Wall Street Memo earlier today spoke with Peter Schiff, president of Euro Pacific Capital and U.S. Senate candidate in Connecticut. We asked him about his campaign, his Goldfinger-like interest in gold, and if he thinks prices will continue to climb.
Schiff, an economist and frequent commentator on television business programs, faces stiff political competition from Linda McMahon, the former CEO of World Wrestling Entertainment.
Kind of funny if you think about it: a guy who goes on TV constantly to promote fiscal sanity, now battling against the former CEO of an “entertainment” company that represents, in a sense, everything wildly excessive and diseased in the U.S. over the past 10 years.
How is the campaign going so far? “It’s coming along,” he told us. “We have less than three weeks now until the primaries. I have that much time to get my message out there to a wider audience.”
He cites a statistic that his name recognition among Connecticut voters is 36%, whereas McMahon’s is 90%, but of those who know who he is, he is better liked.
“I do a much better job of appealing to Republicans than Linda does, I just have to convince them to vote for me.”
He is planning a money bomb media campaign for the final 10 days, in addition to a direct mail campaign about to begin.
Schiff is well-known for his bullish stance on the yellow metal. We asked him if, given the current high price of gold ($1,188 per ounce spot price as of 12:48 p.m.), he is still confident gold is going up.
“I think so, it has been relatively stable over the last two months. It hasn’t made much progress, but I think it will… It has a lot more to go in this bull market.”
And what happens, we asked, if someone out there takes his advice… buys 50 or 100 ounces of gold, and then the spot price drops down to $600 or $900? Could that happen? And what should an investor do if their gold value plummets?
“I would keep it. Obviously, whenever you buy something, you run the risk that the price goes down. That’s no exception with gold. I don’t think they’ll drop to $600, it doesn’t mean they can’t.”
And if gold did go to $600 per ounce, he added, the Dow could be at 5,000. “You have to decide where you want to be, I wouldn’t have everything in gold.”
“Buy more” if gold goes down to $600 per ounce. He suggested it is more likely that gold could go as low as $1,000 per ounce, but any significant drop would be met with “significant buying from all over the world, especially central banks.”
China, India and Brazil don’t have “nearly enough” gold right now; of China’s $2.5 trillion foreign reserves, only 3 per cent or so may be gold. “They need a lot more gold,” Schiff explained.
What About The Euro?
Does Schiff see a brighter future for the euro, or is he bearish on all paper currency at this point? “I am bullish on the euro, relative to the dollar, I’m bearish on it relative to gold.”
“We had a pretty big dollar rally against the euro, but it seems to have ended… Sixth consecutive week where dollar index [has] lost ground.”
Best Way To Own Gold?
If someone is ready to take Peter Schiff’s advice and guard their portfolio against the decline of the dollar, what’s the best way? Krugerrands in a bank safe deposit vault somewhere? The Perth Mint certificate program?
“Both,” he answered. He explained that the Perth Mint, having physical possession of some gold, and gold stocks are all viable ways to have exposure to the precious metal. His company Euro Pacific Capital recently posted a list of five suggested gold and silver mining stocks to own.
“Diversify gold exposure the way you would diversify anything else.”