Peter Schiff came out swinging in an escalating war of words with CBS MoneyWatch blogger Larry Swedroe about the role gold should play in an investment portfolio.
The outspoken Schiff, CEO of Euro Pacific Precious Metals, has voiced his opinion recently about how overspending by the federal government will lead to disaster, and how gold is a necessary investment as a result.
Writing in the International Business Times, Schiff responded to a recent post in which Swedroe advised readers to “ignore the ‘buy gold now’ crowd.” Schiff took specific issue with Swedroe putting “words in my mouth” about the level to which gold will rise.
“I believe gold will continue to rise and close 2013 significantly higher than present levels, and I'm invested accordingly,” Schiff noted. “What I find most disconcerting in Swedroe's piece is everything that follows. He goes on to question both a) investment forecasting as a practice and b) gold as an asset in general.”
From there, Schiff highlighted past predictions in which he was right, and argues he’s using the same thought process now.
“My stance on gold is founded on the same logic that supported my successful forecasts of a dot-com bubble in 1999-2000, a housing market collapse in 2006, a credit crunch in 2007, the resulting bailouts and ‘jobless recovery,’ and also the forthcoming flight from the US dollar and Treasuries,” Schiff listed. “My willingness to make accurate predictions in the face of doubt from mainstream analysts was documented by a fan in the viral YouTube video 'Peter Schiff Was Right.'"
Getting personal, Schiff noted Swedroe’s observation that “there are no good forecasters, just overconfident ones."
“Perhaps he simply hasn't met a good forecaster,” Schiff opined. “I have been addressing gold naysayers long before precious metals became a target in the financial media,” he wrote, citing a televised skirmish with Mark Haines on CNBC in 2005 and past commentaries dating as early as 2006.
Schiff closed with an addendum, noting that “Swedroe has a history of his own.”
“In 2009, in the very same MoneyWatch column, he wrote an eerily similar piece casting doubt on gold's prospects,” he concluded. “Swedroe argued that gold is not positively correlated to rising inflation, but rather negatively correlated to equities. In the intervening time, U.S. equities have risen 41% while gold has risen 63.5%. Not only does this run contrary to his thesis about gold's tendencies, it also means that investors who took his column to heart in 2009 and avoided gold would have missed out on an additional 22.5 percentage points of appreciation over the past three years.”