town so they might play that trump card in the next acridity crisis I go all the way back to 1998 my long-term capital management collapse that was a hedge fund collapsing jeopardizing the world Wall Street bailed it out now come forward to 2008 now Wall Street's collapsing jeopardizing the world and the central banks bailed them out in the next crisis soon to come it'll be the central banks and sovereigns themselves who are collapsing now who's bigger than a sovereign there's only one name in the world which is the IMF well but the I'm it gets its money from the very sovereigns it's trying to do I don't need to get money Peter they can print money that's what's it yes so the normal lending operations yes they borrow money and lend it out they have a balance sheet you're exactly right but they can print strs they don't need to get the money from it it's like they could just they can add another layer to the bond exam somehow how I don't know I think it might fail at the end of the day I'm not a big fan of fiat SDRs I'm not saying that what I'm saying is don't underestimate the ability of sovereigns to play one more trumpet the old way will be good the ultimate crisis isn't going to be the liquidity crisis but in excess of liquidity because all that money that's being created that's the crisis because now the money collapse to see everybody is worried about the asset prices going down Oh the stock market comes down the real estate market comes down the bond market comes down but they forget what if the dollar crash is what if all the money they print to prop up all these asset prices collapses the currency that everybody actually wants because you don't really want the assets you want what you can buy when you sell them you want what you can buy with the income that they produce and if you can't buy anything because they had to create so much money to prop up the values that it's practically worthless that is the real crisis right and that is why people need to have gold because when that crisis hits that's the the one place really really for sure that they'll be able to hide but I still think if you have real tangible productive assets in other countries you know things are still going to have value when you have a currency crisis like that it's the paper wealth that have opted that breaks I mean if factories are still there the resources to plant equipment that productive capacity is still there the question is who's going to own it and who's going to have claim to the production the output of those assets the guy who's getting ready for that is Warren Buffett Warren Buffett's last two big acquisitions were a railroad oil and natural gas Warren Buffett's guy dumping paper money getting hard assets the dollar can go to zero and he still owns a relative exactly as you described well you know it would be it would I wouldn't be surprised you know because you know if you look at what the way he says he talks up the paper economy he talks up the US economy he talks up Obama if it's dumping paper money getting into hard assets investor should do the same all right well on that note Jim thanks a lot to cut ties and thank you

Channel: Peter Schiff

Views: 154,806

Rating: 4.8762345 out of 5

Keywords: James G. Rickards (Author), Peter Schiff (Academic), Economy, Economic, gold, dollar, forex, inflation, currency, silver, bitcoin

Id: ImqxhaPyLEo

Length: 31min 30sec (1890 seconds)

Published: Wed Aug 13 2014

Reddit Comments

[u/xcsler]

Ironically, it was partly Peter Schiff and the Austrian School's economic theories that made me realize the value of Bitcoin.

[u/bell2366]

Grey old men that clearly do not understand the subject. They laid out their ignorance like a grocery list:

• "The dollar is a digital currency and bitcoin is a digital currency" Do you know the difference between digital and crypto guys? kind of significant to your point.
• "There is nothing you can do with it (bitcoin) except give it to somebody else", 60,000 retailers would disagree!
• "Gold will never die, gold is real money" Bought a Latte with gold recently have you?
• "bitcoin has the most fanatics", you have to be a fanatic to see the value of bitcoin? Or did you mean “therefore it must be bad”? Wonder how many “gold fanatics/bugs” are out there?
• "We don't know how bitcoin will behave in a down market", So you are advocating waiting 15-20 years before testing your entry into a new investment or monetary vehicle? Good luck catching value.
• "bitcoin advocates express it's value in dollars", just crazy!! Should we compare it to the current world reserve currency (like every other currency does) or perhaps your personal favourite gold?
• "There are over 400 other digital currencies, the supply of digital currencies seems to be infinite", ignoring the 'digital' slip you imply that bitcoin has less value because there are competitors. Is the USD less valuable because there are 197 other fiat currencies out there?
• "Absent a unitive exchange there is no value in bitcoin", so we can't discover value without a unitive exchange??? Did you know the absolute value check of a currency is the cost of a sex with a prostitute? Studies have shown that it’s been the most consistent measure across currencies and across time since at least early roman times!
• "Ultimately it's going to collapse, it's like Tulip mania", really? on what fricken planet is the development of a unique peer to peer trustless based method of value exchange like a centralised ponzi scheme on a temporarily scarce commodity?
• “What powered bitcoin in 2013 was the fact that was the year that gold did poorly” Gold production 2013 was 139 million oz ($150 billion roughly) and that’s just NEW gold, old gold is 171,000 tonnes!! What percentage of your gold market powered bitcoin to the giddy heights of $8 billion USD?? No using your sliderules!
• “Hopefully we will return to a gold backed currency system” care to explain how the hell that’s even theoretically possible given the massive print runs of fiat, the gold imbalances between countries and most of all the total distrust of USA as a holder? Do you remember why Nixon got rid of it?

The list goes on and on…

[u/jackchi]

This is pure comedy. I can't wait to re-play this over and over 10yrs from now. It will be hard to hear from all my cackling.

[u/chrono000]

wow i feel so offended by this

[u/oncemoor]

Look their biggest fear of Bitcoin at the moment is that they are afraid that it is going to pull demand away from gold, which they are heavily vested. To assume that Gold will always be a scarce commodity is just plain foolish. The universe as well as our own oceans are full of it. It takes only one meteor to be mined and we could introduce a hundred times the Gold that is in existence. In addition what the h*ll are they talking about capital gains on Bitcoin but somehow implying that Gold doesn't have any. In the UK this is the case but as they are both US citizens and they are speaking specifically about the IRS, this seems to be a red herring.

[u/herzmeister]

*yawn*

[u/slvbtc]

Gold has been in the background of reserve currencies for the last 500 years, as backing to the currency to facilitate ease of use/ ease of transfer/ ease or payment on a global scale because gold itself sucks at transportation! Bitcoin is orders of magnitudes superior to gold when it comes to durability, divisability, portability, consistency, scarcity, verifiable, medium of exchange...as soon as the fungibility issues are worked out and it is a widely used unit of account, it will naturally become the main form of money, regardless of what anyone has to say about it!

[u/roboturner777]

I've heard farts more interesting than Peter Schiff

[u/slvbtc]

He edited the bitcoin part out when he posted this interview to his other blogs! haha.. They are only talking about it because they are actually worried it is an option beyond gold, and they have a huge decade long vested interest in gold having a huge run up during the next crisis!.. If they weren't genuinely concerned it could replace the gold standard they would be ignoring it.. we are in the "laugh at you" stage, bordering the "fight you" stage when It comes to the gold bugs.. and I cant believe Jim Rickards actually directly compares bitcoin to "digital fiat currency" like there is no difference, and can keep a straight face! He is not that oblivious!