‘Too little, too late’: Peter Schiff wants you to 'sell the rip' during the stock market bounce — and warns even 'cash is not safe.' Here are his 'still buys'

Stagflation threat

Schiff has been warning about inflation for some time.

Earlier this year, he stated, “By 2025 inflation will likely be in double digits, and the first digit may not be a one!”

Americans have grappled with rising price levels in recent years. In June 2022, the U.S. consumer price index saw an annual increase of 9.1%, the largest since November 1981.

However, after significant interest rate hikes by the Fed, headline inflation in the U.S. has subsided. In June 2024, the CPI declined 0.1% month over month and rose by 3% over the past 12 months. Meanwhile, the Personal Consumption Expenditures (PCE) price index — the Fed’s preferred inflation gauge — showed a 2.5% increase in June from a year ago.

Despite this moderation, Schiff is now sounding the alarm on something worse than inflation: stagflation.

“Stagflation is still the biggest risk, so cash is not safe,” he wrote earlier this week.

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‘Still buys’

Stagflation refers to an economy that’s experiencing high inflation, but without the economic growth that usually comes with it. And just like inflation, stagflation can erode the purchasing power of your hard-earned money.

Given this dire prediction, Schiff points to several areas of refuge.

“So value, dividend paying stocks, as well as gold and the miners are still buys,” he wrote.

Schiff is putting his money where his mouth is. According to the latest 13F filing from Euro Pacific Asset Management, these investment themes are clearly evident at Schiff’s firm.

For instance, at the end of June 2024, the sixth-largest holding at Euro Pacific is cigarette giant British American Tobacco (BTI), which offers a generous dividend policy with yield of over 8%.

Schiff’s firm also owns over 148,000 shares of Philip Morris International (PM), another tobacco titan with a dividend yield of 4.5%.

But perhaps the biggest theme at Euro Pacific is precious metals. As of June 30, Euro Pacific Asset Management held 609,738 shares of Agnico Eagle Mines (AEM), 2,015,178 shares of Barrick Gold (GOLD) and 1,377,339 shares Pan American Silver (PAAS).

In fact, the three mining giants were the firm’s top three holdings, representing 7.9%, 6.6%, and 5.4% of its portfolio, respectively.

Gold and silver have long been considered popular hedges against inflation. The reason is simple: These precious metals can’t be printed out of thin air like fiat money.

Schiff is particularly optimistic about gold. On Aug. 1, he stated, “Stagflation is bullish for gold.”