Peter Schiff’s Official Gold Blog http://blog.europacmetals.com OFFICIAL Gold Blog for Peter Schiff. His most current thinking about gold and silver. Latest videos, written content, late breaking news, commentaries, etc. Fri, 19 Sep 2014 13:00:07 +0000 en-US hourly 1 Destroying the Dollar a Penny at a Time http://blog.europacmetals.com/2014/09/destroying-the-dollar-a-penny-at-a-time/ http://blog.europacmetals.com/2014/09/destroying-the-dollar-a-penny-at-a-time/#comments Fri, 19 Sep 2014 13:00:07 +0000 http://blog.europacmetals.com/?p=6007 Continue reading ]]> A recent article on the Wall Street Journal’s blog draws attention to the high cost of producing a single penny – 1.6 cents each, to be exact. They blame this unsustainable price on the high cost of zinc, which makes up 97.5% of every American penny. The online publication Quartz ran with this story, giving it a new headline: “It costs 1.6 cents to make one penny because of the rising price of zinc”. Time for a short economics lesson.

An alternate, more accurate headline for this story would be, “It cost 1.6 cents to make a penny because of currency debasement.” Rather than pondering whether or not the United States should simply stop producing pennies to save money, Americans should really be thinking about the long-term effects of currency debasement that has been going on for generations.

14 09 18 dollars and change

To debase a currency is to weaken its purchasing power. This is often done by inflating the money supply through quantitative easing, which the Federal Reserve has been practicing for years. When a currency is debased, a unit of that currency doesn’t buy the same amount of stuff that it once did. The US dollar has been seriously debased over the last hundred years or more. Just take a look at the handy infographic at the end of this blog post to see how bad it has become.

Currency debasement is the same reason why the US ditched the copper penny in 1982, as well as silver half-dollars, quarters, and dimes in 1964. Today we call these old silver coins “junk silver,” and they’re popular physical precious metals investments. However, they’re anything but junk – they actually contain a useful commodity that has held its value for centuries. It’s not that zinc or copper or silver has become “too expensive,” it’s that those coins have lost some of their purchasing power.

The government debases our currency and says it is because it became too expensive to produce instead of the real reason – destructive monetary policies. The policies of central banks around the world are supposed to stabilize economies and protect the people from currency debasement. However, the truth is that these policies only enrich the politically well-connected, while hurting the poor, those on fixed incomes, and savers.

When currencies aren’t debased, prices tend to fall, not rise. This gives more purchasing power to the poor, those on fixed incomes, and savers. It also decreases the need to gamble savings in the stock market, which means you have fewer bubbles like the one we’re experiencing right now.

So the next time a friend brings up the pretty well-know fact that it costs more to produce a penny than its worth, take the time to educate them about currency debasement.

14 09 18 what a dollar used to get you

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Every Janet Yellen Press Conference Ever in Under 4 Minutes (Video) http://blog.europacmetals.com/2014/09/every-janet-yellen-press-conference-ever-in-under-4-minutes-video/ http://blog.europacmetals.com/2014/09/every-janet-yellen-press-conference-ever-in-under-4-minutes-video/#comments Thu, 18 Sep 2014 19:42:46 +0000 http://blog.europacmetals.com/?p=5997 Continue reading ]]> Let’s be honest. No one has the time or patience to actually watch Janet Yellen’s press conferences about the Federal Open Market Committee’s meetings. Besides, the news never seems to change – the US economy is never quite good enough for the Committee to recommend that interest rates actually be raised back to “normal” levels. Even if Yellen did have something interesting to say, her delivery is about as captivating as a pet rock. At most, you might be able to sit through, say… four minutes. Thank goodness Grabien has created a video mash-up of every Janet Yellen press conference ever to fit exactly that time frame. So next time Yellen has something to say about the FOMC, skip it. You can watch this instead. Just make sure you have a pillow handy.

If you’re seriously wondering when the Fed will actually raise interest rates, read Peter Schiff’s latest commentary explaining what the Fed’s “new normal” is. Find it here.

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Peter Schiff Explains the New Fed Playbook http://blog.europacmetals.com/2014/09/peter-schiff-explains-the-new-fed-playbook/ http://blog.europacmetals.com/2014/09/peter-schiff-explains-the-new-fed-playbook/#comments Thu, 18 Sep 2014 17:18:02 +0000 http://blog.europacmetals.com/?p=5991 Continue reading ]]> Once again, the financial world watched the Federal Reserve this week in the hopes of hearing some real news about whether or not interest rates would be raised in the near future. While the Fed continued to taper its quantitative easing, it said that interest rates would remain at zero for a “considerable time.” To economists like Peter Schiff this is more or less an open admission that the United States economy is in terrible condition. If the economy was improving, why would it need the continued intervention from the central bank?

In his latest written commentary, Peter compares historical Fed policies to the central banks’ actions in the past eight years. He explains clearly and succinctly why we’re in a new age of “forward guidance” and how disastrous it will be for the economy. Don’t look for interest rates to be raised at all, Peter argues. Instead, another dose of QE is probably right around the corner.

“The truth is the Fed knows the economy needs zero percent rates to stay afloat, which is why they have yet to pull the trigger. The last serious Fed campaign to raise interest rates led to the bursting of the housing bubble in 2006 and the financial crisis that followed in 2008. This occurred despite the slow and predictable manner in which the rates were raised, by 25 basis points every six weeks for two years (a kind of reverse tapering). At the time, Greenspan knew that the housing market and the economy had become dependent on low interest rates, and he did not want to deliver a shock to fragile markets with an abrupt normalization. But his measured and gradual approach only added more air to the real estate bubble, producing an even greater crisis than what might have occurred had he tightened more quickly.”

Read the Full Piece Here

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Are Government Bonds Really ‘Safe’? http://blog.europacmetals.com/2014/09/are-government-bonds-really-safe/ http://blog.europacmetals.com/2014/09/are-government-bonds-really-safe/#comments Wed, 17 Sep 2014 14:05:57 +0000 http://blog.europacmetals.com/?p=5973 Continue reading ]]> Are Government Bonds Really ‘Safe’?


By Dickson Buchanan Jr., Director of International Development

One of the striking ironies of our modern economy is that government bonds are considered safe-haven investments, while gold is a “barbarous relic” to be avoided at all costs. Since the 2008 financial collapse, the bond market has been on a tear, thanks to the Federal Reserve’s endless interest rate suppression. This has only served to reinforce the traditional notion that government bonds are “safe.”

Meanwhile, the financial media argues that gold is no longer relevant to today’s investors. They conveniently ignore the fact that gold has been a safe-haven for thousands of years, while government paper has only been around for a handful of decades.

However, government bonds fall short of traditional investment goals. A look at the history of government-issued bonds in the 20th century reveals terrible performance. Applying this historical knowledge to our current economic climate, and bonds don’t stand a chance when compared to time-tested gold bullion.

Government Bonds – An Abysmal Track Record

When making any sort of investment – whether in government bonds, real estate, or gold – a prudent investor aims to not only earn interest on the principal, but also to get the entire principal back. This is Investing 101. In fact, with safe-haven investments, capital preservation is the primary objective and any additional gain is just gravy. So an obvious way to judge the effectiveness of a supposed safe-haven asset would be to look at how well it preserved capital investment in its past.

When it comes to paying back the principal on its debt, governments have an ugly – and lengthy – history. Today I will highlight just that period in history that most closely resembles our current “Great Recession” – the Great Depression following World War I.

The League of Nations – the precursor to our modern United Nations – issued a report showing 62 sovereign states had been loaned a total of $149 billion by 1936. By the end of that year, 27 of the 62 governments were in default on both the interest and the principal on those loans. That is a failure rate of over 40%.

If you look at loans that just the United States made to other nations, the default rate gets worse. Of 40 sovereign states that the American government issued loans to following the First World War, 23 defaulted on their debt obligations. That is nearly a 60% failure rate! Had you been alive then, your chances of seeing any of your principal back on government debt were worse than a coin flip. I wonder what category that falls into over at Moody’s or Standard & Poor’s?

The most notable country at the time to default on its obligations was Great Britain. Its currency, the pound sterling, was the world’s reserve currency. Great Britain’s inability to pay its debts in full after World War I was a precursor to the pound losing its privileged role.

To be fair, governments have a near flawless record when it comes to paying the interest on their debt. But this returns us to the primary notion of using safe-havens for capital preservation. Who in their right mind would lend money to someone who only agrees to pay back a fraction of the principal? That’s not lending, that’s charity.

Are We Any Safer Today?

Snap back to today. The US government has borrowed more than it ever has before, with more than $17 trillion in debt. Consequently, the Federal Reserve’s balance sheet has ballooned to the unprecedented figure of nearly $4.5 trillion. About $2.5 trillion of that is in government Treasury notes, while $1.7 trillion is in mortgage-backed securities.

This represents a huge systemic risk to the liquidity of the entire financial system. The government lacks both the resources and the will to pay back this debt. As we’ve just seen, history shows this lack of will to be the norm, not the exception. This proves true even if your currency is the world’s reserve currency, as was the case with Great Britain.

The United States’ current position is not so dissimilar. Just as Great Britain entered World War II in a vulnerable economic condition, so is the US gearing up for yet another costly offensive (they don’t use the word war anymore) in Iraq. WWII put the final nail in the coffin of the British pound, and perhaps the US government’s military adventurism in the Middle East will do the same for the dollar.

The numbers don’t lie and the conclusions are obvious. When it comes to actually receiving the full principal of one’s loan, government debt is one of the most speculative investments an individual can make.

Welcome to the Monetary Madhouse

Today we live in the monetary madhouse erected by our central banks. Distortion and irregularity prevail, not clarity and stability. Instead of private investors looking for win-win profit opportunities in a free market for money and credit, we have central banks using “forward guidance” to dictate where capital should flow. Today’s bond market and the giant balance sheet of the Fed are a direct result of their intervention.

Nearly all government bonds are bought based on rate speculation and rarely held to maturity. What does that mean? These bonds are traded without a care given to whether or not they will see a dime paid back in principal. The bond market relies almost entirely upon making money based upon changes in the interest rate.

Let that sink in for a minute.

In any other market, the lender is highly concerned with whether or not the interest and the principal will be remunerated in full. The lender would not part with his funds if repayment of the principal were not guaranteed.

This is not the case with government. The government can borrow like no other. It maintains the illusion of solvency by only paying the interest on its debt and rolling over old debt obligations by issuing new debt as a replacement. This means the merry-go-round of debt keeps on spinning but nothing ever gets paid. This is more than enough to make any credit manager’s head spin.

Government debt is simply not a safe play in today’s markets. It’s either speculative or it’s suicidal. On the other hand, there is no speculation about gold. The yellow metal’s value has remained relatively stable for thousands of years without a government’s promise. Gold is no “barbarous relic” – it’s our financial salvation.


Dickson Buchanan is Director of International Development and a Precious Metals Specialist at Euro Pacific Precious Metals. He received his MA in Austrian Economics from King Juan Carlos University in Madrid, Spain, and is currently enrolled in the doctorate program. Dickson joined the Euro Pacific Precious Metals team in 2012 after returning from his economic studies abroad.


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Eastern Gold Reserves Are Growing and Growing… http://blog.europacmetals.com/2014/09/eastern-gold-reserves-are-growing-and-growing/ http://blog.europacmetals.com/2014/09/eastern-gold-reserves-are-growing-and-growing/#comments Tue, 16 Sep 2014 18:11:04 +0000 http://blog.europacmetals.com/?p=5968 Continue reading ]]> Listening to the financial media, you might be convinced that the precious metals – gold in particular – are simply not considered reliable investments anymore. This is a viewpoint peculiar to the West, as Peter Schiff has repeatedly emphasized. However, every now and then, the mainstream media shares some news reminding us that while Americans and Europeans might be disenchanted with the yellow metal, other countries are still very concerned with protecting their savings with the hard asset that has served as a safe-haven for thousands of years. Often that news comes from countries that have a much longer history of troubled economies, and therefore a greater understanding of what assets carry real value in this world.

Today, for instance, Bloomberg published two stories about central bank and Chinese gold demand. In the first, “China May Boost Gold Reserves Amid Imbalances in Holdings“, Bloomberg reports on research from the London-based Official Monetary and Financial Institutions Forum. David Marsh, managing director of the Forum, reminds us that while China hasn’t officially announced an increase in its gold reserves since 2009, there is a good chance that it will very soon. Marsh vaguely suggests that China has been adding to its reserves since 2009 “in different ways.”

14 09 16 chinese gold

Additionally, Bloomberg notes that according to the official figures, Russia has surpassed China to become the fifth-largest gold-holding country in the world. In general, central banks of the world have been net buyers of gold for 14 straight quarters, or 3-1/2 years. So while Wall Street speculators might have been shying away from the yellow metal since it has come down from its 2011 peak, the powers that actually control the world’s money supply have been gobbling up gold. As Marsh puts it:

“Gold will become more traded amongst central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves.”

Bloomberg’s second article on Chinese gold demand notes that the Chinese Gold & Silver Exchange Society of Hong Kong has become the first non-mainland entity to be allowed warehouse access by China. Construction of the new vault storage facility will begin in Shenzhen next year. It will have a capacity of 1,500 tons. This is just another signal that China is preparing to position itself as the hub of the international gold trade in the years to come.

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The Fed Is Destroying the Economy and Nobody Cares (Video) http://blog.europacmetals.com/2014/09/the-fed-is-destroying-the-economy-and-nobody-cares-video/ http://blog.europacmetals.com/2014/09/the-fed-is-destroying-the-economy-and-nobody-cares-video/#comments Fri, 12 Sep 2014 14:07:16 +0000 http://blog.europacmetals.com/?p=5961 Continue reading ]]> Peter Schiff was interviewed by Paul Vigna on Wall Street Journal Video yesterday. Peter explained to Vigna the terrible effects that the Federal Reserve’s zero interest-rate policy is having on the United States economy. They spoke about how tepid the American job market is right now, and why Peter thinks a new round of quantitative easing is right around the corner. If you’d like to read Peter’s latest written commentary about why central banks are wrong to think that inflation is the cure for our economic woes, you can find it here.

“The next thing the Fed is going to do is launch an even bigger round of QE than the one they’re tapering off from. Because the US economy is not recovering. We are slipping back into recession. If the Fed doesn’t know that yet, it will by the end of the year… Tightening is all talk… [The Fed will eventually start] a new round of QE that will make the Europeans and Japanese blush.”

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Gold Videocast: Peter Schiff Answers Your FAQs (Video) http://blog.europacmetals.com/2014/09/gold-videocast-peter-schiff-answers-your-faqs-video/ http://blog.europacmetals.com/2014/09/gold-videocast-peter-schiff-answers-your-faqs-video/#comments Thu, 11 Sep 2014 13:51:44 +0000 http://blog.europacmetals.com/?p=5956 Continue reading ]]> Peter answers some of the more challenging questions he has received from you, his loyal clients and subscribers. Learn what he really thinks about gold manipulation, why Wall Street hates gold, who should buy silver instead of gold, and more!

0:05 – Question: “According to the financial media, the world has ‘fallen out of love with gold.’ Is this really true?”

0:40 – The world cannot fall out of love with something it never loved in the first place – but it will fall out of love with fiat currencies.

2:03 – The time to buy gold is when everyone hates it. That’s why it’s so cheap.

2:30 – Question: “In your last Gold Videocast, Jim Rickards said that gold price manipulation is true. Why do you keep ignoring this issue”?

2:40 – Even if gold is being manipulated, I still want to own it.

3:10 – If manipulation is true, it allows my clients to buy more at artificially low prices.

3:38 – Manipulation cannot go on forever. Before long, free-market forces overwhelm artificial price controls.

4:17 – Question: “You keep warning about hyperinflation and a collapse of the US dollar, but it hasn’t happened! Has our modern banking system solved this problem?”

4:43 – You have to warn about things in advance to give people time to prepare, which is exactly what I did with the housing bubble.

6:03 – A recent article mentioned widespread Shrinkflation. If a company charges the same price for less of a product, that’s still inflation!

6:55 – Inflation will become hyperinflation if the government doesn’t take drastic measures.

7:15 – Question: “You always recommend gold as the best way to protect one’s wealth, but I can’t afford it. Is silver a good alternative?”

7:28 – Silver coins are better for small barter transactions.

7:57 – There is more potential for upside in silver. So if you can only afford a little right now, why not get started with the metal that may give you more bang for your buck?

8:10 – Eventually, you should hold both metals, but for some people it makes sense to get started with silver.

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Currency War Games http://blog.europacmetals.com/2014/09/currency-war-games/ http://blog.europacmetals.com/2014/09/currency-war-games/#comments Wed, 10 Sep 2014 19:47:04 +0000 http://blog.europacmetals.com/?p=5945 Continue reading ]]> In the 80′s, America confronted two great risks – an evil empire and an out-of-control US dollar. Unfortunately, though we beat the communists, we seem to be losing the battle for sound money.

For its latest comic, Lampoon the System reprises War Games, the classic 1983 blockbuster starring Matthew Broderick. The esteemed Jim Rickards plays the role of “Joshua”, the supercomputer in the movie. Peter Schiff interviewed Rickards in August, and they talked extensively about the repercussions of an international “currency war.” If you missed it, check it out here.

14 09 CurrencyWarGames

Jon Pawelko publishes the web comic Lampoon The System to poke fun at insane economic policies and educate the public on sound economics.
Click here for more cartoons and information on his anthology book, available for only $15.

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Is the World at ‘Peak Gold’? http://blog.europacmetals.com/2014/09/is-the-world-at-peak-gold/ http://blog.europacmetals.com/2014/09/is-the-world-at-peak-gold/#comments Tue, 09 Sep 2014 14:27:11 +0000 http://blog.europacmetals.com/?p=5941 Continue reading ]]> This week, Chuck Jeannes told The Wall Street Journal that either this year or next, miners will have reached “peak gold.” Peak gold means that the amount of gold being pulled out of the earth will begin to shrink every year, rather than increase, which has been the case since the 1970s. Jeannes is the chief executive of the world’s largest gold mining company, Goldcorp, so it’s probably safe to assume he knows a thing or two about mining the yellow metal.

Let’s put this into context. Central banks continue to stockpile gold (even Scotland is wondering how much of the United Kingdom’s gold it will get if it becomes an independent country). Nobody knows how much gold China is hoarding, but pretty much everyone assumes it’s a lot more than the official reports. Smart economists like Peter Schiff and Jim Rickards have been pointing out for a year now that gold buyers throughout Asia are accumulating more and more gold from Western investors, and they have almost no intention of selling it.

For physical precious metals investors, all of this news should hit home. What happens when this robust demand for gold runs up against the hard limits of the mining industry? This is simple supply and demand – prices go up.

“As gold production declines, the miner’s job becomes harder, as companies compete for increasingly rare deposits. Discoveries have already tapered off. In 1995, 22 gold deposits with at least two million ounces of gold each were discovered, according to SNL Metals Economics Group. In 2010, there were six such discoveries, and in 2011 there was one. In 2012: nothing.”

Read the Full Article Here

14 09 09 gold mine

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The Amazing World of Silver Technology http://blog.europacmetals.com/2014/09/the-amazing-world-of-silver-technology/ http://blog.europacmetals.com/2014/09/the-amazing-world-of-silver-technology/#comments Fri, 05 Sep 2014 17:10:10 +0000 http://blog.europacmetals.com/?p=5933 Continue reading ]]> The Silver Institute’s August edition of Silver News is now available. This issue explains the fundamentals behind the surging growth in demand for industrial silver, which is expected to exceed global GDP growth through 2016. The constantly evolving industry for silver technology is largely to thank for this increasing demand. August’s Silver News highlights some of the fascinating new applications of silver, including:

  • Two forms of 3D printing with silver
  • Using heated nanosilver to treat cancer
  • Screen-printed silver circuits that cure in UV light
  • Antibacterial silver on home hardware products

You’ll also find an explanation of how silver is used as an essential chemical catalyst in the production of ethylene oxide (EO), which in turn is needed to create ethylene glycol. Ethylene glycol is one of the most important substances in our modern world.

“Ethylene glycol, in turn, is used to produce many products including polyester fibers for clothes and carpets, plastics, solvents and other chemicals, and even antifreeze formulations. By itself, EO is used to sterilize many health-care products and medical instruments, including delicate electronic or optical tools, which would be harmed by the high heat or radiation sterilization processes. EO is also used to accelerate the aging of tobacco leaves, as a fungicide, and even as a preservative for spices.”

Read Silver News Here

14 09 05 tanaka silver circuit

Image: Tanaka’s printed silver circuit board.

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