Brace for “Abrupt” Dollar Collapse

Peter Schiff: Brace for "Abrupt" Dollar Collapse

Outpacing former U.S. Comptroller General (1998-2008), David Walker, the indefatigable Peter Schiff has markedly stepped up his appearances, interviews and overall visibility of the past year with his dire message to investors: prepare for an "abrupt" dollar collapse.

Though a thorn in the side of Wall Street's behemoth banking cartel, broker-dealers and the financial media that serves them, Euro Pacific Capital's CEO Schiff strips away the tired rhetoric, massaged sentiment building, shameless hype, obfuscation and outright rumor spreading of CNBC's broadcast, all characteristic of an old guard desperately clinging to power though its control of a highly sophisticated media-driven propaganda campaign deployed to hide the foreshadowing symptoms of a coming economic collapse.⁽¹⁾

Speaking with SeekingAlpha's contributing writer, Garrett Baldwin, Schiff deploys his own version of the truth, which he sees as an endgame for dollar hegemony manifesting in future sharp declines in U.S. Treasuries.

"I do believe that it [the decline in U.S. Treasuries] will be very abrupt," said Schiff. "I think when the dollar collapses, it will happen very rapidly. When the bond bubble bursts, the air is going to come gushing out. It's not going to give a lot of people time to reverse their position."

And like the Nasdaq and housing bubbles, both pricked into collapse, the U.S. sovereign debt bubble, too, has "a lot of pins" out there grasped by powerful  invisible hands; and "it's [Treasury market] going to find one eventually."

Peter, the son of famed tax protestor Irwin A. Schiff, has demonstrated that his message to investors can be trusted as pure, no less than uber-American patriot U.S. Congressman Ron Paul's plea to revamp the global monetary system and phase out the Federal Reserve during his presidential 2012 bid.

While unabashedly speaking truth to power about the dollar's ultimate worthlessness void of its artificial props, Schiff offers real solutions to what former U.S. Comptroller Walker has metaphorically stated is a "burning platform"—not in the sense of how best to put out the fire (though Schiff tried in his bid for U.S. Senator for his home state of Connecticut), but how investors can profit from an inevitable Roman Empire-like decline.

Schiff's decade-long message to investors who seek protection from the coming colossal collapse, which he originally saw coming as far back as 2000, is to own gold.  His advice back then rewarded investors with a 700%+ return in nominal terms and much more in real terms when compared with the contrasted performance of more widely-held assets, such as real estate and the S&P500.  The S&P still trades below its 2000 level while home prices continue to fall.

When the subject of gold's breathtaking drop in late 2008 and early 2009 was broached, Schiff defended his record, talking about the performance of the gold price within a larger context of the overall bull market in the metal since its $255 price tag low of 1999. 

"In 2008, gold prices went down, but they're double what they were now – then," Schiff explained.  "So people still made money on precious metals. And of course if they bought precious metals, years earlier, had they bought them in 2002, 2003, 2004, even though 2008 was a down year – or at least the second half was. They've more than recouped that."

Schiff continued, "So, people have been able to profit, certainly from the advice to get out of the dollar. The dollar is quite a bit lower than it was when I first started telling people to get rid of it based on these forecasts. Even though it's higher than it was a month ago, it's much lower than it was years ago. And the dollar will continue to fall."

To expound on Schiff's strategy for survival of the mother of all currency crises he sees on the horizon, investors may want to refer to the lifelong work of Princeton Economics' founder Martin Armstrong, a man whose study of market cycles may shed more light on the coming years' volatility in the gold market.

Though Armstrong's personal life is controversial, his brilliant work with market cycles led him to advise the Reagan White House on how best to handle the aftermath of the 1987 stock market crash—which developed into the infamous Working Group of Financial Markets, more popularly referred to today as the PPT (Plunge Protection Team).   Twenty-three years later, the eccentric Armstrong strongly suggests that the volatility we now see in all markets across the globe will increase dramatically into the year 2016.

Speaking with King World News this past week, Armstrong said the volatility will be, frankly, frighteningly breathtaking.

"We're going to increase volatility by 50% over the next two years, and then, going into the latter part of 2016 it will double again," he told KWN's Eric King. "It's the way markets move."

"Boil a pot of water.  When it gets to the boiling point, you'll see all of a sudden the water juts burst into bubbles," Armstrong explained.  "That's the way the market is.  And that final end is when you get that doubling effect.  And when you see that, sometime it can be more than double, but when you see that, that's the time when you are getting into the final top.  So we haven't seen anything like that yet."

And to hammer home the point made by Messieurs Schiff and Armstrong, gold investors must focus on the endgame and not the extreme volatility in the gold market.  To keep it simple, the old stead hand of financial markets, Dow Theory Letter's Richard Russell, said about gold in a roundtable discussion with Financial Sense Newshour in 2003, "I think it's a bull market [in gold]. The bull will always try to shake you out, go up with the least people as possible."  Russell suggested  that investors should not look at the gold price anymore than they look at the market value of their houses on a day-to-day basis.  Instead, the 87-year-old veteran of the markets said,  "You buy and take a position in gold, and that's it."

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