Does money need a non-monetary use? Will the government return to a gold standard? Are we doomed to repeat the same cycle of fiat money? Peter Schiff, CEO Euro Pacific Capital, chairman of Schiff Gold, and host of Schiff Radio joins me to discuss. 

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Podcast Transcript:

Stephan Livera:

Welcome to the show.

Peter Schiff:

Well, thanks for having me on your program.

Stephan Livera:

Peter, I’ve been following you for quite some time, and obviously I know you’ve gone back and forth with many Bitcoin advocates discussing, you know, the relative qualities of gold versus say Bitcoin versus Fiat money. So I, I guess maybe we could just start with a little bit of where are you currently at in terms of your thinking on Bitcoin? Has your thinking shifted in recent years?

Peter Schiff:

No. I mean, I pretty much feel the same way about Bitcoin as I felt when I, when I first learned about it, which was, you know, many, many years ago when it was a much, much lower price. So I mean, I’ve certainly watched it catch on. And when I first heard about it, obviously I had no idea it would rise to this level of popularity, but I mean, I knew about it and I thought it was interesting that you know, that they had created it, but I still believed then, and I do now that it didn’t really have the important qualities that would make it money. And so I didn’t think it would succeed as money. And in fact, you know, what are the earlier things I thought, and this was before there were any altcoins, I was like, well, what stops somebody from just coming up with some other cryptocurrency to compete with it?

Peter Schiff:

And, you know, and when I said, that there were no other curtains. It was the only one. And so I was right in that. Now there are thousands of these things, but the popularity has grown to the point that even these other cryptocurrencies, you know, have got an audience and now they have, you know, high market values too. So it just got a lot bigger then, you know, I thought maybe it could do when I first learned about it, but I don’t think anything that’s happened to Bitcoin despite its growing popularity, all of the, you know, personalities that have been attracted to it, all the infrastructure that has evolved around it. I still think it fails the basic test that it failed initially. And I don’t think it’s going to succeed. Now I do think that people who bought it early on some of them made a lot of money and got out.

Peter Schiff:

Others have made a lot of money and have yet to get out and we’ll see how much you know, they actually get out before the bottom drops out. But I think at the end of the day the gains that are made by the people who got in early and got out will be equal to those who got in late. And didn’t, and you know, the big question is if you’re getting in now, where are you in the pyramid? I mean, are you still early? I think that’s quite obviously not the case. Are you in the middle or are you coming in at the end? And you know, I still think it’s closer to the end, but we’ll see. I mean, it’s certainly possible that there’s more air that could go into this bubble, but I wouldn’t want to bet on it and I’m not betting on it.

Stephan Livera:

I see. So let’s try to unpack some of that. So as I understand you believe that Bitcoin doesn’t meet certain hurdles. If you will, to try that it could even be a possible candidate money. Is it that there’s no physicality to it? Is that part of your reasoning? Why? Or let’s go into that a little bit further.

Peter Schiff:

Well, it’s not so much that there’s no physical nature of it. I mean, intangible assets can, can have a use case and have value to them. But you have to understand you know, what money is and, and then what, what money substitutes are like currency, because there’s a big difference between money and currency, right? Money is a commodity money is by definition, the most liquid commodity that people will accept in exchange for other commodities, even if they don’t need that commodity themselves, because they know they can hold onto it and they can exchange it for somebody else who will accept it. So, and money replaced barter, because before money, if you wanted to exchange for something, you needed to find somebody who needed exactly what you had and who had exactly what you needed. And so it was a very inefficient way for people to trade.

Peter Schiff:

But people then discovered that, Hey, you know, there’s certain commodities that everybody needs that can kind of function as a medium of exchange to facilitate these transactions. And over time, metals won out and in particular, gold became the one commodity that was best suited to be money because of the properties that enabled it to store its value. And the fact that all gold was the same. And so if I owed you an ounce of gold, if I paid, you an ounce of gold, that was exactly the same as the one you loan me. I mean, there was all these unique properties of portability and scarcity and stuff like that, made gold a better form of money than other commodities that have been used as money. So then eventually society came up with money substitutes because sometimes you didn’t want to you know, clog around your gold people would leave their gold with a blacksmith or a banker.

Peter Schiff:

And the paper would be issued that would circulate in place of money. That was backed by the money. And that paper, that circulated was currency. Now the currency had no real use value, cause it was just a piece of paper. What gave it value is that there was some actual money in a vault somewhere, backing it up, that the bearer of that piece of paper could go collect whenever you wanted it. And so currency became a money substitute that can circulate in addition to actual money. Then what happened later on is governments started issuing paper currency that wasn’t backed up by gold. That was backed up by nothing. And so that’s what fiat currency is. It’s a piece of paper and the government just says it’s money and it’s not backed by anything. And so cryptocurrencies to me have more in common with that, right? That type of currency, a fiat cryptocurrency, as opposed to legitimate cryptocurrency, which would be a cryptocurrency backed by money like gold.

Peter Schiff:

So if I had gold in a vault and I issued some coin that was backed by that gold, that could circulate as a digital currency, but was ultimately backed by and redeemable in the gold that I had in a vault somewhere. Then that would be a legitimate, a cryptocurrency backed by real money, as opposed to a Fiat cryptocurrency backed by nothing. But the cryptocurrency to me is no different than the piece of paper in that there is no real value in the cryptocurrency, just like there’s no value with the paper. I can’t do anything with that piece of paper. And I can’t do anything with a Bitcoin. What gave the piece of paper value was what you could do with the gold that was behind it, because that gold was an actual commodity that had all sorts of uses. And it was very valuable because of the demand for those uses.

Peter Schiff:

But the paper doesn’t have, there’s no demand for paper. It only has value because there’s real money behind it, but there’s no use case for cryptocurrency either. So I just don’t see how it could be a store of value when it has no actual value to store and eventually it’s going to crash. And when it does, you know, then nobody’s going to want it anymore. Because I think the main demand for Bitcoin is basically because people believe if they own it, they’re going to get rich if they just hold onto it long enough. And that’s what people are doing. They’re hoarding cryptocurrency based on the perception that eventually they’ll be so valuable because everybody else is going to buy it and then they’ll be able to cash out and they’ll be able to, you know, buy all sorts of consumer things because they’re going to be rich. But I think that that’s not going to pan out that way.

Stephan Livera:

So let’s try to go a little bit further into that. So as I understand you essentially it’s that you believe gold has other uses other than it’s use as money. That why in your view. Right? So I think the way, the main way I would sort of try to challenge that is I think if we look at the writing of Mises, I think he recognized that even a total Fiat currency could just piggyback onto any existing price framework. And in that sense, the new currency need never have been valued directly as a commodity itself because we’re not coming from a pure barter world. So I guess my question to you then would be, why do you believe that in order to be money, something must have a use other than money?

Peter Schiff:

Well, because you have another source of demand for the money. So for example, if the price of gold really started to fall, there is going to be buying that is going to come in, right? There’s people are always going to need jewelry. And so the jewelers are going to be there buying gold, you know, no matter what you’re going to need gold in electronics for its properties. And so people who are in that industry that need gold are there to buy gold because they need it. And in fact, even if the price goes down people that weren’t using gold because it was too expensive. And let’s say they were using copper, which wasn’t as good, but it was all they can afford. If the price of gold was low enough, they would say, well, I’m just going to use gold. I mean, I don’t have to use copper at this price.

Peter Schiff:

I’ll use gold. So you have all this natural demand that is going to be there for gold, the commodity, even if you have a temporary loss of demand for gold as a store of value or as money. Although also I think central banks, to the extent that gold got cheaper, they’re going to buy more gold as well. As a reserve asset. I mean, you have that other source of demand coming from central banks who have been holding gold you know, since they’ve come into existence, but you don’t have any of that buying for Bitcoin. All of Bitcoin’s buying is by speculators. There is no other buyer other than the speculator who believes the price is going to go up. And so if you all of a sudden, see the bottom drop out of the market and the speculators are no longer greedy about wanting to get rich, but are now fearful that they’re going to go broke and you have a lot of people selling. There is no natural buyer to come into the market and put in a bottom.

Stephan Livera:

I see your view here is essentially you’re distinguishing here between natural demand as you call it and let’s call it monetary demand, but even in the gold world, couldn’t we also say that actually, as a fraction of Gold’s value, really the natural use component is very, very tiny compared to the actual monetary demand. If you want to call it that the exchange demand.

Peter Schiff:

I wouldn’t say that. No, I mean, I think that there’s certainly a lot of demand for it as a metal, but let’s say for jewelry, right? People are buying gold jewelry at the market price. So let’s say even if gold went to $5,000 an ounce next year, people are still going to buy gold jewelry. They’re just going to pay a higher price for it. They’re still willing to do it. See gold is a luxury good. And so the demand is going to be there. Now, if there was no investment demand or monetary demand, then the price might be lower. But even at the higher price, because it is a luxury good, there is still going to be demand for it. And its other properties, you know, the properties of gold are so good and where gold is needed in medicine and electronics and dentistry, they only need small quantities of it.

Peter Schiff:

But it’s so important that even if the price went way up, the demand would still be there at the higher price because it is so good at what it does. So and if you look back over time, historically you have thousands of years of historical comparisons where you can take the price of an ounce of gold and you can relate it to other commodities and to other financial assets to kind of figure out historically, you know, you know, what, where, would gold be expensive and where would it be cheap? So there’s a market, a frame of reference, you know, you don’t have that at all with Bitcoin, cause it’s only been around for 10 years and there’s no way to say how much should a bushel of wheat cost in terms of, you know a Satoshi or a Bitcoin, whatever you want to do or to know anything any kind of relative value between any commodity in Bitcoin.

Peter Schiff:

There’s no way to, to know because there’s, just, no, again, there’s nothing you can even use Bitcoin for. But again, the problem is too is you don’t know. I mean, I hear all the Bitcoin people, they want to say why Bitcoin is so great. And then they got to dismiss the 5,000 plus other cryptocurrencies. Well, why is Bitcoin better than those? And why is Bitcoin better than the ones that haven’t even been invented yet that may be invented next year or next month or in five years? You know, they haven’t come up with a better gold in 5,000 years. Right. But I’ve never seen in my lifetime, a technology that wasn’t improved on over time, whatever it was. Right. So, you know, somebody invented the cellphone, but the cellphone I use today is nothing like the one that was out 30 years ago.

Peter Schiff:

I mean, everything that’s, you know, technological, somebody makes it better. They make it faster. They, you know, they improve on it. So to think that Bitcoin is assuming that you, you know, the what cryptocurrency, that nobody’s going to make something better or faster or more efficient. And if they do well, then it renders Bitcoin obsolete. You know? So I don’t know how you can have this confidence that I’m going to store my wealth in this cryptocurrency and just take a shot, just hope that this is it. That the first cryptocurrency ends up being the best one that, you know, this is like, you know, you put all your money into my space and just hope that nobody came up with Facebook, right. Or whatever, or Spyglass and you hope no one came up with Yahoo or then Google. I mean, you know, you don’t know.,

Stephan Livera:

Probably our main point of disagreement. So some of the earliest stuff you were chatting about there is just around exactly how much of Gold’s demand comes from the monetary cases. I guess I view it like that might actually be somewhat of a, we view that more like that’s like Bitcoin is something that is taking just a very, very large percentage of its demand from the monetary component. And yes, I agree. It’s some of that is speculative based on the idea that we believe it has certain.

Peter Schiff:

All of it is speculative right, I mean nowhere is Bitcoin really being used as a medium of exchange, Right? Are you can’t go online.

Peter Schiff:

And find products that are priced in Bitcoin, where it says I’m selling this product and here’s how many satoshis it costs, right? You’re not going to find people, negotiating contracts pay me a Bitcoin a month, you know, or people are not taking out insurance policies, you know, on their home. And they’ll say, Oh, okay, well, here’s your premium, it’s this many satoshis every month. And your benefit is this many satoshis nowhere in the world is Bitcoin being used as a medium of exchange as a unit of account as any type of monetary function. The only thing that I see it used for is speculative store of value. And to a very, very small extent barter. Sometimes you will see people online that may exchange something for Bitcoin, but in that respect, it’s acting more like a barter transaction where somebody who wants Bitcoin is exchanging or somebody who is somebody who wants Bitcoin and has something that somebody who has Bitcoin wants, they’ll be willing to accept that Bitcoin in exchange for their other product or service.

Peter Schiff:

And so you have a barter arrangement going, but it’s not where the Bitcoin is used as money to facilitate. The transaction is actually the good that the person on the other side of the transaction actually wants. So you have maybe a tiny bit of use of Bitcoin for barter. Maybe that’s, I don’t know, less than 5% of the use. I mean, if that, and the rest of it is people just hoarding it and either saving it or day trading it, right. There are a lot of people are just buying it and selling it. I mean, you know, they’re just trying to make money trading it cause it’s a good trading vehicle. It has a lot of volatility and you look at a chart and you can buy it here, sell it there. So you got a lot of people trading it and then you got a lot of people just Hodling it, right. They don’t trade it. They just hold onto it and hope it keeps going up, but they’re not using it as money.

Stephan Livera:

So I think the main point I’d disagree there is probably just that maybe you’re setting a bit of an unfairly high hurdle. It’s not that a Bitcoin could have emerged out into the world fully formed and everyone is going to start using it as money straight away. Surely these things will take time and we view it like it’s a network of people who are growing. And I guess probably the main way I would counter your discussion around the altcoins is that really it’s like, we should think of it more like it’s the creation of the internet. And we’re just gonna keep building the internet as opposed to the kind of MySpace and Facebook example. And as I’m sure, you’re probably aware that there were many failed attempts or concepts in the past, things like E-gold things like Bmoney or Hashcash as preceding ideas. So really Bitcoin actually is the successor to many of those ideas.

Peter Schiff:

But see, that was different because that was actually backed by gold. It was, and the companies that are kind of that try to be like that were like gold money, you know, where you have an account of physical gold that’s owned and you can now exchange your gold electronically. You can transfer, you know, fractional you know, pieces of gold. You can transfer as little as one gram of gold instantaneously to any other gold money account holder. And then you could use your gold as an electronic form of payment. So that’s what I would say is it may be is a, advancement on that basic principle what’s going on with Bitcoin and other cryptocurrencies is totally different.

Stephan Livera:

For me. The important point as well is to understand the historical context as well. So I think part of why Bitcoin was designed the way it was is that it is that it is there to resist centralized ownership and storage. And so I think that was potentially what was the fate that befell, you know, some of the earlier predecessor ideas. And so that is in some sense why it was designed in this way, because it’s there to resist the centralized custodianship.

Peter Schiff:

That was, to me, that was the original appeal of Bitcoin was that since the government was so cracking down on the banking system with all of the AML and know your customer requirements, and I know those requirements because I operate in that realm in financial services and in banking and the governments basically know everything that we’re doing and the idea that, Hey, here’s a way to transact anonymously using Bitcoin. And so then it almost became, Oh, okay. So this is a way that I can have a medium of exchange where I can engage in transactions that the government doesn’t know about. And so immediately you know, anybody who’s doing something that they don’t want the government to know about. And of course, a lot of that was illegal activity kind of looked at Bitcoin as a way to launder money. And Hey, I can do my transactions through Bitcoin.

Peter Schiff:

And even if I lose a little bit, maybe it goes down 20 or 30%. That’s not that high a cost to pay to launder money. I’m going to be doing this, you know, under the microscope. And I think that that’s where a lot of the initial demand came from was from that illicit activity. But, you know, then as Bitcoin tried to go mainstream and tried to go to wall street and appeal to that type of crowd, they really had to distance themselves from that original use case. And other coins came up to say, Oh, we’re the private coins because now, you know, people were saying, Hey, Bitcoin, isn’t private. Everybody knows what’s happening. I mean, there’s a digital signature. I mean, you’d be a fool to use Bitcoin to commit a crime because it’s easy to track you down. They can find you.

Peter Schiff:

And a lot of people have been busted because they dealt, using Bitcoin that, you know, it’s easier. So I think that that initial appeal was something that it had going for it, but it’s long since lost that. It’s you know, in its attempt to say that it’s well, it’s, you know, it’s a mainstream you know a currency. And once you start putting all those transaction costs on top of Bitcoin, I mean, once you find, Oh, you want to open up an account, you need a passport, you need utility bill, everything you need to do. We need all these questions that you start holding all the financial institutions liable for any crimes or even potential crimes where they don’t catch a red flag. And now all of a sudden you have all these compliance and regulatory burdens that are gonna overwhelm the industry.

Peter Schiff:

And that of course, you know, the other problem with Bitcoin is how expensive it is. I mean, if people actually try to use it as a medium of exchange, the amount of energy that it would consume because of all those transactions that had to be validated would run the cost of using it through the roof. I mean, right now, like if I wanted to send you a million dollars worth of Bitcoin, okay. I mean, I could do it for a low cost. If I wanted to go out and buy a cup of coffee costs are a lot higher than using my credit card to buy a $5 cup of coffee. And of course it takes a lot longer for transaction to actually settle that the credit card will settle it instantaneously. But if people actually started using Bitcoin more often, that will just run up the cost, the validating, and it would just be particularly expensive to actually use it as a medium of exchange. And even if we could afford, I mean, you know, all the energy would be going to Bitcoin, there’d be nothing leftover for anything.

Stephan Livera:

Well, right. So there’s let me respond to a few of those points. So I think firstly, the point around privacy, I think essentially that is coming down to people who are basically using Bitcoin the wrong way. There are ways to use it more privately. It just requires a little bit more work to use the right private techniques or to acquire it without KYC. Now I’m in a similar boat to you in terms of being an austro-libertarian. I obviously want to see less government regulation and, you know, I want the government to be smaller. But I also recognize that there are almost two different spheres to Bitcoin, right? So there is that whole gray market or dark market black market world where people are transacting without KYC and using privacy techniques. But then on the other hand, there is also the regulated white market world, which obviously the AML/KYC and so on.

Stephan Livera:

And so there are many people who treat it more like it’s a kind of reserve asset and we’re seeing more companies that are starting to try and and you could argue and I would say, yeah, you’re probably right. You could argue that look, some of that is again, speculative demand, but would you not say that over time, we’re seeing more and more people come around to that idea of perhaps speculating even with a small percentage of Bitcoin. So I guess bringing it back to my earlier point, it’s that I think the some of the Bitcoin skeptics are almost imposing this impossibly high standard that it should be stable and well-accepted all from the get go. And unfortunately there is no central bank or government telling people to use Bitcoin. There’s no central bank stabilizing the price of Bitcoin. And so it necessarily will be volatile in these early stages. What would you say to that?

Peter Schiff:

Well there’s no precedent for that, because you know, money is either a commodity that is known and has been used right. A long time before it became accepted as money, or you have had the government. The only reason that a Fiat currency works is because it has all the government behind it, right. Without that it wouldn’t work. And in fact, even with that, it doesn’t work for long. I mean, there hasn’t been a Fiat currency that has survived. You know, they’ve all crashed. I mean, it’s not like this is the first time we’ve experimented with it. I mean, even, you know, the United States when we were established on a gold standard and, you know, 1790, whatever, they, you know, we went on the gold standard or ratified the constitution. The founding fathers were very familiar with Fiat currencies of the past that had collapsed and become worthless.

Peter Schiff:

So Fiat currency has been around for a while and they’ve been collapsing in value. There’s been hyperinflations for hundreds of years. So but the only way they’ve been able to work is if the government is there. So what Bitcoin is trying to do is create a Fiat currency digitally and hope it’s going to succeed seed without any of the government support, backing it up. And I just think that is a very, very, a risky bet for people to make, because there’s no precedent in it ever working. And that it will. And when you talk about that the fact that there’s, you know, all these institutions that are using it as a reserve asset, look, there are no central banks that are holding Bitcoin and counting it as a reserve. As far as investors, major investors, I mean, I’ve heard of, you know, dot Paul Tudor Jones is a hedge fund guy who apparently stuck his toe in the Bitcoin water, how long he’s going to leave it there.

Peter Schiff:

I have no idea. And for all I know he’s already gotten out. I mean, I don’t really know, but I mean, he’s an outlier. It’s not like you have a lot of funds. I mean, they’re barely buying gold at this point. I mean, they’re just starting to Warren Buffett. Finally, after all these years bought a gold stock and now, you know, I read there’s a big endowment or a pension fund from a government that’s going to go 5% into gold. So they’re finally starting to move into gold. I mean, I think it’s a big stretch for some of these mainstream investors to go into Bitcoin. I mean, I don’t see it happening. I still think that the height of the Bitcoin popularity was in 2017. That’s when the price ran up to $20,000. And that’s when you had a lot of companies that were coming out with the gimmicks of, Hey, we’re going to accept Bitcoin.

Peter Schiff:

I mean, mine was one of them Schiff Gold. We were one of the first to jump on that bandwagon by partnering up with BitPay and trying to say, Hey, if you’ve got some Bitcoin, spend it over here, you know, buy some gold with it. And we partnered with BitPay. And back then there were a lot of companies that were signing up, all that died down. I mean, nobody’s doing that anymore. I never hear companies making an announcement. So now our gold I mean, I think that was the height. And in fact, if you look at all the Google search trends, Bitcoin is still not as popular as it was in 2017. So I already think it’s died out. I think, you know the pyramid scheme peaked, but you know, the price, you still have people that are holding and hoping, and you have a lot of people that have a lot of Bitcoin that they want to sell.

Peter Schiff:

And so those people have a vested interest in maintaining this momentum and trying to get more people to buy into this pipe dream because they need to maintain that market because they need to get out because the minute people stop thinking Bitcoin is going to go to the moon. And that’s why every time people talk about Bitcoin and where it’s going to go 50,000, by the end of the year, a hundred thousand. I mean, everybody’s got these pie in the sky price forecasts. I mean, nobody comes out from the Bitcoin community and says, yeah, I think you’ll get a 10% return in Bitcoin this year. I mean, nobody says anything like that because nobody is going to hold it. If they only think they can get 10%, the reason you have to believe you’re going to hit a home run is because the odds of striking out are so high. So everybody is only in it because they think it’s going to go to a million. But the minute peoples don’t think that anymore, then the whole scheme collapses. So the people that own a lot of these Bitcoin, you know, and they’ve got hundreds of millions of dollars worth of these things, they have to keep this hype going, or it’s all worthless cause they won’t be able to sell.

Stephan Livera:

Right. So a few points there. In terms of the 2017 with being the peak, I think that’s an interesting point, but also at the same time, we should recognize now that we are actually seeing more volume than 2017 in certain circumstances in terms of.

Peter Schiff:

Maybe in trading, although I don’t even know how much of that is legitimate or how much of it is wash sales and you know, people just trading back and forth among themselves, but where you don’t see more Bitcoin is in the real world, you don’t see more people using it as a medium of exchange, right. As a payment mechanism, that’s where it’s not growing. And that’s what it was supposed to be. It was supposed to be an alternative for the dollar or the Euro. And then what happened is when nobody was using it as, as digital currency, that’s when they reinvented it as visual goal, they were saying, well, no, one’s actually going to use it. Right. It’s just going to be like gold. They’re just going to hold it. Right. So they had to reinvent it when it wasn’t doing what it was originally promised to do. But you know, this whole idea that it’s digital gold, it’s not digital gold, right? It’s no more digital gold than a digital house is a house. Yeah. I mean I can make, I could design a digital house on my computer, but I can’t live in it. It doesn’t provide any shelter. And so I don’t care if you make Bitcoin look like a gold coin and you put a B on it, it doesn’t make it real gold any more than my digital house can provide actual shelter.

Stephan Livera:

So let me try and counter that in this way. So let me just finish that point before. So around the 2017 versus now we are seeing additional, we seeing higher volume in certain continents in terms of local Bitcoin trading. So things like on platforms like local Bitcoins and Paxful we’re seeing more volume in places like Africa, South America and so on. And then the other point I wanted to touch on relating to how you’re saying, Oh, everyone’s always pumping the price of Bitcoin. And so on. It is I was chatting with my friend Saifedean who, you know and he mentioned that if you run the numbers in terms of Cumulative Annualized Growth Rate for the first nine years of Bitcoin’s life up until now, even it has hit a 200% CAGR right. As in 200%, basically in other words, it has tripled every year. So it’s factually true to say that. And I think, yeah,

Peter Schiff:

Tripled every year, since its peak in 2017, it’s roughly half of the price it was back then. So,

Stephan Livera:

Oh, I think what he’s saying is if you run the numbers from the start to now, right. The annualized growth rate. So if you’re sort of zooming out and so I think he was saying in this example, it would have to be around 17,000 to maintain it at the end of this year to maintain that 200% CAGR rate. But I think more broadly, I think the point really is, and probably this is where most Bitcoiners would disagree with you is that it’s just going to be a growth over time. So of course it’s not going to be directly used in day to day trade because people, and obviously people, some people do use it in day to day trade. But I think the way we would think about that is more like it’s just going to grow through these phases and if you zoom out,

Peter Schiff:

But how do you know it’s going to grow? What if it doesn’t grow? I mean, what do you base it on other than hope?

Stephan Livera:

So let me, here’s how I would answer that. So I would say Bitcoin achieved what no human institution could do. And what is that, that we’re talking about? Digital scarcity fundamentally, it’s the ability to send it anywhere and not be blocked by a government because I think, and this is fundamentally where probably a kind of Bitcoin versus gold disagreement lies, which is that gold tends to be stored in vaults and it relies on custodians. And so in that sense, it presents more of a political risk because government can go and

Peter Schiff:

Well, I think it’s less of a risk in that. I can have a physical gold coin in my hand, right. That I can physically hand to somebody and the government is not going to know about that transaction. You know, I would agree that, you know, they could go to banks or other institutions that may be storing it, but they really can’t go to the individual who has gold in his possession and, and monitor everything they do with the actual coins. Whereas if I have Bitcoin and I have to transfer it using my computer, that is going to be much easier for the government to you know, interfere or get a record of that transfer. And they’re already, you know, we have a bank, I have an offshore bank. And from the very beginning, I mean, even though I wasn’t into Bitcoin from you know, I didn’t think it was going to work.

Peter Schiff:

I really wanted to provide banking services to people in the Bitcoin community. I thought this would be great. I mean I would love to bank Bitcoin people, right? Cause I would want there the banking fees, but I couldn’t do it. And the reason I couldn’t do it was because I couldn’t be a bank and touch that business with a 10 foot pole because I was going to get shut down. Nobody would deal with me, no counterparty banks. I mean, basically in order for me to exist, I had to prove that I won’t allow anybody to deal with me that even remotely looks like they have anything to do with cryptocurrency because the government has made it so risky and so dangerous based on the fines and the penalties having to do with money laundering. Even if the people who are using a cryptocurrency are completely legitimate.

Peter Schiff:

They’re not laundering any money. They’re not involved in narcotics or terrorism or even tax evasion. Totally legit. It’s just the fact that they’re using it raises the red flags to raise the possibility that they may be involved in these activities. And that’s all it takes to meet, to make sure that I can’t get involved. And I think that even if Bitcoin could succeed and I don’t think it will, but I think if it did succeed on a wide scale of kind of, you know, circulating as a medium of exchange or somehow, and to the point where it actually threatened the dollar or the Euro or the yen or any of these currencies, the governments would kill it. They would just punish it as contraband. They would have penalties five years in jail, 10 years in jail, 20 years in jail for anybody caught with cryptocurrency, anybody using cryptocurrency.

Peter Schiff:

And the minute they did that, then you wouldn’t be able to use it. I mean, it would be completely in the realm of the criminal.Who was risking going to jail anyway, who was committing other crimes. And so you know, committing an additional crime of having Bitcoin may not a concern them, but if you’re a law abiding guy, you’re not going to want to go to jail for five, 10, 20 years for being caught with contraband. So I think if it doesn’t die on its own, it’ll be a victim of its own success and that the government will kill it.

Stephan Livera:

So I think the problem, I would see with that kind of argument is that Bitcoin is a global phenomenon and governments won’t be able to effectively stop it everywhere. And so I think the other more important point I would want to make is that things take time for society to accept them. And I see it more like as more and more people adopt Bitcoin. And I think it’s coming because it is super scarce that they will essentially, it takes time for like, and you probably have some experience even in this and looking at the way, you know, maybe a gold ETF was hard to do earlier on, and then it eventually happened. And so I think it, or like maybe the first person who maybe spoke about hand-washing right. So this is like a medical example, but he wasn’t exactly a popular guy because they, it was seen as like doctors were a good people and therefore it was, you know, because they were in a different paradigm, and so I think it just takes time for people to change their minds on some of these things.

Stephan Livera:

And we’re seeing some of the US banking regulators come around to this idea. The OCC recently came out saying, you know, banks are enabled to custody, Bitcoin for their customers. So wouldn’t you say, this is more just a changing of the paradigm and a changing of the way people think. So I think it eventually gets to the point where it’s like being a Bitcoin user is like being a known internet user. Right. It’s just going to become part of the infrastructure that society uses. It’s just going to take time for that mental shift. What would you say to that?

Peter Schiff:

Well, look, I think that’s wild speculation at best. I mean, I think more, more realistically it’s people, that’s what people hope will happen because they have such a vested interest in it happening. You know, sometimes when, you know, you have such a vested interest in something that it makes it really hard to see things clearly or objectively. And so, you know, when you have so many people that have bet their whole lives really on that happening, they really ignore any possibility that it won’t. But I think I would assign a very low probability to something like that happening. I mean, yes. Is Bitcoin scarce in a sense that there’s 21 million Bitcoin. Sure. But there’s an infinite number of cryptocurrencies that could be created that can do exactly what Bitcoin could do, which is pretty much nothing. Right. I mean, gold is scarce.

Peter Schiff:

Yes. There are other metals in the world, but they can’t do exactly what gold does cause they don’t have the properties that gold has. So the fact that Bitcoin is scarce doesn’t necessarily mean anything, right? I mean, I could come up with a Peter Schiff you know original artwork and, you know, it could be scarce. I can make, you know, 10 of them or whatever, but if they may not be have any value, just because they’re scares, if they stink and nobody really wants them. I mean, just being scarce, does it make it valuable? I mean, gold is valuable. Not because it’s scarce. I mean, gold is expensive because it’s scarce and because it’s scarce, it’s it’s good money. But it’s value comes from its inherent properties that it could be used for that make people value it because of all the things that you could do with it, the fact that it’s so scarce means that it’s going to be very expensive.

Peter Schiff:

But you can’t just say something is valuable simply because of scarce, right? No, that’s not the case. And so I don’t, I don’t see the this argument that Bitcoin is so scarce is the reason it’s going to become so valuable and how it’s going to succeed. But what I do think could happen, and this is where I would agree with you is it’s possible more people may want to make this bet. I mean, especially in the environment of central bank, money printing and rising inflation and gold price going up, people might think, well, Bitcoin is also a store of value and it’s another safe haven, they’re wrong. But if in the short run, more people are going to bet that that’s going to happen. Then the price could go up. But you know, I think what you really have to ask yourself, as somebody that has a lot of money in Bitcoin is why hasn’t it already happened? Why is it still just 11,600? I mean, given all the things that have happened with the money printing and the QE and the 0% rates and given the environment that we’ve seen with $2,000 gold. I mean, if I had told you a couple of years ago, when gold was 1200, 1300, that in 2020 gold would be at 2000 and I asked you to give me a prediction for Bitcoin. There’s no way you would have said any, you know, that it would still be below 20,000. Right.

Stephan Livera:

Well, I think this is just a, it’s a cycle thing, right? So I would say the other point is, remember Bitcoin earlier this year, just in March, was around what three or 4,000. And now it’s sitting at 11,000. So I think it’s not entirely a fair.

Peter Schiff:

Well that’s because it crashed to 3000 from 10,000 in like a day. So just because it crashed and recovered. Now, you can’t go back and say, look, Bitcoin has tripled. Yes. But before it tripled that went down 70%. So if you take out the crash and take out the recovery, it hasn’t gone anywhere. In fact, Bitcoin, even after it got up to 20,000, in 2017, after it crashed below 4,000, it then rallied back up to about 14,000 in 2019. It’s not even back up to that level yet. Forget about getting back to the 2017 high. It hasn’t even gotten back to that 2019 high, so I see a series of lower highs. I think, the market is peaked out and I think the more likely direction for Bitcoin is down. And I see nothing but hope and optimism out there among the Bitcoin hodlers, I mean, this is a bear market that is falling a slope of hope. Everybody expects a huge rally and it never materializes and nobody has been shaken out. Nobody is scared. Everybody has complete conviction that they’re right. To me that’s a very dangerous market to be in on the long side.

Stephan Livera:

Okay. So look let’s talk a little bit about, more about the political risks. I think we have to acknowledge that with gold a 6102 event occurred. And so I guess in my mind, I’m trying to think through, well, let me understand from your view, what’s the scenario then that you believe gold would reemerge or reassert itself as money and the government wouldn’t go back and stop it again?

Peter Schiff:

Well, the government doesn’t want gold to be money, right? So they will resist it because gold takes the power away from government and puts it back with the people. Gold is a discipline, on government. I mean, that’s why the US founding fathers put us on a gold standard. They didn’t trust government and rightly so, they didn’t want to empower government with the ability to create paper, money. They wanted the discipline of a gold standard and all the benefits that comes from limited government and sound money. The only reason that I believe that gold is going to be re-monetized is because I don’t believe that there will be any other way for governments to reestablish faith in the monetary system once it’s lost. So if you go back to the origin of the current monetary system, where everybody has Fiat currency, and it’s all backed by dollars and to a lesser extent, Euros and Yen and other currencies Aussie dollars are a little bit, you know, Swiss Francs.

Peter Schiff:

But the way all this started was before that happened, all the world’s central banks, including the United States, everybody backed their currency with gold, every central bank had gold to back up their currency. And after the second world war was over, you know, in the Bretton Woods agreement, the United States was the most powerful economy in the world. We had almost all the gold. We made everything, all the products were made in America, all the industries that are now in countries like Japan didn’t exist. We made all the consumer electronics. We made all the automobiles. If you wanted anything that was any good, you had to buy it in America. And America was the world’s biggest creditor nation. Everybody owed us money, right? Because we had wealth all around the world. So we were number one by far, and we had all the gold and the dollar, the federal reserve note was backed by gold.

Peter Schiff:

And so we got a deal with all the central banks. And we said, look, instead of backing your currency with gold, just back it with the dollar, because that’s as good as gold because our currency is fully redeemable in gold. You have $35 whenever you want, just ask us, and we’ll give you an ounce of gold, right? So instead of backing your currency by gold, backed by the dollar now, why would they do that? Well, if you have gold, you’re getting no interest on it and you have to store it. We’ll store it for you at the federal reserve. We won’t charge you anything. You could take those dollars and loan them to us in the form of us treasuries, right? Risk-Free and you can get a five or 6% rate of interest, which is better than getting no interest on your gold. So you can have the best of both worlds.

Peter Schiff:

You can back your currency by gold, but earn interest by having us treasury. So we kind of conned the world into moving by going off the gold standard onto a dollar standard, but they still were on the gold standard, you know, because the dollar was backed by gold. So they were, it was, it was still, their currencies were still backed by gold only through the dollar. Well, once we got the world to sign on to this, we started to run deficits that we started to print more dollars than we actually had gold. And so we didn’t have enough gold to make good are IOUs. And when foreign creditors started to figure this out, they started coming back for their goal. Hey, here’s my $35. Give me the gold. And then we started losing our gold. And so rather than doing the honest thing, we defaulted, we basically said, you know what?

Peter Schiff:

We’re not going to give you any gold for your dollars. You know, you could hold onto the dollars if you want, but you’re getting nothing for them. They’re not backed by anything anymore. And so then the dollar crashed really. I mean, it went down about 70% against the Deutsche Mark, the end. This was Frank, the price of inaudible from $35 to 800, you know, everything would got more expensive because the dollar lost a lot of value. Oil went up tenfold during the seventies. But then the, you know, with Reagan came in, Volcker, came in and, you know, the dollar stabilized, even though it was no longer backed by anything, it kinda got stable. And we were paying very high interest rates. We had the highest interest rates in the world. And so the, the dollar kind of found a bottom. And so the world stayed on that system.

Peter Schiff:

And you know, it’s been on it ever since, but now we’re at a point where you can’t get any interest anymore on your dollars. The interest rates are zero. We’re the world’s biggest debtor nation. We have the world’s biggest trade deficits. You know, we’re, we’re a shadow of what we used to be. And now with COVID, you know, we’re running three, $4 trillion deficits, QE infinity I think that the dollar is going to crash and it will no longer be an acceptable reserve to back up other currencies. And as people lose confidence in the dollar, they’re also gonna to lose confidence in other fiat currencies. Now, once confidence is lost in a Fiat currency, how do you restore it? You know what’s happened in like various, let’s say South American countries is they’ll eventually inaudible it to the dollar.

Peter Schiff:

Like if your currency is losing all this value, alright, we’re going to peg it to the dollar. And this is going to, this is going to stabilize it. But when the dollar crashes and people start losing confidence in the whole system, the only thing that I think will instill confidence would be to go back to gold, to be able to tell the public, Hey, our currency has value now because it’s tied to gold and the gold is going to bring back the stability that you don’t have. And so I think it’s the government isn’t going to want to go back to a gold standard. I think it’s going to be the only thing that will work to stabilize the value of their careers. You know, once you destroy the value of the dollar, that’s backing it up and you say, what’s backing the Euro. What’s back in the, well, nothing. Alright, well why should I hold onto it?

Stephan Livera:

So even if we grant that what’s to stop the same political centralization occurring in the future, I mean, there was, there was the 6102 in the past. Governments have devalued, they have seized inaudible gold, and then devaluated what’s to stop anything like that, just happening again. Are we not just doomed to go through this cycle? Why is this time any different and don’t, we need a technological solution to the political problems of government?

Peter Schiff:

Well, I mean, I don’t see how Bitcoin would solve those problems. I think it creates a whole different set of problems. You know, are governments gonna start confiscating gold again, I don’t know. I mean, if they’re going to confiscate gold and you know, they can confiscate other forms of property, they can confiscate stocks, they can confiscate bonds, they can confiscate real estate. I mean, gold is actually harder to confiscate than those other assets, because it’s harder to find it. You know, the government knows exactly where your stocks are, you know, it can find your real estate. I mean, you can’t hide it. But you know, they don’t know where your gold is. So I think it’s harder. And even if some governments do they all won’t. So look, you know, we’ve had corrupt governments in the past.

Peter Schiff:

I think the only difference is they have more technology now, but then so do we, the public has more technology too. Look, I think that what makes sense to me is what’s worked in the past, will work in the future. Gold has worked in the past, even though governments have found ways to get around it over time. Every time there is a monetary crash, they can reset by returning to sound money. And I know, I think it’s gonna happen again and yeah. Well, the cycle repeat? Sure. Even if we go back on a gold standard, sometime in the next 10 years, who’s the say 50 or a hundred years from now, we won’t make the same mistake of going off it again. I mean, we probably will. I mean, this is probably not the last time this is going to happen.

Peter Schiff:

History tends to repeat often and, you know, the public never seems to get any smarter. They repeat the same mistake over and over again, just sometimes several generations go by and then the people making the mistakes never lived through the, the earlier mistakes. And, you know, so they, you know, you don’t learn the lessons of history and so you’re condemned to repeat them. But I think what the outcome that I’m betting on is a much higher probability than what you’re betting on that the world is just going to jump from paper, money to cryptocurrencies, and they’re going to choose Bitcoin as opposed to some other cryptocurrency.

Stephan Livera:

I see. So in your mind that does it make a difference then that Bitcoin has a technology called multisignature? So for example, you could store your private keys, which are now, which enable you to self custody your Bitcoin. You can store that across multiple jurisdictions. And this is in fact, a technique used by many of the large Bitcoin custodians, and it can also be used by individuals also. So in your mind, does that present an additional tool in the tool set of the individual seeking to defend their value?

Peter Schiff:

Well, you defending your Bitcoin is different from defending the value of your Bitcoin. So you can have all sorts of security systems to make sure that nobody steals my Bitcoin or that right, but that doesn’t mean that those Bitcoin are gonna have any value just that they’re not going to get stolen. And in fact, once they don’t have any value, no one’s going to want to steal them. So it’s not even gonna matter, but you know, the point that you’re making about Bitcoin, but that’s going to be true of any other cryptocurrency that’s using similar technology. Bitcoin is not unique. It doesn’t have a monopoly on anything. There’s nothing proprietary about it. The only thing that Bitcoin has going for it is that it was the first cryptocurrency and therefore it has more infrastructure built around it. More people recognize it, but it doesn’t have any kind of guarantee that that first mover advantage means that it’s going to, you know, maintain that advantage for the rest of the time. You know, things have a tendency to change and there’s competition and things evolve and preferences and tastes. I mean, I look at it more as a fad. I mean, for somebody to come out and say that, Hey, Bitcoin has had, has done really well the past 10 years, and then to make extrapolation on what it’s going to do in 20 years or 50 years or a hundred years, I think is ridiculous.

Stephan Livera:

Okay. So I think probably the main difference in our views there is that we see it like Bitcoin is just a growing network effect. So more and more people are using it. There are more exchanges, there are more merchants, there are. And also there’s a lot of development and tooling around Bitcoin that just simply isn’t available in the altcoins. And if you were to look at say the actual liquidity on the exchanges, it’s something like, you know, a very, very high percentage of the volume done on the exchanges is with a Bitcoin pair, as opposed to one of the altcoin pairs. And I think that’s probably the main difference there that we see this, like it’s a growing monetary network effect, but the important part is kind of the scarcity meshed with the technology components that give it something additional, something that gold just couldn’t do.

Peter Schiff:

You know, people ask me, you know, Hey, is there anything that could happen to Bitcoin that would change my mind? And a lot of it is related to price, right? Well, at what price will you change your mind? I always say, well, price doesn’t have anything to do with it. I mean, if the price just goes up all else being equal, I’m not going to change my opinion. You know, if just because a bubble gets bigger, it doesn’t mean that I no longer believe that it’s a bubble, but the question I think is more important that I can ask you, or you can ask yourself is okay, what do you have to see happen in Bitcoin for you to give up on that view for you to realize, you know, what, it’s not going to work out, right. It’s not going to be what I thought it was going to be.

Peter Schiff:

So what metrics are you potentially looking for where that would be your sell signal that says, you know, what, what I thought was going to happen is now not likely to happen. And so I’m going to get out. Is there, is there any set of circumstances at this point, or that have you thought about, you know, what is your plan B in case it doesn’t work other than just riding it to zero? Because I know some people have told me, look, I’m never going to sell. Even if it goes to zero, I’m just gonna stick with it the whole way down. I mean, maybe that’s your plan, but if it’s not, is there something else that you’re looking at that might cause you to say, okay, I’m gonna you know, I’m going to cut my losses or take my profits and I’m gone.

Stephan Livera:

Yeah. That’s an interesting question. I don’t know That I have any specific kind of metrics that I could give, but I would say if it appeared to me that let’s say there were some unpatchable flaw in the code that got discovered somehow, and it couldn’t be rolled back, it couldn’t be fixed. Or if, maybe let’s say the, you know, it went to extreme low price and then stayed there for you know, 10 years time,

Peter Schiff:

Of course, by then. I mean, by then, there’s nothing left. Right. So, I mean, what would be an extreme, low price?

Stephan Livera:

I’m not really sure. I guess. I don’t have, I guess I don’t have like a set number in my mind in terms of, Oh, if it goes below this number for this long, I would sort of just assess more wholistically. Do I think somehow that I think longer term Bitcoins decentralization won’t win out and in some way that maybe it got overly centralized or captured in some way. But in my mind it seems more like it’s going the other way. It’s increasingly decentralizing. There’s more people like if we zoom out, obviously I think we see it moves in waves. And so I think we’re sort of entering that next wave. So for me, I see it like that.

Peter Schiff:

I think if it were still making new highs you could have an argument, but I think at this point until Bitcoin actually makes a new high right above 20,000 it’s hard to get around the fact that 20,000 may have been the ultimate high, right. Cause at this point it’s certainly possible that 20,000 was the high price that we’ll ever see in Bitcoin. That could be true. And you can’t say that’s not true until we, until we eclipse it. So at this point it’s possible. And I think you should have some type of strategy that might acknowledge that that might be the case so that you just don’t hold onto it for the next 10 years. And, you know, even though the price has collapsed, I mean, I think some of the traders that have gotten in, like, let’s say, I mentioned Paul Tudor Jones, and I’m not really sure what price Tudor Jones paid for his Bitcoin.

Peter Schiff:

But I think he got it, you know, upwards, you know, around, let’s say around the $10,000, maybe a little less, I don’t, you know, but he is a very, very good trader. And I think that’s why he got into Bitcoin because he sensed the trading opportunity. Not because he had any kind of, you know, real longterm commitment. He just thought he could make some money buying it. And I know that he’s going to have some kind of threshold where if the price drops he’s out, right, and he’s not going to ride this thing down, like you would wait 10 years, he’s going to look for an opportunity and cut his losses. And I think there’s going to be some other people that are going to do that, you know, once this thing, once this thing breaks. And and then, you know, you get into a dynamic where you have a lot of people wanting to get out, you know, not, you know, you don’t have all these new buyers wanting to get in. You got people that are in, that are looking for a way out.

Stephan Livera:

So Peter, could I not say, well, imagine if we were having this conversation in 2015 or 2016 and you know, Mt. Gox, bubble or whatever had gone to 1200 in, let’s say late 2013. And at that time we could have been speaking in the price would have been in the few hundred dollars, maybe $400 or something like that. Couldn’t you say the same thing to me then? And I would then be saying, Oh, well, see, I think this is a longer term trend, which is the same.

Peter Schiff:

It’s not just that I could have been saying the same thing. I was saying the same thing. So yeah. I mean,

Stephan Livera:

But then if that was the case, it did go above that though. It went to 20,000.

Peter Schiff:

It did. It did, right? Yes. But we don’t know that it’s going to do it again. You’re absolutely right, right after it got to a thousand and crapped out to 200, it looked like that might’ve been it. But I do remember that once it took out a thousand and I was like, crap, you know, this thing may really move. I mean, I actually predicted before it even hit 5,000 that I thought it would hit 20,000. I said that on television, I thought, look, this thing has a lot of momentum now in the chart pattern, I still didn’t think it was any more legitimate than I thought. And what are the reasons that I didn’t buy it? You know? And even after, you know, it was trading around that 200, 300, $400 for a while. I remember looking at the chart back then and thinking that it really, it could run.

Peter Schiff:

And I remember a friend of mine who is a hedge fund guy who told me he bought a bunch of it and he ended up crazy enough. he didn’t even make money. I don’t know how he didn’t make money. Although I have some other hedge fund guys that did make money, they got in, but when this guy bought it, I was like, shit. You know, that to me was like, you know, this guy, I mean, maybe, maybe, maybe this thing’s going to go up. I just couldn’t get my arms around buying something for two or $300 that I didn’t want to buy a 10 or 20 bucks. I was like, I mean, I was going to kill myself. I put some money in this and, you know, and of course to make it meaningful, I would have had to put real money into it.

Peter Schiff:

I mean, what difference would it make? I mean, I couldn’t put a thousand dollars in. I mean, it wouldn’t matter. So I would have to put a decent amount of money into it. And I was like, do I really want to throw away this money? And so I didn’t do it. And obviously it would have been a good trade, but my gut feeling is had, I bought a bunch of it. I would have got out of it a long time ago. I mean, but you know, there’s no way to know for sure because I didn’t do it. And I could always think of scenarios that might’ve happened, but, you know, I could have, it’s possible that I had loaded up on it. My mind could be just as clouded. I mean, I’ve gotten into some trades in my history where I bought stocks that went way up and then I got so optimistic I didn’t sell.

Peter Schiff:

And then they collapsed, you know, it’s happened to everybody. You know you know, you kind of lose sense of reality because she’d get blinded by the greed of the position that you’ve fallen in love with. So who’s to say that that couldn’t have happened to me if I got into Bitcoin, you don’t know. But I stayed out of it the whole time. And I know there are other people that try to say, Oh, my judgment is clouded because I’m in the gold business. And look I am in the gold business. The money I make from Schiff gold is a very, very small percentage of my annual income. So gold is a small part of what I do, even though a lot of people know me from gold. I am a money manager and you know, over 90% of my income comes from fees on managing accounts, managing separate accounts, managing mutual funds.

Peter Schiff:

That’s most of my living. And so, you know. If I really believed that Bitcoin was the new gold, I would have no problem buying it personally, which I haven’t done. I would have no problem telling other people to buy it, but I don’t believe that I, you know and, and even, even when it was cheaper, I do remember telling people, look, I think the price of Bitcoin could go up. I just don’t know how long it’s gonna to stay up. And eventually it’s going to crash. And so I don’t, I don’t advise people to get into a bubble, even if I think the bubble might get bigger. Now, if they want to do that on their own, that’s on them. Right? So if somebody says, yeah, Peter says it’s not gonna work, but Hey, there could be a lot of people who think it’s going to work and I can make a lot of money, you know, in the meantime they could do that, but at least they don’t have me to blame. You know, I don’t want someone to come back and say, Peter, you told me to buy Bitcoin and, and, you know, look at all the money I lost. So it’s like, I didn’t tell anyone to buy it. You know, you want to buy it, you can buy it, but you better know when to sell it. You better have some kind of game plan for when the music stops, you know, or you gonna get out before the music stops. Otherwise you’re not going to get out.

Stephan Livera:

Is it a demographic thing as well? And I’ve seen some of the commentary on Twitter, you were talking earlier, Spencer, your son has some Bitcoin. Is it a demographic thing?

Peter Schiff:

Well, look, yeah, look, my son actually bought some Bitcoin on the way up before, but you know, he’s young now. He just turned 18. So he was younger in 2017, but he ended up opening up an account for Bitcoin. That’s a lot of the kids in his class, you know, in high school, we’re opening up, were doing it. And so Spencer bought some, I think at around four or 5,000, 6,000. And he sold out at 19,000. Now he didn’t have a lot of money in it, but you know, he tripled his money. He made a decent trade and he got out and then he never bought any back until just recently when it got above 10,000, I think he got in, you know, four or 500 bucks worth at around 10,000. Right. He got in and I think he bought some more recently. And he tweeted about it on his Twitter account and he’s, you know, he’s got over 15,000 followers and I, of course I helped them get those followers by pointing him out.

Peter Schiff:

But he puts out a lot of really good tweets. I mean, he gets a lot more likes a lot of times and shares on his tweets that I get on mine and I’ve got, you know, 280,000 followers. So he has a very, very good engagement rate. So I think when he made some positive tweets about Bitcoin, people started, you know, making fun of me, Hey, your son’s buying Bitcoin. So that’s what I said, alright. You know, he just turned 18. You know, you really want to rub it in. Why don’t you give him some Bitcoin as a birthday present? So a few people did it. He ended up getting, I don’t know, six, 700, $800 worth. I’m not sure how much Bitcoin people gave him, but people games a Bitcoin. But look, I think my son just thinks it’s going to go up. You know?

Peter Schiff:

I mean, he sees it and he’s into it. And I think he’s, you know, but I think that taking investment advice from 18 year old Spencer Schiff is not as good as 57 year old Peter Schiff. I got a little bit more experience right? Under my belt. I’ve seen fads come and go. I’ve made a lot of mistakes over my life. I’ve lost a lot of money doing dumb things. And I’m trying to help people avoid the mistakes that I made, but before I had the experience. And so, but sometimes you have to make the mistakes for yourself. Sometimes there’s no better lesson than losing money yourself. And so, as far as I’m concerned, this is gonna be a cheap lesson for Spencer to learn. He’s gonna lose a little bit of money as a young man. And I think that’s good.

Peter Schiff:

And I think a lot of the people out there who are gonna lose money in cryptocurrency, a lot of young people, a lot of teenagers or 20 somethings, it’s better to lose money when you’re in your twenties than when you’re in your fifties. Like me, I don’t want to lose any money anymore. I’m done losing money, right. Because when am I going to make it back? And I have a lot more money to lose. I could lose money in my twenties because I didn’t have much, I got a lot now. So I gotta be more careful about the money. And so, you know, when people say, Oh, the millennials are buying it. Yeah. That’s not a reason to do it. They’re the ones that are, that are, don’t have enough experience to realize what they’re doing. You know, they’re greedy and they’re just buying it.

Peter Schiff:

And they, you know, they don’t know what they’re doing. And and, and it gets reinforced, you know, by, you know, when you get into a bubble early on you think you’re so smart because you’re making money. There’s an old expression. Don’t confuse brains with a bull market. And a lot of people in crypto, they have a lot of money if they got in early, but they weren’t smart. They were lucky. They were lucky to get into a market that turns into a mania. But you know, you confuse the two and you end up losing a lot of money.

Stephan Livera:

Well, I think you’re right that we have to approach the world with some level of humility and you’re right that, you know, certainly there were people who weren’t smart, they were just lucky. But I guess, yeah. So I guess it just turns on what do you think is the most important factor? Whether it’s the, you know, the, the overall kind of idea of digital scarcity versus kind of what you were saying, which is more like having some use other than monetary use. But I want to turn now a little bit more just to generally things that we probably agree on around, obviously you and I are both anti central banking and so on, but I guess the challenge that we are faced in, or the challenge we face right now is that, well they’re gonna do it seems to me, they’re going to keep doing what they can to keep the party going. What do you see over the next, let’s say five to 10 years in terms of central banking and what they’re going to try to do to maintain the system?

Peter Schiff:

Yeah, well, you know, it’s already lasted a lot longer than I first thought, you know, when I was really starting to warn about this leading up to the Oh eight financial crisis, I assume that when that crisis hit that something would have happened sooner than now. So they’ve already been able to kick the can down the road for a long, long time, and maybe they could have done it for a while longer until the road ran through COVID-19. And I think that this detour has probably really, really shortened the amount of time that we have. So I don’t think that we can make it another 10 years. That doesn’t mean we can’t cause we did it, we made it these last 10 years or, but I just think the dollar is very close to a collapse and I don’t see how it can be stopped.

Peter Schiff:

And so I think the world is going to have to return to a gold standard. I don’t know that the US will, I mean, maybe, I mean, if we do the right thing, we’ll be the first to go back to a gold standard. But I have a feeling that we may be the last because we’re probably gonna hold on the dollar standard as long as possible because we have derived the most benefit from it. But I think other nations are gonna jump ship or break ranks and start to save themselves by just abandoning it and going to gold. So I just think you’re gonna see more central banks just buy more gold and you know, you’re going to see more private investors moving money into gold more of the hedge funds, but more importantly pension funds, endowments insurance companies.

Peter Schiff:

I mean, you really haven’t seen this wave. I think it starting, you know, with Warren Buffet. And there were a few guys that came in before Warren Buffet. But you know, at some of the very smart people that are, you know, early on in this trend are, you know, getting into this. But you know, I think this is going to play out very, very quickly. You know, probably especially after this next election, you know, starting 2021 you know, we could really accelerate. I think you’ve gotta look at the dollar you know, we hit today. The dollar index was at a new lows since I think, April of 2018, but we’re still, you know, at a level that is not scary. The dollar index is 92. I think we have a shot of getting down to around 80 even before the end of the year.

Peter Schiff:

But I think once we take out 70 and I think 71 was the low from 2008. So once you really start to see, you know record highs, you know, so with the Aussie, I mean you know, you’re gonna probably see the Australian dollar, you know, back above parity you know, quite a bit above probably, you know, when you get the dollar index down around 70, cause it got up. I remember the last 2008, I think the Aussie dollar got up to about what 1.10 ish, maybe more, I forget what the peak was. But I think once the dollar index moves into uncharted territory, once it makes new all time record lows at all course, the trade weighted dollar is gonna be maybe even weaker because the dollar index is just a, you know, a basket of currencies.

Peter Schiff:

There’s a much broader you know, look at, if you look at a trade way to dollar. But I think once we’re in uncharted territory, you know, this thing could just implode. And you know where I think it’s unfortunate is that a lot of people that are in Bitcoin because they understand this, you know, they’re gonna end up losing as much as, not more as the people who stayed in Fiat, you know they got, you know, off the Titanic, but they got on a lifeboat with a hole in it. So they’re still going down, you know, when they have the opportunity to buy gold or silver and they didn’t do it. So, you know, there are people that are telling me, Hey, Peter, you ought to hedge your bets and at least buy a little bit of Bitcoin just in case you’re wrong.

Peter Schiff:

And look, I mean, there’s some merit to that. I just am so sure that I’m right, that I don’t think I need to buy any Bitcoin. And I have so much gold and gold related stocks that, you know, I’m going to be fine, even if Bitcoin does go way up, I’m still going to be fine because Gold’s going up too. But I think it’s more important that the people who are on Bitcoin, keep it in perspective, keep their risks in perspective and make sure that they’re not only in Bitcoin, that make sure that you have enough gold and silver. That you’ll be okay. Even if your Bitcoin goes to zero.

Stephan Livera:

I think for me, I see it just like, we are likely to just see more of the same from central banks. So they are going to just keep, they’re just going to try to keep the party going for as long as they possibly can. And that just necessitates higher inflation. I think, yeah. But I think we can’t, we won’t necessarily see that straight away, you know, it might just be more of the same, but we might be more asset inflation. It might be more, you know, as people say Japan inaudible of the world.

Peter Schiff:

Yeah.I mean, I agree with you in that they will try to keep the party going as long as they can, but the operative words there is as long as they can, because what I know is that they can’t keep the party going indefinitely. The party is going to end, and it’s probably going to end sooner than anybody thinks. And so that’s how I’m basing my investment case on the fact that the party ends. And what is it like when it ends, who are the winners and who are the losers, right. And I think that if you’re holding, you know, real assets, if your whole goal is silver,if you’ve got assets in the right countries and we buy a lot of foreign stocks in certain countries that I think are gonna end up as net winners, after we have a global reset.

Peter Schiff:

And after we realign currencies and exchange rates in a post us dollar reserve monetary system, there’s gonna be winners and losers. I just think initially the biggest loser is the US now that may change in a couple of generations. I mean, maybe we’ll take advantage of this. And out of the ashes will arise you know, a new America that will get to the top again, you know, look what happened to Germany and Japan. I mean, we kicked the crap out of them and world war two. I mean, look at where these countries were. And then, you know, look what happened 20, 30 years. Look what happened in West Germany. Look what happened in Japan. So, you know, you can come back from a really bad situation. So I think America is going to be in a really bad situation, and hopefully we come back from it, but I think there’s going to be some immediate winners. And I just want to make sure that I am aligned at least financially with the winners. So I win too.

Stephan Livera:

Well, look I think those are probably the key points I was interested to hit with you for any listeners who would like to find you online, where can they can find you?

Peter Schiff:

Well, you know, I’m on the internet. So if you just search my name, but my podcast, which I do my podcasts, the Peter Schiff show podcast, I generally do two episodes a week. Although I’ve done five a week, if things are really moving in the markets that there’s a lot of news, I tend to up the frequency of my podcasts. But I do at least two a week, sometimes three. And you can listen to that at schiffradio.com or on my YouTube channel the Peter Schiff show. So I would suggest that you subscribe on YouTube or go to iTunes or wherever you listen to your podcast or my website, and make sure that you’re looking for my podcasts. And if you haven’t heard them, you can go back and listen to all the archives. Cause I’ve been saying stuff for a long time and I encourage people to listen to the older podcast so they can see a lot of the things that I’ve, you know, that I forecast that have already come true.

Peter Schiff:

A lot of people like to focus on some of the things that haven’t come true yet, but there’s so many more things that have come true. And basically all the puzzle pieces are coming into place. And so you’ve got to understand that I got so much, right, for a reason. It’s not just random luck it’s because like understand the final outcome. And the things that are happening are just things that I said would happen. And they’re all, you know, all these pieces are coming into play and eventually we’ll get the entire picture. And then all the predictions are gonna come true, but you know, you can’t wait for that to happen because by the time that’s happened, it’s too late to do anything, to protect yourself or to profit from it. But my, you know, my websites my asset management company, Euro Pacific asset management.

Peter Schiff:

We do have quite a few accounts for people you know, in Australia, New Zealand, that part of the world. I mean, I manage money. You guys can’t get into my mutual funds yet. I’m working on that, but I can still manage portfolios. So if anybody’s interested in having me managing an account for them, they can go to your pacificfunds.com and contact us there. Their books that I’ve written my most recent book is the real crash. America’s coming bankruptcy, how to save yourself and your country. You can get that book on, on Amazon. A number of the books that I’ve written are there. Some of them are even on my own site shipbooks.com, but most of them are just on Amazon. I haven’t written one in a while. That book I think came out in 2013, but because most of the stuff I’m doing now, I’m just putting it out on my podcast. So I’m not putting it in the book. I’m just like saying it. So you don’t have to wait for a new book to come out. You just have to listen to my podcast.

Stephan Livera:

Excellent. Well, look, thank you very much for joining me today, Peter.

Peter Schiff:

Oh, it’s my pleasure. And yeah, it was like talking to the Australians. You guys always come with Peter. Remember I had an Australian girlfriend one time. She, you know, so that’s how I got used to being called Peter.

Stephan Livera:

Thank you. Bye.

Peter Schiff:

Alright.

Stephan Livera:

Take care.

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