Peter Schiff: Inflation will be higher by year's end; US debt tops economic hurdles
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With the U.S. in danger of breaking through its debt ceiling, ongoing inflationary pressures and a recession, Wall Street traders are preparing for another year of market volatility in 2023.
Will inflation finally cool this year? Will traders find havens in commodities? Will gold reach $2,000 per ounce? Will the debt ceiling be raised again?
Gold is predicted to reach $2,000 per ounce in 2023. Year to date, the precious metal is already up roughly 6%. (iStock / iStock)
In an exclusive interview, Peter Schiff of Euro Pacific Capital, shared his warnings with FOX Business on the debt ceiling, why inflation is not really easing and other warning signs for the U.S. economy.
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FOX: We hit the debt ceiling. How should investors be looking at gold, other precious metals and the USD?
Schiff: Investors should not just be looking at gold, they should be buying it. Silver too. Investors should limit the number of dollars they hold just to what's needed to pay near-term bills.
FOX: When will gold reach that $2,000 mark? What can investors expect out of silver this year?
Schiff: I think gold will hit $2,000 in the first half of 2023. I think silver will enjoy an ever-larger percentage gain than gold.
Silver's increasing industrial applications like in electric batteries could decrease the metal's trading volatility and bring it closer to gold status on Wall Street. (Reuters / Reuters Photos)
FOX: The Treasury Department is using "extraordinary measures" to mitigate the debt crisis. Yellen has said they can do this through June. What are the risks here? What needs to happen to avoid a default?
Schiff: The crisis is the debt, not the ceiling. The ceiling would be part of the solution, except they keep raising or suspending it so we can go even deeper into debt.
Schiff is CEO of Euro Pacific Capital Inc. based in Westport, Conn., a stockbroker and a radio personality. (The Peter Schiff Show 2023)
The real risk is that the debt ceiling is raised again and eventually we get a real sovereign debt and dollar crisis, as no one wants to hold our debt or our currency.
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FOX: The Dow turned negative for the year this week. How worrisome is this for equities in 2023?
Schiff: I think the most widely held U.S. stocks are very overpriced, and there is a lot of downside risk in those names in 2023.
FOX: Last month, during an interview on Fox Business Network, you said inflation will be higher this year. We’ve seen it ease slightly as of December — CPI +6.5%. Any update to your views here?
Schiff: I still think, by the end of the year, inflation will be headed higher again, with the year-over-year increase possibly taking out the high from 2022. If it doesn't take out the 2022 high in 2023, it will do so in 2024.
To combat rising consumer prices, the U.S. Federal Reserve is expected to continue its interest rate hiking strategy in 2023. (Robyn Beck/AFP via Getty Images / Getty Images)
FOX: Amazon, Microsoft, Google and others laying off. What are your recession views for 2023?
Schiff: I think the recession that began in 2022 will continue and worsen in 2023.
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Federal Reserve Chairman Jerome Powell weighs inflationary market pressures for 2023 after the latest inflation data showed consumer prices still 6.5% higher on an annual basis. (AP Photo/Manuel Balce Ceneta / AP Newsroom)
FOX: The Fed is expected to keep tightening this year. What are your expectations for the frequency/size of hikes this year?
Schiff: I expect the Fed to pivot before the year is over, not because it wins the war against inflation, but because it surrenders. We will not have a soft landing and may even have another financial crisis in 2023 that the Fed will worry more about than worsening inflation.