<img src="/images/nav_ra.png" />

A / A / A

Americans consume more and produce less.

Our weekly commentaries provide Euro Pacific Capital's latest thinking on developments in the global marketplace. Opinions expressed are those of the writer, and may or may not reflect those held by Euro Pacific Capital.
Peter Schiff
Friday, November 15, 2002
Yesterday's strong numbers on retails sales and today's weak data on industrial production, which reveals a third consecutive month of falling output from our nation's factories, mines, and utilities, show that Americans continue living well beyond their collective means. In addition, today's increase in consumer sentiment reflects the continued willingness of Americans to go deeper into debt to purchase imported products. Increasing consumption and decreasing production will result in further increases in American's enormous current account and merchandise trade deficits. How long will America's foreign creditors continue the greatest "vender financing" scheme the world has ever seen? How long will America's thrifty and productive trading partners continue to extend credit to profligate, non-productive Americans? How long before the world realizes that the de-industrialized American economy is no longer capable of producing enough exportable consumer goods to pay off its enormous external liabilities? I believe the answer to these questions is "not much longer." The American consumer, like the proverbial Emperor, truly has no clothes (unless, of course he imports them). It will not be long before the non-American producer finally acknowledges his nudity, and the dollar bubble will finally burst. When that happens U.S. consumer prices and interest rates will spiral upward, stock and real estate prices will collapse, unemployment will soar, and the U.S. economy will enter a prolonged recession as it enters a new era of savings, self-sacrifice and under-consumptions, and begins a long and painful process of re-industrialization.

Check the background of our investment professionals on FINRA’s BrokerCheck.

Investing in foreign securities involves risks, such as currency fluctuation, political risk, economic changes, and market risks. Precious metals and commodities in general are volatile, speculative, and high-risk investments. As with all investments, an investor should carefully consider his investment objectives and risk tolerance as well as any fees and/or expenses associated with such an investment before investing. International investing may not be suitable for all investors.

Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. The fluctuation of foreign currency exchange rates will impact your investment returns. Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money.

Our investment strategies are based partially on Peter Schiff's personal economic forecasts which may not occur. His views are outside of the mainstream of current economic thought. Investors should carefully consider these facts before implementing our strategy.