Home Prices Could Fall 50 Percent. Schiff Says Rising Yields Are the Most Bullish Thing for Gold.
Peter Schiff sat with Jeremy Szafron on Kitco News and said the forty year bull market in bonds is over. Mortgage rates peaked at 18 percent in 1981 and bottomed near 2.625 percent in 2021. The ten year went from 16 percent to 60 basis points. We are six years into a structural bear market he thinks lasts at least twenty years, and rates can rise faster than they fell.
“We can expect mortgage rates to reach 9 percent perhaps by the first quarter of next year.”
That is the affordability break. People already cannot buy at current rates. The only way buyers return, he said, is a 30 to 50 percent drop in home prices nationwide, a bigger bubble than 2007 and 2008. The people still in their houses are the ones locked into 3 and 4 percent fixed loans. Once equity is gone, there is no reason to keep paying.
“This is a bigger bubble.”
The government that bailed everyone in 2008 cannot bail anyone this time. It is the one that needs saving, and nobody is big enough to save the United States government. Yields are already at levels last seen in 2002. That is not the end of the move. It is closer to the beginning. Servicing the debt becomes extremely expensive. The crisis is a sovereign debt crisis, not a homeowner crisis, and it is not far off.
“It is time for America and other countries, by the way, to be held accountable for their extravagance.”
He maps four debt quadrants. High debt and high rates is the dangerous one. The exits are massive inflation or a restructuring. Washington could default at 50 cents on the dollar. Bondholders have already lost half in real terms. Banks, insurers, and the Fed hold the paper. Big Tech is now competing with the Treasury to borrow. The dollar’s strength is an illusion.
The trade is the one he has run for twenty years. Sell the bonds. Buy the gold. Rising bond yields, he told Szafron, are the most bullish thing that could happen to gold and silver.
“Rising bond yields are the most bullish thing that could happen to gold and silver.”
Central banks keep buying. China’s monthly purchase was the largest in two years. Gold is still about $1,500 under its January high. When the sellers run out, he expects the metal back toward $5,000, and faster than the last trip.
Silver’s 2025 breakout is bigger than people realize. He holds more of his own money in mining stocks than in physical bullion because that is where the upside is.
Buy the bullion, skip the collectibles, and store it where you can get it.
A retiree living on Social Security and CDs should buy next year’s groceries now.
Tax hikes on the wealthy are coming. The one long shot that could save the debt is not a revaluation of Fort Knox. A real 50 cents, he said, beats a dollar worth 20 cents.
The biggest threat to retirement is the bond market that still thinks the forty year bull is alive. It is not. Nine percent mortgages and a 50 percent house price drop are the bill.
Gold is the hedge against the Treasuries that cannot be bailed.
