The Russians have sold off nearly all of their U.S. Treasury holdings and they’re adding to their growing gold reserves.
Peter Schiff, a Manhattan investor and precious metals dealer who is known for being bearish on the U.S. economy and the dollar, said he thinks the Russians are preparing for an impending dollar crisis.
SchiffGold specializes in gold and silver. Schiff founded the company in 2010 to deal gold for his brokerage clients. He advises long-term investment in gold as an inflation-proof store of value.
In his 2007 book, “Crash Proof“, Schiff wrote about how to profit from the economic collapse. He has been bullish on long-term investments in foreign stocks and currencies in countries with sound fiscal and monetary policies, as well as global commodities including precious metals.
A dollar-bear is a trader with a pessimistic strategy when trading the U.S. dollar against other currencies. This strategy expects the U.S. dollar to decline against major currencies and considers this factor when positioning investment portfolios.
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Russia expanded its gold holdings by 71.53 tons through the first four months of 2019 and now owns 2,183.46 tons of gold, Schiff reported.
Meanwhile, U.S. dollars in Russian reserves fell from 46 percent to 22 percent in 2018, according to Bank of America analysts.
The world has been on a dollar standard ever since the U.S. led the world off the gold standard, Schiff said. This wasn’t a problem when people perceived value in the dollar, but Schiff said he thinks that’s going to change in the next recession.
“When the Fed goes back to zero and when we launch QE4 (the fourth round of quantitative easing) I think the dollar’s role as a reserve currency is going to be questioned,” he said.
A stockbroker, financial commentator and radio personality, Schiff hosts the Peter Schiff Show podcast. He’s the former host of the podcast Wall Street Unspun.
Schiff said he thinks the U.S. uses the dollar as a weapon.
“Other countries don’t like this, and to the extent that they can move away from the dollar, well then they kill two birds with one stone,” he said. “And one way of doing that is to increase their gold reserves now while gold is still cheap. Because when the dollar really starts to tank, the price of gold is going to soar. Russia, right now, obviously wants to buy as much gold as it can while the price is still relatively cheap. That allows it to build up a bigger hoard of gold to replace the diminished value that the dollar is going to play as a reserve currency.”
Schiff ran in the 2010 Republican primary for a U.S. Senate seat in Connecticut, losing to Linda McMahon.
China has also been buying gold, he said — one way to gain leverage in the trade war. They can strengthen the yuan by selling dollars and buying gold.
It’s not just possible for other countries to ditch the US dollar — it’s inevitable, Schiff said.
“Ultimately, the U.S. won’t have any leverage at all … This (the dollar as the reserve currency) was an exorbitant privilege that the U.S. has enjoyed for decades, but it has abused that privilege dramatically, even more so recently with the sanctions. So, I think that privilege is going to be lost and with it will go the artificially high standard of living that came along with it in the United States.”
The spot gold price today is $1,279.25 per ounce, according toMoneyMetals.com.