(07/05/13) Still Bearish on the Dollar

Euro Pacific Capital's Peter Schiff shares the reasons why he is cautious about US investments, and which global market he likes the best.

Hi, Peter. Is it déjà vu all over again in terms of what is happening with the central banks?

I am afraid so. You know, people have a very short memory. We're here at the MoneyShow in 2013, and to me it is like 2006. The same old same old.

We had a bubble that burst, but the Fed came to the rescue with stimulus, so the stock market was rising. The real estate market was rising and everybody was happy. Everybody thought it was great. But we were on the verge of a major collapse.

In 2013, same thing. The housing bubble burst five or six years ago. The Fed is up to its same old tricks, only bigger—more stimulus and cheaper money. They have housing prices going up. They've got stock prices going up. Once again, everybody thinks it is great.

It is actually worse than it was last time, and the next financial crisis or collapse is going to be much bigger than what we had in 2008, so do not believe all the hype.

When do you think that will come?

I do not know. It is going to come soon. I mean, maybe it will come before the end of the year, maybe it will come in 2014 or 2015...you never know. When I was coming to the MoneyShow in 2004, and I was talking about the crisis, I did not know when it was going to hit. I just knew that it was coming. And it came.

The next one is coming, and people need to be prepared for it and recognize this phony rally for what it is, just another Fed-induced bubble that is going to burst.

Are you advising subscribers, radio listeners, and clients to not participate in the stock market rally?

No. Remember, we are participating. I am bearish on the dollar, so I have actually told people for years that if you understand the real crisis, you cannot own dollars. So you have to own something else, which includes stock.

We tell our clients—and we have been telling our clients for years—to own stocks, to get out of paper and into real things. I have been telling my clients to focus more on international stocks and foreign markets, which I think offer more upside potential, less risk, and more yield, especially if you are concerned about currency. I want to own companies that are paying dividends and earning non-dollars.

Do you have specific investments in those fields, such as ETF funds or even individual stocks that you can share with us in the remaining few minutes?

Well, you know the FNRA and the regulators do not let me really give out individual stock recommendations anymore, but we build custom portfolios for our clients. We also have a registered investment advisor.

I manage seven mutual funds that follow my strategies, so people can learn about my funds. They can invest in those funds. They can have us manage their money. They can set up a brokerage account where we will advise them, recommend the stocks that we like around the world, and stocks that pay good dividends.

What are your favorite areas, for example?

Well, we are way overweight in Asia, so I like markets like Singapore and Hong Kong. I like Scandinavia. We have investments in Norway and Sweden. I like Australia and New Zealand.

Japan?

You know, we have Japanese stocks. We are overweight Japanese stocks, but I do not how much longer I am going to stay there, because Japan is another big bubble. We do not like the Japanese yen, so in our funds that are fixed income that are bond-related, we have no yen.

We have no euros and we have no pounds. There are certain currencies that we like and that we focus on. But the Japanese are printing a lot of money, and so they are getting the stock market to go up—but again, a lot of the gains are an illusion, because the yen is falling almost as fast as the stocks are rising.

I think there is a big problem waiting for Japan, but unfortunately we have an even bigger problem in the United States.

It could last as much as a year, perhaps even two years. It could be like 2005 and 2006 and not blow up until 2008, so it could last maybe longer.

I do not know, is this 2005 or is it 2007? I do not know. But I did not know back then how long it would last. I just knew that it was just a big bubble and it was going to burst.

But you had a lot of people that were convinced that it was real, that there was nothing to worry about, and that it was blue skies as far as the eye could see. Those are the same people that are saying everything is great now, the coast is clear and do not worry.

I recognize the market is rallying, but for all the wrong reasons, and so you have to be very cautious about what is going on.