How will Peter Schiff and the Austrian school of economics predictions do this year?
Last year they did pretty badly. Wonder if SiriuslyWrong and Ron Paul will still praise and
Well, let’s go back in time and see how good his prediction was for 2011:
US dollar demise: Schiff does not see much safety in the US dollar. Schiff says it is not just a dollar collapse, it is a bond collapse too; "avoid any kind of long term bonds, avoid treasuries, and avoid municipal bonds."
The year is not over yet, there is still one more trading day so this can change, but in 2011 the US dollar is up 1.85%, basically flat. No collapse in the dollar like what Schiff predicted.
The 3-year Treasury bond fund (SHY) is up 0.56% (basically flat), 10-year Treasury bond fund (IEF) is up 12%, and the 20-year Treasury bond fund (TLT) is up 28%. No collapse in treasuries like what Schiff predicted.
I looked up three municipal bond ETFs (PZA, MUNI, MUB) and they are up 8%, 5%, and 10%. No collapse in municipal bonds like what Schiff predicted.
I looked up one long term bond ETFs (BLV) and it is up 16%. No collapse in long term bonds like what Schiff predicted.
Indeed, every bond fund I checked was up big this year (and everyone one I wasn’t invested in was up more than mine). Quite simply, what Schiff predicted would occur this year did not occur.
Buy emerging markets and foreign currencies. Schiff is focusing on Asia where people work hard, are producing and have savings.
The emerging market funds (VWO, EEM) were down 20% this year.
Japanese Yen: +4%
Australian Dollar: –0.9%
Swiss Franc: –1%
Canadian Dollar: –2%
Swedish Krona: –3.06%
Chinese Yuan: –1%
Mexican Peso: –11%
New Zealand Dollar: –10%
Russian Ruble: –4%
US Dollar: +1.85%
How did the US dollar do against some other currencies directly?
vs Singapore Dollar: +1.48%
vs Hong Kong Dollar: –0.03%
vs South African Rand: +25%
Looks like the US dollar did very well this year and held its own against almost everyone, contrary to what Schiff said. Emerging markets also did poorly, contrary to what Schiff said.
Buy precious metals and commodities. Stay with gold, stay with silver.
Gold is up +9% this year, so he got this one right. However, silver is down –10% this year. Copper is down 42%, Aluminum is down 45% and platinum is down 25%. If you were lucky enough to buy a precious metal ETF, you could have made some money but not very much, maybe 3%.
What about other commodities? The general commodities ETFs (GSG, MOO, DBA) are down 3%, 20% and 11%.
The fact is that commodities did not do very well this year, contrary to Schiff’s advice.
If you would have listened to Peter Schiff this year, you wouldn’t have done very well in the market. You would have underperformed it. Everything he recommended was either flat (currencies), down big (emerging markets) or straight up wrong (collapse in dollar, treasuries and bonds). He was right on gold but wrong on silver – and every other metal. That’s 1 out of 7.
Now, you can argue (as Schiff does) that gold is a long term investment and long term, everything he is saying will turn out to be correct. Maybe. But for now, his prognostications are no more correct than anyone else’s.
He did say, after all, that this was his outlook for 2011.