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Peter Schiff: 3 Ways to Survive the Fed’s Destructive Policy

By: 
Jeff Macke
Source: 
Yahoo! Finance
March 6, 2012

"The Federal Reserve doesn't care about the long term health of the economy, it just wants to keep the music going until the next election," says the always outspoken Peter Schiff, head of Euro Pacific Capital.

Schiff, a well-known critic of both the current Fed and the institution as a whole, is speaking this time in reference to the FOMC's announcement last week that economic conditions "are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."

While most traders just shook their heads then started buying anything that wasn't nailed down in response to the news, Schiff took it as yet more evidence that the Fed has learned nothing from even the most recent follies of the past.

"Had the Fed raised rates we would have had a bursting of the bubble much sooner than 2008 and it wouldn't have done nearly as much damage," he says.

As Schiff sees it, the Fed's being "clueless about money" is yet another reason to take away its power or, failing that, at least stop it from contributing to Washington DC's nonsensical commitment to failed Keynesian policies.

With an economic Armageddon, or at least a catastrophic reset of all we know, on the horizon Schiff has 3 rules of thumb for those trying to survive:

1) Buy Gold and Silver: Retirees in particular as their savings get gutted by low rates.

2) Seek Foreign Sources of Foreign Income: Schiff says get out U.S. dollar-based investments, entirely in favor of both high-yielding foreign companies and bonds.

3) Avoid Longer Term U.S. Denominated Bonds

The biggest loses are going to be felt by bondholders in the U.S. Schiff strongly encourages citizens to get out of anything based on the greenback and start loading the boat on virtually anything else, particularly gold.

Do you buy Schiff's basic premise that the U.S. is living on borrowed economic time? Is gold the answer? What are you doing to protect yourself? Let us know in the space below.

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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.