Both David Einhorn and Peter Schiff have long talked about the eventual fall of the US dollar. Because of the race to the bottom between central banks across the world, the US dollar has remained king of the mountain.
Trump had talked in depth about the Chinese trying to outrace the US in the race to the bottom in the value of their currency. Since Trump’s inauguration, the Chinese have allowed their currency to appreciate versus the dollar.
In Einhorn’s most recent letter to his investors, he stated,”Gold rose over 8% to start the year. Nothing significant happened here (the White House columns are not gold yet); gold simply reversed a portion of the post-election decline it suffered last quarter. Gold remains a long-term position with a thesis that global fiscal and monetary policies remain very risky.”
Einhorn has had this take on the yellow money for years going all the way back to 2007, preceding the great recession. He believed that the Federal Reserves main goal was to prop up the stock market as opposed to watching inflation and unemployment. He spoke directly to this thesis in this article that I posted about a week ago.
Peter Schiff was made famous by being one of the few money managers to predict the 2006-2008 housing crisis. Both Schiff and Einhorn have suffered multiple losing years after the crisis as they have stuck with their thesis that the Federal Reserve is more concerned with the next 20 point move in the stock market than unemployment or inflation of the US dollar.
Schiff has also put his chips in foreign markets as opposed to the US markets. He has paid the price up until this point for doing so. However, he may be proven right as the financial data coming out in the last several weeks is beyond dismal. So as he pushes gold he may be right there as well as foreign, emerging markets investment paying off in the next 12-18 months.