Gold-bug Peter Schiff has admitted he could have made a lot more money over the last decade if he had focused his investing on high-performing stocks instead of gold.
“Had I had all my money 10 years ago in the ‘Magnificent Seven,’ I’d be a lot richer than I am today,” the 61-year-old investor said recently on the PBD Podcast.
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“I mean, I’m rich enough, but I would have more money had I concentrated on those names,” Schiff added — referring to the seven giants dominating the U.S. stock market: Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Nvidia (NVDA), Tesla (TSLA) and Meta (META).
Here’s why U.S. stock investors saw their wealth explode in the last decade — and why Schiff still cautions against being overweight equities.
Top 1% rake in huge gains
The total net worth of the wealthiest 1% in the U.S. hit $44.6 trillion at the end of 2023, according to Federal Reserve data — a new record driven primarily by an end-of-year stock rally that boosted rich individuals’ investment portfolios.
That new wealth record marks an almost 50% jump from the first quarter of 2020, when the total net worth of the top 1% was $30.1 trillion.
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Schiff, who said in June 2023 that his “net worth is a lot more than $80 million,” would fit within the Fed’s top 1% definition for Q4 2023 — but unlike some of his wealthy peers, the growth in his net worth was somewhat restricted by his investing philosophy, which is hyper-focused on gold.
When quizzed by Patrick Bet-David, host of the PBD Podcast, about how much his net worth has increased over the past decade, Schiff said: “It’s hard to say. My investment portfolio has gone up. In fact, the non-gold portion over that time frame has done better. Now, my gold stocks did very well from 2000 to 2010-11, but over the last 10 years, I have bigger winners in the other half of my portfolio than I do in the gold stocks.”
If wealth generation was his sole focus, Schiff said he could have earned even more money by investing more heavily in the “Magnificent Seven,” all of which have dramatically outperformed the S&P 500 in the past decade.
“I did not do that,” he said — and here’s why.
Soaring stock portfolios ‘all artificial’
Schiff believes the $44.6 trillion held by America’s top 1% is “all artificial [and] all on paper because of what we claim stocks are worth.”
He believes investors are simply “benefiting from the inflated asset price level” caused by the Fed’s monetary policy decisions in the past decade — specifically the low interest rate policy (hovering near 0%) in the early months of the COVID-19 pandemic and the two years prior.
“Most of these Americans, if they tried to sell their stocks, the market would crash,” Schiff argued. “So, you have all these billionaires whose wealth is a function of the price of their stock. If they actually tried to sell their stock, it wouldn’t be that high.”
Gold, on the other hand, is a more stable investment, according to Schiff. In a possible scenario where the U.S. economy tanks and investors panic-sell their stocks, he believes gold is more likely to retain its purchasing power and protect your overall net worth.
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