Peter Schiff, CEO of Euro Pacific Capital, argues that the 40-year bond bull market ended in 2020 with the 10-year yield below 1%, and that the current bear market, now at 5%, will run “indefinitely” toward 6% and beyond, since the US is a worse credit risk than in 1980, when the 10-year yielded 16%. He says any Fed hike of 25 or even 50 basis points is a cosmetic, face-saving move after 65 months above the 2% target, and that real fixes (deep cuts to Social Security, Medicare, and defense, plus much higher rates and a protracted recession) will never happen because politicians prefer long-term pain to short-term pain. Schiff contends that central banks dumping dollars and Treasuries for gold will drive gold to new highs, while Bitcoin effectively peaked in November 2021, is losing its political tailwind, and will leave many “bag holders.”
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The bond bear market has no floor: Schiff says every Fed attempt to cap yields through quantitative easing, along with the Treasury’s own buyback version of “Operation Twist,” creates more inflation and forces bondholders to demand even higher rates. He warns the dollar may crack before bonds do, since Treasuries are just promises to pay future dollars.
What he’d actually do about inflation: Schiff calls the “Big Beautiful Bill” one of the worst pieces of legislation ever passed and says neither party will make the substantial, across-the-board spending cuts needed. He says rates must rise enough to discourage borrowing and encourage saving, accepting job losses, falling stock and real estate prices, and loan defaults, because postponing the reckoning only makes the eventual crisis worse.
Warsh’s credibility test: With a 90% market probability of a 25-basis-point hike, Schiff says Warsh has already punted several times and would lose all Fed credibility if he skips again. He expects any bond rally on the hike to reverse within a day or two, with the 10-year pushing toward 5.25% and then 6%, eventually triggering a selloff in stocks and crypto.
Gold’s pullback and the next leg up: Schiff says gold was technically overextended after running from $2,000 to $5,500, and the war triggered profit-taking on the false narrative that higher inflation is bearish for gold. He sees roughly $4,000 as a solid base and predicts much higher highs because the Fed has already lost the inflation fight.
Bitcoin’s peak and the T-Gold dispute: Schiff says Bitcoin, now about 23% off its January highs, really peaked in November 2021 when priced in gold, and that its run to $126,000 was driven by Trump’s election and a crypto-friendly Congress, a tailwind he expects to reverse as Democrats likely take the House and Senate after the Clarity Act failed. When the host called Schiff’s T-Gold “centralized Bitcoin with counterparty risk,” Schiff replied that it has no blockchain component at all and is simply vaulted gold made transmittable, while Bitcoin fails as money because “there’s nothing behind it.”
