If the dollar is in bad shape then why not short the dollar outright? Why use a proxy like gold that sometimes works at hedging dollar weakness and SOMETIMES doesn't. The US Dollar was cut in half 1983 - 1987, yet Gold only traded down to sideways with insane volatility.
Nice to see someone observes these types of relationships objectively, for once. Pretty risky shorting dollar from here though, IMO.
It's ok to put up a hypothesis for causal explanation in hindsight, but the point he illustrated is that the common hedge argument does not always work, regardless of the cause. And it's worth proving that to yourself by actually going back and corroborating facts firsthand (not you necessarily, just in general). Too many neophytes tend to rely on specious myths regarding relationships that often fall apart dramatically, and cost them a lot of money. Another perfect example is the flip flopping relationship of COT speculators vs. commercials (ex: S&P 500 extremes).
Do you think the dollar is going back up and stay there for any length of time? And the circumstances today are a bit different as in 83-87, the economy was booming then and equities were on a tear. Anything is possible, keeping an open mind is best. But, conditions warrant prudence and some here were not around in 1980 as I suspect some are, shall we say "neophytes".
I have yet to find anything in these markets that happens all of the time---that's why we play the game.
Money printer is dollar bears best friend, although it could rally temporarily. Fundamentals and simple facts ain't on your side(dollar bulls).
The Dollar index is basically 60 percent Euro. So, if you want to short the dollar against a hard asset then gold is the way to go. Shorting against the Euro doesn't make much sense because its supply can be manipulated just like the dollar.
To get back to the OP: Peter Schiff's entire argument comes down to one unassailable premise he holds (direct quote): "At some point very soon, China and Japan will decide it is in their interest to 'pull the plug' on the US." That's it. If true, he would be right with gold's price in dollars/oz. If not, he won't. Now, China and Japan pulling the plug means they will start to dump dollar assets and stop all purchasing of dollars. They would have to know that this would decimate the dollar's value. These two countries together hold close to half of all dollar reserves in the world. This decision would be like someone who owns half the float of a stock going on CNBC and telling the world that they are selling all of it. In other words, 'pulling the plug' means devaluing their assets and our debt. We owe less. They own less. Seems unlikely to me, regardless of the conventional fundamentals of the dollar. In point of fact, over the past 12 months, they have both increased their dollar holdings.
Good point, another thing that should be brought up is I bet no one here, including Schiff, could paint a logical picture of how/why gold would be at 5000 and the dow would be at 5000 and Asian stocks would be up at the same time. This makes no sense at all. But you would have an easier time explaining gold 5k dow 50k and asian stocks up.