The Peter Schiff Show Podcast

Two Camps: Inflation vs Deflation

I did the first live stream a couple of weeks ago; that was on bitcoin. I got a lot of feedback on that one and a lot of people were coming up with potential topics for the next one.  I think the most common request was for inflation or deflation: which one is it going to be? Because there are a lot of people out there who see the world similar to the way I do, as far as the problems that are confronting the U.S. economy in particular but the global economy, but everybody seems to fall into two camps as to how it is all going to go down; whether it is deflation that is coming - we should prepare for that, or whether it is inflation that's coming and you should prepare for that.  Now I am an inflationist.  I am in that camp. Other people in that camp may be, like Jim Rickards or Jimmy Rogers or Marc Faber - there are a number of people who would be in the inflation camp. Deflation would be guys like Robert Prechter, Harry Dent, there are a number of guys that are looking for deflation.

Defining Terms

Now before I really get into it, I want to talk a little bit about the terms, so we know what we're talking about.  Let's define the terms.  What is inflation? What is deflation? The actual definition of inflation, the actual meaning of the word, is an expansion of the money supply.

What does "Inflate" Really Mean?

That's what inflation is; it's not about prices.  If you think of the word, "inflate" - what does inflate mean? It means to expand. You inflate a balloon; when you inflate a balloon, it expands. Prices don't expand - they go up, they go down; they don't expand. What expands?  Money supply. When the government creates money, the money supply expands, like a balloon.  It blows up. So that's what inflation is, it is an expansion of the money supply.

What is Deflation?

Deflation is the opposite; it is a contraction of the money supply. Now when you inflate the money supply-you create more money - you have more money bidding up prices. So inflation will result in prices going up. But prices going up is not the inflation they are the consequence of inflation.

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

Two Camps: Inflation vs Deflation

I did the first live stream a couple of weeks ago; that was on bitcoin. I got a lot of feedback on that one and a lot of people were coming up with potential topics for the next one.  I think the most common request was for inflation or deflation: which one is it going to be? Because there are a lot of people out there who see the world similar to the way I do, as far as the problems that are confronting the U.S. economy in particular but the global economy, but everybody seems to fall into two camps as to how it is all going to go down; whether it is deflation that is coming - we should prepare for that, or whether it is inflation that's coming and you should prepare for that.  Now I am an inflationist.  I am in that camp. Other people in that camp may be, like Jim Rickards or Jimmy Rogers or Marc Faber - there are a number of people who would be in the inflation camp. Deflation would be guys like Robert Prechter, Harry Dent, there are a number of guys that are looking for deflation.

Defining Terms

Now before I really get into it, I want to talk a little bit about the terms, so we know what we're talking about.  Let's define the terms.  What is inflation? What is deflation? The actual definition of inflation, the actual meaning of the word, is an expansion of the money supply.

What does "Inflate" Really Mean?

That's what inflation is; it's not about prices.  If you think of the word, "inflate" - what does inflate mean? It means to expand. You inflate a balloon; when you inflate a balloon, it expands. Prices don't expand - they go up, they go down; they don't expand. What expands?  Money supply. When the government creates money, the money supply expands, like a balloon.  It blows up. So that's what inflation is, it is an expansion of the money supply.

What is Deflation?

Deflation is the opposite; it is a contraction of the money supply. Now when you inflate the money supply-you create more money - you have more money bidding up prices. So inflation will result in prices going up. But prices going up is not the inflation they are the consequence of inflation.

Participate in my next YouTube Live Challenge next Monday, July 29, 9pm EDT

The Topic: It’s Inflation, NOT Deflation

What is Really Happening to Corporate Profits?

Both the S&P 500 and the NASDAQ rose to all-time record highs today; nominal highs, of course.  The Dow Jones didn't quite make it to a new high, it did close better than 50 points higher - 27,192.45, but probably the most interesting thing about the record high, is what's actually happening to corporate profits. I'm talking about operating profits, which are profits before you subtract interest and taxes.  I'm looking at some new statistics that came out today.  There were some revisions that came out from the government; some of them on the GDP, which I will get to a bit later in the podcast.

Corporate Operating Profits Moved Sideways Since 2014

Just looking at corporate operating profits, it turns out that operating profits actually peaked in the third quarter of 2014.  That is while Obama was still President, a few years before Trump was President. So corporate profits - operating profits peaked in Q3 of 2014.  And they basically have been going sideways ever since, although they have been dipping recently.  If you take a look at the last quarter, operating profits are now the lowest they've been since 2011.

Profits Have Gone up - but Not Operating Profits

Now, the Dow Jones finished 2011 at about 12,000  - 12,200, I think was the end print. Well, we've more than doubled since then, but operating profits haven't gone anywhere. How are you doubling stock values when the profits are staying the same?  Now, of course it's not the profits - profits have gone up - but not operating profits. But operating profits are really more important if you want to look at what's going on in the companies in these averages. Operating profits is how much money the companies make from operating their businesses.

Tax Cuts Boosted the Stock Market

So, actual profits have risen even though operating profits have not. Why is that?  One: we got the big tax cuts. Corporate tax rates went way down so that enabled after tax earnings to rise. So that provided a boost to the U.S. stock market. But these corporate tax cuts are temporary. They are not permanent; corporate taxes are going to be raised.  Especially if I'm right about Trump being a 1-termer; the Democrat who succeeds Trump is going to raise corporate taxes.

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

Participate in my next YouTube Live Challenge next Monday, July 29, 9pm EDT

The Topic: It’s Inflation, NOT Deflation

What is Really Happening to Corporate Profits?

Both the S&P 500 and the NASDAQ rose to all-time record highs today; nominal highs, of course.  The Dow Jones didn't quite make it to a new high, it did close better than 50 points higher - 27,192.45, but probably the most interesting thing about the record high, is what's actually happening to corporate profits. I'm talking about operating profits, which are profits before you subtract interest and taxes.  I'm looking at some new statistics that came out today.  There were some revisions that came out from the government; some of them on the GDP, which I will get to a bit later in the podcast.

Corporate Operating Profits Moved Sideways Since 2014

Just looking at corporate operating profits, it turns out that operating profits actually peaked in the third quarter of 2014.  That is while Obama was still President, a few years before Trump was President. So corporate profits - operating profits peaked in Q3 of 2014.  And they basically have been going sideways ever since, although they have been dipping recently.  If you take a look at the last quarter, operating profits are now the lowest they've been since 2011.

Profits Have Gone up - but Not Operating Profits

Now, the Dow Jones finished 2011 at about 12,000  - 12,200, I think was the end print. Well, we've more than doubled since then, but operating profits haven't gone anywhere. How are you doubling stock values when the profits are staying the same?  Now, of course it's not the profits - profits have gone up - but not operating profits. But operating profits are really more important if you want to look at what's going on in the companies in these averages. Operating profits is how much money the companies make from operating their businesses.

Tax Cuts Boosted the Stock Market

So, actual profits have risen even though operating profits have not. Why is that?  One: we got the big tax cuts. Corporate tax rates went way down so that enabled after tax earnings to rise. So that provided a boost to the U.S. stock market. But these corporate tax cuts are temporary. They are not permanent; corporate taxes are going to be raised.  Especially if I'm right about Trump being a 1-termer; the Democrat who succeeds Trump is going to raise corporate taxes.

 

Participate in my next YouTube Live Challenge next Monday, July 29, 9pm EDT

The Topic: It's Inflation, NOT Deflation

Not to Praise the Tea Party but to Bury It

President Trump originally won the Republican nomination by appealing largely to what used to be the Tea Party. A lot of Tea Party Republicans ended up embracing Donald Trump; in fact I think a lot of the support that might have otherwise gone to Rand Paul (a Tea Party favorite who went to Washington in 2010 as part of the Tea Party movement); a lot of his thunder was stolen by Trump, who appealed a lot to Tea Party Republicans.

Even Tea Party Corpse Seems to Approve of its Demise

When Trump went to Washington, he wasn't exactly praising the Tea Party, but few people expected that he went to Washington to bury it, either. But that's just exactly what he just did by agreeing to this budget deal with the Democrats.  The Tea Party is dead! President Trump just put the final nail into the coffin, lowered it in the ground and covered it in dirt. The irony is, nobody seems happier about this than the corpse itself! The Tea Party Republicans are not up in arms against the Commander-in-Chief. Everybody still loves Donald Trump.

Where is Rick Santelli?

Even the father of the Tea Party, Rick Santelli, (he is credited for getting it all going) where's Rick? Where are his tears, where's the eulogy as his child is being buried? Again, no criticism, everybody thinks Trump is great… As I said, I was back at Freedom Fest, which they should have just re-named "Trump Fest".

Continuation of Policies Once Criticized by Candidate Trump

Donald Trump is simply continuing all of the policies that he once criticized in order to become President. When he was running for the Republican nomination,  he was extremely critical of the big deficits under Obama. He was even critical of the big deficits under Bush. That was one of the things I liked about Trump. He was criticizing big spenders of both parties. He was supposed to be different. He was rising above politics.  He was going to drain the swamp. And draining the swamp meant putting an end to the deficits.

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

 

Participate in my next YouTube Live Challenge next Monday, July 29, 9pm EDT

The Topic: It's Inflation, NOT Deflation

Not to Praise the Tea Party but to Bury It

President Trump originally won the Republican nomination by appealing largely to what used to be the Tea Party. A lot of Tea Party Republicans ended up embracing Donald Trump; in fact I think a lot of the support that might have otherwise gone to Rand Paul (a Tea Party favorite who went to Washington in 2010 as part of the Tea Party movement); a lot of his thunder was stolen by Trump, who appealed a lot to Tea Party Republicans.

Even Tea Party Corpse Seems to Approve of its Demise

When Trump went to Washington, he wasn't exactly praising the Tea Party, but few people expected that he went to Washington to bury it, either. But that's just exactly what he just did by agreeing to this budget deal with the Democrats.  The Tea Party is dead! President Trump just put the final nail into the coffin, lowered it in the ground and covered it in dirt. The irony is, nobody seems happier about this than the corpse itself! The Tea Party Republicans are not up in arms against the Commander-in-Chief. Everybody still loves Donald Trump.

Where is Rick Santelli?

Even the father of the Tea Party, Rick Santelli, (he is credited for getting it all going) where's Rick? Where are his tears, where's the eulogy as his child is being buried? Again, no criticism, everybody thinks Trump is great… As I said, I was back at Freedom Fest, which they should have just re-named "Trump Fest".

Continuation of Policies Once Criticized by Candidate Trump

Donald Trump is simply continuing all of the policies that he once criticized in order to become President. When he was running for the Republican nomination,  he was extremely critical of the big deficits under Obama. He was even critical of the big deficits under Bush. That was one of the things I liked about Trump. He was criticizing big spenders of both parties. He was supposed to be different. He was rising above politics.  He was going to drain the swamp. And draining the swamp meant putting an end to the deficits.

A Podcast from Freedom Fest in Las Vegas

I'm still here in Last Vegas at Freedom Fest, but I wanted to take some time out to come up to my hotel room here and record a short podcast - otherwise I'd have to wait until Tuesday.  There's been a lot of stuff that's happened over the last few days, so I definitely wanted to record something; the quality might not be up to snuff.  But I figured I'd talk a little bit about what's been going on in the market.

The Action Was in the Metals Markets

Really, the stock markets - not much action.  All the major markets finished the day and the week lower; bond prices a bit higher.  The real action, though, was in the metals markets.  You wouldn't really know it to look at the price of gold, which was only up maybe about a dollar or two on the week, although we did have a big $20 rise yesterday, followed by a $20 drop today. I'll get into why that happened in a minute.

Strength in Silver

But the real action was in silver, which finished the week better than up 90 cents, I believe.  So, a very strong week for silver - even on days when gold was down, silver was up. In fact, even this morning, silver was up for a while while gold was down. I titled my last podcast, "Is Silver Finally Joining Gold’s Party?" and, as of now, it really looks like the answer to that question is yes. We've see a lot of strength in silver.

Clarida Shakes Markets with Rate Cut Comments

In fact, we had the biggest two-day gain, going back several years, in the price of silver. The big jump that we has yesterday really was set into motion by some Fed comments, although that probably was just a catalyst; it probably would have moved up anyway. But in particular, we had Clarida came out and he said that the Fed should not wait for the data to turn before cutting rates. Meaning that, "We should cut rates, anyway, even if we don't get negative data; even if it doesn't look like the economy is going into recession, we should just preemptively cut rates."

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

A Podcast from Freedom Fest in Las Vegas

I'm still here in Last Vegas at Freedom Fest, but I wanted to take some time out to come up to my hotel room here and record a short podcast - otherwise I'd have to wait until Tuesday.  There's been a lot of stuff that's happened over the last few days, so I definitely wanted to record something; the quality might not be up to snuff.  But I figured I'd talk a little bit about what's been going on in the market.

The Action Was in the Metals Markets

Really, the stock markets - not much action.  All the major markets finished the day and the week lower; bond prices a bit higher.  The real action, though, was in the metals markets.  You wouldn't really know it to look at the price of gold, which was only up maybe about a dollar or two on the week, although we did have a big $20 rise yesterday, followed by a $20 drop today. I'll get into why that happened in a minute.

Strength in Silver

But the real action was in silver, which finished the week better than up 90 cents, I believe.  So, a very strong week for silver - even on days when gold was down, silver was up. In fact, even this morning, silver was up for a while while gold was down. I titled my last podcast, "Is Silver Finally Joining Gold’s Party?" and, as of now, it really looks like the answer to that question is yes. We've see a lot of strength in silver.

Clarida Shakes Markets with Rate Cut Comments

In fact, we had the biggest two-day gain, going back several years, in the price of silver. The big jump that we has yesterday really was set into motion by some Fed comments, although that probably was just a catalyst; it probably would have moved up anyway. But in particular, we had Clarida came out and he said that the Fed should not wait for the data to turn before cutting rates. Meaning that, "We should cut rates, anyway, even if we don't get negative data; even if it doesn't look like the economy is going into recession, we should just preemptively cut rates."

See Peter at the Las Vegas Freedom Fest – July 17-20

https://www.freedomfest.com/

Save $50 using promo code SCHIFF

93 Ounces of Silver for One Ounce of Gold

I think the most interesting development today in the market was in the metals market. I've been talking on the podcast for some time about the spread between gold and silver, and the fact that silver has never been this cheap, in terms of gold. The spread got to almost 93:1, where you can buy 93 ounces of silver for one ounce of gold - which is incredibly cheap.

Some Silver Stocks up 10% or More on the Day

It's a great time to be buying silver, and I've really been pounding the table on people buying silver.  I recommended it again last night last night on my live YouTube event, I recommended it to my Managed Account clients on our last webinar, encouraging people to contact their brokers and maybe buy more silver stocks. In fact we had silver stocks today; some stocks up 10% or more on the day. Very, very significant jump up in the price of silver stocks, even thought the price of silver itself did not have that big a move. It was only up 19 cents.

Silver Up as Price of Gold Fell

But the significance of the move is that gold was down $8. So not only did silver have a relatively large move, although not large enough to normally cause silver stock to rise by 10%, but what was significant about it was that it rose as the price of gold was falling. This could signal - and it was looking to me technically that we saw some indications of this last week (I added to my own silver stocks last week  - but it looked to me like this trend was about to change.  We're still above 90:1. We're close to getting back to 90:1 even. But this is still an incredibly good opportunity to buy physical silver; to buy silver oriented stocks. But what I think this is showing me is that the bull market in gold is getting ready to kick into a higher gear.

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

See Peter at the Las Vegas Freedom Fest – July 17-20

https://www.freedomfest.com/

Save $50 using promo code SCHIFF

93 Ounces of Silver for One Ounce of Gold

I think the most interesting development today in the market was in the metals market. I've been talking on the podcast for some time about the spread between gold and silver, and the fact that silver has never been this cheap, in terms of gold. The spread got to almost 93:1, where you can buy 93 ounces of silver for one ounce of gold - which is incredibly cheap.

Some Silver Stocks up 10% or More on the Day

It's a great time to be buying silver, and I've really been pounding the table on people buying silver.  I recommended it again last night last night on my live YouTube event, I recommended it to my Managed Account clients on our last webinar, encouraging people to contact their brokers and maybe buy more silver stocks. In fact we had silver stocks today; some stocks up 10% or more on the day. Very, very significant jump up in the price of silver stocks, even thought the price of silver itself did not have that big a move. It was only up 19 cents.

Silver Up as Price of Gold Fell

But the significance of the move is that gold was down $8. So not only did silver have a relatively large move, although not large enough to normally cause silver stock to rise by 10%, but what was significant about it was that it rose as the price of gold was falling. This could signal - and it was looking to me technically that we saw some indications of this last week (I added to my own silver stocks last week  - but it looked to me like this trend was about to change.  We're still above 90:1. We're close to getting back to 90:1 even. But this is still an incredibly good opportunity to buy physical silver; to buy silver oriented stocks. But what I think this is showing me is that the bull market in gold is getting ready to kick into a higher gear.