Why gold is money. Peter Schiff. Gold stores wealth.

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Peter Schiff: In 1999 I think that was the first time I started buying them.

Interviewer: How much was gold per ounce then?

Peter Schiff: Well gold was under 300, 200 near the peak of the Naz (?) When it really started to get ridiculous, stocks were ultra cheap back then and I started buying them and I started selling them and recommending physical precious metals and I bought myself gold, silver, platinum probably in 2000 I think I started selling it, and now we probably sell more physical bullion per month today than I used to sell in brokerage business -when I first started in 2000 so now I'm selling a lot of gold.

Interviewer: Where does it go from here?

Peter Schiff: A lot higher, I mean look where oil is, it's $120 a barrel so if you look at the relationship that gold has to oil you would expect that to be close to Ten to one. So with $120 barrel of oil you should see gold around $1200 per ounce. I would think that it will get there before the end of the year. Interviewer: Help me to understand this Peter and pretended that it is the average investor asking. Gold is this kind of thing that you buy the bars of it that you buy the physical gold and you don't do anything with it, you just hold it.

Peter Schiff: Gold is money. And money retains its value, that's the good thing about money. The problem is when people are using what they think is money, dollars, doesn't retain its value because Ben Bernake (?) is printing it like crazy. In fact there was news that came out today on Freddie Macky, huge losses that they have, on Freddie may, Freddie Mac is going bankrupt unless the Federal reserve create a substantial lot of inflation, to prop up the housing market. So the only way that these companies won't go bankrupt is if they create so much inflation gold is probably going to be at $5000 per ounce.

Interviewer: But if the dollar does make a comeback, if the world considers its current moves and its future moves to be serious –about stopping inflation, to not lowering the interest rates any more will Gold continue to go up?

Peter Schiff: The dollar is not going to make a comeback. I don't care how much they talk it up.

Interviewer: That’s not what I asked -if the dollar does hold its value.

Peter Schiff: It’s impossible for that to happen. You might as well ask me if pigs sprout wings can they fly? The dollar is not going to go up Boucker (?) did stop inflation back in the 80s.

Interviewer: Was it possible to do it? If Bernake does it will Gold continue to go up?

Peter Schiff: No. What did Boucker do? He put interest rates up to 20%. Is Ben Bernake going to put interest rates up to 20%?

Interviewer: So far he hasn’t.

Peter Schiff: No, and if he did would our economy total collapse? If we had 20% interest?

Interviewer: Well it did back in the 80s.

Peter Schiff: Well because we didn't have a $10 trillion national debt financed with T Bills.

Interviewer: We had a loss of debt compared to the GNP.

Peter Schiff: Back in the 1980s the majority of debt was in 30 year government bonds that was owned by other Americans. Now the majority of debt is T-bills two-year T-bills owned by the Saudis and the Chinese and the Japanese is a huge difference. There were no exact rate (Can’t make this out properly) mortgages, the Fed don't have the tools to defend the dollar all it can do is debase it.

Interviewer: Peter shall we go back to the gold standard?

Peter Schiff: Well cool you know the answer to that.

Some laughing and joking

Peter Schiff: Well we wouldn't have had an azdec bubble we wouldn't be on the verge of collapse of the standard of American living because of the years of monetary excess. I would much rather have had a gold standard then Alan Greenspan and now Ben Bernake.

Interviewer: It is true if we had linked the dollar to gold back in the days when you first bought into the big way back in 1999. What would oil be now?

Peter Schiff: If you go back even further, we separated from gold in 1971. If we were still on the gold standard oil would be about $3.50 per barrel. The difference is inflation.

Interviewer: Of course we would be making about $500 a year.

Peter Schiff: But we would have a higher standard of living, I don't know what we would be making. I don't have details on the entire salary but we would have the purchasing power, that's what's important. And now the government, when they look at oil prices at $120 a barrel and they look at food prices and they say well this is because of global economic growth and is because China and it's because of OPEC. But it's not. All of it is because of the Fed and all of it is because they are printing money, when you've got to own gold.

Interviewer: Can we broaden this discussion to other metals like silver and platinum and then maybe we can go to the non-precious ones.

Peter Schiff: Well I like silver. Silver has always been a monetary metal and I think gold and silver kind of go hand-in-hand. I think there is a bigger move coming in silver, if gold is a $5000 an ounce, silver could be at $500 an ounce and the ratio might be ten to one, now it’s 40 or 50 to 1.

Interviewer: When you think gold will be $5000 an ounce? How long for that?

Peter Schiff: Well I don't know when, I don't have a crystal ball that gives exact dates.

Interviewer: Well you know a ballpark figure.

Peter Schiff: Before the end of maybe the next presidential term -five years from now I think it could be up there. It could be $2000 an ounce sometime next year.

Interviewer: Well we'll save the tape.

Peter Schiff: Save them, I would save them myself.