Commodities: Peter Schiff - Financial Advisor?

It's funny to hear some of Peter Schiff's detractors attempt to make him seem fooish in the light of his growing popularity, as he predicted way ahead of time the market meltdown and the collapse in the real estate market.

Now that investors have started flocking to him for advice, every move he makes that wasn't correct as far as the timing goes, is being presented as evidence that he doesn't understand what's going on.

While that's not a true assessment of his situation, as market timing is known to be a foolish way to think of investing in the first place, and I doubt Schiff has attempted to do that with those looking to him for advice.

What has been the financial advice given by Schiff? Get out of the U.S. dollar and put it into other currencies like the Singapore dollar and Swiss franc. He's also advocated buying precious metals and foreign stocks which pay a dividend, especially commodities focused companies.

Already some of that investment advice is being confirmed, as gold and silver are starting to break out, and the US dollar struggling to hold its strength.

One thing that Schiff does seem to have not been able to project (but neither has anyone else), is the period of time it would take for companies and funds to deleverage and the length of the forced liquidation time period.

That, more than anything, was the major reason behind some of the length of time it has taken for these projections to happen.

For example, the US dollar has been artificially kept high, as people thought it was because it was considered a haven for their money. I don't think that's the case at all. What it was was funds had to divest of much of their commodity holdings in order to raise hard to find cash. That was a cause of gold prices being held down when the usual trend would be to be the place of safety it usually is, which would have caused gold prices to surge.

Now that it seems much of the forced liquidation period is behind some big funds, they are starting to put their money back into gold, and the price of gold has responded accordingly.

What has been the explantion of Schiff concerning some of his advice that seems to have been vastly wrong? Schiff said that he is able to see things clearly in advance, and so when he says what he says, things may not happen right away, and take longer to pan out.

Is this just a failed investment advisor making excuses? I don't think so. When you are an expert on macro economics, you do see the big picture much clearer than the usual investment advisor, and so could definitely make the proper assessment without nailing down the time frame.

That's why investors must take all advice from a financial advisor with a long time frame in mind. There's no doubt the U.S dollar will collapse in price. There's no doubt that inflation in the U.S. will soar as billions, and even trillions, is being committed to horrendous bailouts of poorly run companies in the name of "being too big to fail."

Someone will have to pay for those bailouts, and since foreign countries are seeing the imminent fall of the US dollar, they're not going to buy any type of Treasury bond to shore up the people of the United States at the expense of their own.

American consumers have stopped spending, and so to invest in America's debt without getting anything in return through consumer spending on their products isn't going to happen. At least it isn't going to happen the way it has in the past.

So as far as Peter Schiff goes and his investment vehicle Euro Pacific Capital, he's working on getting a license to be a investment advisor. He's been a broker inthe past, but he want to be an active manage of his clients' money.

Already Schiff has hired analysts through Euro Pacific Capital to start doing their own independent research.

This could be a very opportune time for Schiff, as along with Jim Rogers, he probably understands the overall macro economic situation as well as anybody, and over the next several years it should play to his knowledge and strengths.

So now that Peter Schiff is becoming a significant financial celebrity, where is he going to go from here?

You could imaging "Peter insurance," "Schiff capital, financial advisor, investment advisor, Schiff's financial services. Who knows?

One thing for sure, he had the macro economic picture almost completely right. The only legitimate complaint is the short term picture stood up longer than Schiff expected, and so his detractors and competitors are trying to drive that wedge between Schiff and potential clients, as they swarm to him and away from them for advice ... and their dollars.

If Schiff does this right, he could very well become a financial household name similar to Warren Buffett. But he'll have to prove himself over the long term, and if he can keep his short term projections under discipline, he should do very well for investors over the long term.

This isn't the last we've heard from Peter Schiff or Euro Pacific Capital. Commodities will continue on their bull run, and those running with certain of those commodities should do great in the future.

Jim Rogers Giving Clinic on Identifying and Solving Economic Crisis Part 3 of 5

Points covered in video:


Where the opportunities are now

In forced liquidation period

Find things where fundamentals are unimpaired

What is unimpaired are raw materials, commodities

Supplies of everything will continue to decline

Categories like farming, mining and lumber will be significant going ahead

Farming has severe shortages now

Even though demand is going down, supply is going down faster

Historically commodities tend to come back first in tough times because of shortages of everything

Alternative energy a long way from being reality or affordable

Future of China and America over next 30 years

Part One Part Two Part Three Part Four Part Five

Commodities: Jim Rogers TV - Why Regulation Fails

Jim Rogers: Why real assets like commodities are so important today

Some of the things covered by Rogers in this video:

Regulation and its failures

Will pass blame and take wrong steps

Need to let companies fail so system can be cleaned up

Takes assets away from competent and giving them to incompetent

Inflation on the horizon

Hold on to real assets




Part One, Part Two, Part Three, Part Four

Commodites are going to be even more significant in the future as demand for natural resources will rebound with a vengeance!

Commodities: Mirror Equities Drop

Commodities mirror drop of equities

Almost everything in the current market are acting like they're in a conspiracy against commodities, as they go against their usual behavior and drop along with stocks. Investors usually use them as a hedge when the equities market falls, but this time around there's no safety there.

Once the period of deleveraging dissipates we'll get a better picture on whether that's the major downward pressure on raw materials. It's definitely one of the key reasons commodities are underperforming, as funds are forced to sell in order to access capital.

Of course this also increases the strength of the U.S. dollar, which in turn puts more downward pressure on commodities, as when funds move out of their positions in commodities, it brings them back to the U.S. dollar which most are denominated in.

The other obvious reason for the ongoing plunge in commodity prices is the economic conditions themselves, where demand for raw materials has declined significantly. This is one of the major reasons China is putting their own stimulous package into play, to spur domestic growth by providing capital for infrastructure projects.

When forced liquidation (deleveraging) begins to slow down, that'll probably be the first step toward shoring up the raw materials market again.

All of these factors will continue to drive the prices of commodities across the board.

Commodities are in "Forced Liquidation" - Jim Rogers

Jim Rogers, CEO of Rogers Holdings said in an interview with Commodity Online that the commodity bull market will last longer than he originally anticipated because of the financial crisis around the world.

Historically, said Rogers, there have been eight or nine periods of what he calls "forced liquidation," where people sell everything regardless of the underlying fundamentals. He added that this is one of those periods.

He explains it this way: ”The cyclical demand for commodities may slow, but the secular supply will be badly affected so the commodity bull market will last longer and go further in the end.”

What this means is the rate of growth will slow, but nothing has changed in the long-term demand for commodities in the emerging markets. Natural resources will continue to be needed for many years to come, and that means commodities will remain in demand.

Illiquidity is what's holding things back at this time, not the demand that hasn't changed. As Rogers said, people are being forced to liguidate in order to get access to immediate funds. When that's over, we'll go back to the commodity bull market as defined by the fundamentals of the market.


Other Insights from Jim Rogers:


Jim Rogers: Where he's putting his money

Jim Rogers: We're Facing an "Inflation Holocaust"

Jim Rogers: History Reveals Bailouts do more Harm than Good

Jim Rogers: Government Bailout a Huge Mistake

Jim Rogers: People Don't Understand Commodities

Jim Rogers Says Commodities Should Come Back Strongly