Peter Schiff: Trump Levies a Backdoor Export Tax | SchiffGold

On the latest episode of The Peter Schiff Show, Peter returns to Puerto Rico, laying out a clear investment case for gold and silver miners while calling out recent policy moves that threaten markets and manufacturing. He warns that administration trade and finance policies — from ad hoc export levies to re-insuring mortgage giants — will distort markets and encourage reckless risk-taking.

Peter opens by urging listeners to consider where true asymmetric opportunities lie and why taking a concentrated bet can make sense for those who can tolerate volatility:

And I really want to make sure that my podcast audience is invested in this sector to the extent that they are risk seeking. These are not for widows and orphans because there is risk. Although I believe the upside potential dwarfs the downside risk. And I think that when you get a situation where it’s so asymmetric, where you have so much profit potential relative to what you can lose, that’s when you want to make a big bet. I mean, I think that’s how people have made a lot of money in the markets over the years.

He then explains a market technicality that helped spark recent moves in the metals complex, pointing to tariffs on Swiss-fabricated bars and the behavior of futures shorts needing to cover:

And a lot of those bars are fabricated in Switzerland. And Switzerland is subject to a 39% tariff. At least Americans are subject to that tariff if they import something from Switzerland. Well, if you import gold bars from Switzerland, 39%, that is a huge premium. And so what happened was I think some of the shorts in the futures market needed to cover.

He underlines just how dramatic the returns have been this year for the miners and notes that Bitcoin’s media splash has overshadowed hard assets — a dynamic that could reverse as institutions notice real gains in mining equities:

Of course, the year is not even over yet, and you’ve got a 71% gain [in GDX]. Investors, institutional investors, are going to notice this. They’re going to start putting gold stocks on their screens, I think, for the first time. For all the hoopla around Bitcoin. Bitcoin’s stole all the spotlight from gold this year.  

Shifting from markets to policy, Peter criticizes what he calls a thinly veiled revenue grab directed at tech exporters. He reads the reported 15% cut to sales into China as a de facto export tax that undermines any stated national-security rationale:

Just before I started to record this podcast, I read an article about Trump getting Nvidia and Advanced Micro Devices to agree to pay the US government 15% of their revenue selling their products into China, 15%. I guess if they didn’t agree to that, I guess Trump was going to say, you can’t even sell these products to China. In theory, the reason that we would prohibit the sale of products to China was because of a national security risk. Well, clearly, if we’re going to allow the sales to happen, but just force the companies to cut the US government in for 15% of their sales, then clearly, it’s not a national security issue because if it was a national security issue, then we wouldn’t allow them to do it at all. So to me, this is a backdoor export tax.

Finally, he rails against proposals to privatize Fannie Mae and Freddie Mac while simultaneously maintaining explicit government guarantees. Peter warns that turning securitized mortgages into de facto Treasury-like instruments will incentivize outsized risk-taking and recreate the conditions that led to the last housing bust:

If Trump says, ‘Hey, we’re privatizing Fannie and Freddie and anybody who buys any of their securitized products, it all comes with the US government guarantee,’ well, it is so much worse because now Fannie and Freddie are basically issuing US Treasuries. Buying securitized mortgages issued by Fannie and Fannie would be like buying a US Treasury, which is a disaster because it would allow excessive risk taking. It’s going to be worse than what happened prior to 2008. There is no justification for this.

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