Euro Pacific Capital CEO Peter Schiff is out with a bearish call on U.S. equities today, saying that the so-called “Trump Trade” is done and over with.
In fact, Schiff told CNBC that it’s time to dump stocks and buy gold instead:
“Remember that early in the Trump trade, you had a strong dollar. The dollar has surrendered 100 percent of its gains post-Trump’s election,” Schiff told CNBC. Additionally, “year to date the S&P is up, [but when] priced in gold the S&P is actually down.”
So instead of staying in the U.S. stock market, Schiff is urging investors to buy bullion, which “is up more than the Dow and more than the S&P,” with the yellow metal having rallied 11 percent this year. Gold rose to its highest price since the end of April on Friday, thanks largely to the continued drop in the U.S. dollar.
Along with gold, Schiff also says to look beyond U.S. borders for better returns. The fund manager sees emerging market strength continuing throughout the rest of the year, outpacing U.S. stocks by a wide margin.
Since the election of Donald Trump, the stock market has soared. Many Americans believed the new president would turn things around and "make America great again!" Meanwhile, the sale of precious metals has slumped in the US. While sales of gold and silver have soared in places like China and India, Americans have been buying up US stocks.
But is the unbridled optimism warranted? Peter Schiff doesn't think so, and believes now is the time to think like a contrarian, and buy gold and silver.
While everybody is still piling into stocks, Peter believes this is an opportune time to invest in precious metals. Trump's election made a lot of people more optimistic about America's economic future. Gold and silver bullion coin sales at the US Mint have fallen to the lowest level in years, following the general trend in US precious metal markets. But as Peter points out, fundamentally things aren't any different than they were before the election. The precious metals slump in the US doesn't really make sense. The fact that the mainstream is looking the other way is a good indication that it's time to get into gold and silver - before it's too late.
As Peter put it, nothing has changed.
Yes, having Donald Trump president is better than having Hillary Clinton as president. But he is not a get out of jail free card for the economy…The problem is the damage is going to hit on Donald Trump's watch. Barack Obama got out of Dodge just in time."
Obama and the Fed did a great deal of damage to the economy. Trump inherited a mess, and he won't be able to fix it. Will all of the chaos surrounding his administration, it seems increasingly likely he's going to have a hard time pushing his agenda through. And as Peter points out, even if he does, it's not going to be enough. Even with a new administration, the fundamentals underlying the economy haven't changed. The Federal Reserve hasn't changed. The bubbles still exist.
The seemingly never-ending record run for stocks doesn't mean the Trump rally is on solid footing, according to perma bear Peter Schiff.
"I think the trade has unraveled a bit," the Euro Pacific Capital CEO said last week on CNBC's "Futures Now."
Last week, stocks set new all-time highs, as investors shrugged off a weaker-than-expected May jobs report and remained at least partly motivated by elements of President Donald Trump's policy agenda. However, one of Wall Street's most relentlessly bearish voices was unimpressed.
"Remember that early in the Trump trade, you had a strong dollar. The dollar has surrendered 100 percent of its gains post-Trump's election," Schiff told CNBC. Additionally, "year to date the S&P is up, [but when] priced in gold the S&P is actually down."
So instead of staying in the U.S. stock market, Schiff is urging investors to buy bullion, which "is up more than the Dow and more than the S&P," with the yellow metal having rallied 11 percent this year. Gold rose to its highest price since the end of April on Friday, thanks largely to the continued drop in the U.S. dollar.
Meanwhile, Schiff said it's also time to look overseas, as foreign markets are actually outperforming the U.S.
"The U.S. markets have been pretty steady while foreign markets have been much stronger, [with emerging markets also being very strong," he said. "I expect this trend to continue and I think it will accelerate in the second half of the year."
In fact, while the S&P 500 Index is up almost 9 percent this year, Wall Street analysts have started urging investors to look at Europe, also up 9 percent year to date. Emerging markets, however, have soared over 19 percent so far in 2017.
But Schiff says more trouble could be ahead for the markets, especially given the Federal Reserve's next actions. While the CME Fedwatch Tool is predicting an over 90 percent chance that the Fed will hike rates during its meeting next week, Schiff doesn't expect any more hikes after June, which could damage the market.
"Even though the Fed claims to be data-dependent and they hike interest rates [in spite of weaker than anticipated data], I think the markets are starting to look beyond the hikes to the cuts," said Schiff. "I think we're getting ready to start a new easing cycle."
Schiff had previously cast doubt on the number of rate hikes. In February, the ardent Trump critic had pointed out that economic data was weaker than anticipated, blaming the Fed for Trump's election.
What is going to happen next? Can Presidents Trump budget plan save the US, or are we already too far gone? The damage that Obama did, may not be able to be reversed.
"When interest rates go up, the cost of servicing the enormous national debt will skyrocket. You can just forget about this entire budget, its all a bunch of fantasy."
Peter Schiff takes to the sound waves and discusses the recent aliments of the US dollar and how it is destined to crash and burn. We haven't seen anything yet, and much more pain is on the way. Get prepared now, or regret it.
Are the Federal Reserve attempting to bring down our system? What are they doing and why are they doing it? Peter Schiff discusses the recent actions of the FED and what direction they are going to take next.
