Is Peter Schiff Full of It?

Short answer: mostly. But, to mix metaphors, a broken clock is still right twice a day.

Who is Peter Schiff?

If you don’t know who Peter Schiff is, feel free to stop here and continue your life blissfully ignorant of his place in the investing and macroeconomics landscape. If you must know, however, Peter Schiff is an investment author, talking head, Youtube personality, and CEO of Euro Pacific Capital. Schiff’s star began to rise in the 2000’s, at least as his place as a public figure was concerned.

Peter Schiff truly arrived when he “predicted” the financial crisis of 2007-2008. Almost any mention of Schiff’s name on the internet is not far from a repetition of that fact, and it continues to buoy his reputation to this day. Elevated in some corners as an oracle, Schiff was taken on as Ron Paul’s personal financial advisor in his last run for President (Schiff is a Libertarian).

Peter Schiff’s Sketchy Track Record

Peter Schiff is a prolific writer and video creator. If you’re reading this, it’s likely that you’ve come across some of his work. Peter Schiff is also convincing. He’s an engaging personality who sounds like he knows what he’s talking about, and he totally predicted the ‘08 meltdown, right?

Well, that’s where Schiff’s track record starts to come apart. Peter Schiff is always…predicting…the end of days for the American financial system. He has been doing this since he emerged onto the public stage, and in 2007, he just happened to get it right.

Schiff (or “Doctor Doom” as he is often called) has never strayed far from proclamations of catastrophe. In late 2008, it was China was going to destroy American currency through debt reclamation. In 2011 and 2012 it was hyperinflation and the dissolution of the value of the US Dollar. More recently (for almost ten years now) Schiff has predicted an intense bear market during which time gold prices would rise to $5,000 per ounce. This last figure has gone on the record over and over, but gold prices remain, usually, less than $1500.

Why You Should Tune Out Doctor Doom and Those Like Him

It’s not that Peter Schiff is wrong about everything, it’s that in getting so much wrong, regular readers and listeners are bound to get led astray. Schiff’s politics inform his financial predictions, and not vice versa. Like many of that ilk, for better or worse, Schiff is big on gold, hates the Fed, and a constant critic of American currency. He’s repeatedly denounced Bitcoin and other cryptocurrencies (even as they have far outpaced gold in returns to people that own them). The best you could say about Peter Schiff is that he’s overly cautious. Less gracious analysts would call him a conspiracy theorist.

Then there’s his investment predictions. Caution is a virtue for investors, specifically in an lengthy bull market such as the one we’re currently enjoying. But Schiff’s investment recommendations don’t usually work out well for people who take him seriously. Michael Shedlock once analyzed Schiff portfolio performance and wrote “I have talked with many who claim they have invested with Schiff and are down anywhere from 40% to 70% in 2008.”

Getting What Schiff Does Well From Better Sources

Following Schiff’s rules for investment will have you hoarding gold in your basement while you wait for the sky to fall. But caution in itself is not a bad thing, not remotely. Today’s investors need to be intensely thoughtful about the composition of their portfolios, as tech stocks continue to froth up and the housing market starts to resemble that of a decade ago.

But you won’t learn how to prepare from Schiff. He sacrifices insight for simplicity and shock value. Reading sources like this site, exponents of modern portfolio theory, value investors in the tradition of Warren Buffett – these are the kinds of sources that will help you actually prepare for the lean times, without telling you to wrap you head in tinfoil.