Gold broker and crypto critic Peter Schiff makes headlines every time he describes bitcoin as “fools gold,” which he did again this week, days after the No. 1 cryptocurrency plunged more than 20 percent from its new all-time high of of close to $42,000.
Bitcoin dropped to a little more than $30,000 over the weekend and Monday, emboldening critics such as Schiff to push the narrative that bitcoin has no actual value, IBTimes reported.
The value of one bitcoin was $36,191.70 as of this writing. Bitcoin has more than quadrupled in the past year, reminding everyone of the bitcoin madness of 2017 “that first made cryptocurrencies a household name before prices collapsed just as quickly,” Yahoo Finance reported.
Bitcoin relies on a willingness to be delusional
Schiff claimed that the recent early January 2021 price rally was due to sellers being able to sell to buyers who don’t recognize that bitcoin is “all a scheme.” Most people who don’t sell are “under the delusion” that bitcoin will someday turn to cash, he said, according to Fox Businesss.
“It’s never going to be money. It doesn’t fit the very definition of money. Money needs to be a commodity. It needs to have actual value unto itself, not just the uses and means of exchange,” he said.
Schiff is heavily vested in gold
Schiff founded his company, SchiffGold, in 2010 to deal gold for his brokerage clients. Known for being bearish on the U.S. economy and the dollar, he advises long-term investment in gold as an inflation-proof store of value. A stockbroker, financial commentator and radio personality, Schiff hosts the Peter Schiff Show podcast. He’s the former host of the podcast Wall Street Unspun. Schiff ran in the 2010 Republican primary for a U.S. Senate seat in Connecticut, losing to Linda McMahon.
So is bitcoin the “new gold” or fool’s gold?
The new hope is that bitcoin can emulate gold as a store of value that sits beyond the reach of government mismanagement, Alex Rankine wrote for Moneyweek. “Younger investors appear to prefer digital wallets to the hassle of managing physical bullion. Yet fraud and theft are still rampant in the world of bitcoin trading. What’s more, the cryptocurrency’s price tends to move in line with stock markets, undermining its credibility as a safe-haven asset.”
Schiff’s “fool’s gold” comments came days after Goldman Sachs advised its clients not to buy bitcoin, saying such digital assets do not “constitute a viable investment rationale,” IBTimes reported. However, the crypto community says it’s tracking new data that shows Wall Street is buying bitcoin like hot cakes.
The Grayscale Bitcoin Trust is a publicly traded statutory trust with substantial holdings fully backed by bitcoin. It allows accredited investors to gain exposure to BTC without owning the underlying asset
Grayscale is buying bitcoin faster than new coins are entering circulation, according to market researcher Kevin Rooke, Daily Hodl reported in May 2020.
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“Grayscale’s Bitcoin Trust bought 18,910 bitcoins since the halving. Only 12,337 Bitcoins have been mined since the halving. Wall Street wants bitcoin, and they don’t care what Goldman Sachs has to say.”
Schiff is also the CEO of Euro Pacific Capital, a U.S. investment advisor and broker-dealer. He is known for holding long-term investments in the foreign stocks and currencies of countries with sound fiscal monetary policies.
Schiff says bitcoin is backed by nothing
He said bitcoin was like fiat digital currency that’s “backed by nothing” and not legally recognized.
“People who are buying it are going to wake up one day and they’re just going to be a bagholder,” Schiff told Fox.
Schiff described bitcoin as “fool’s gold” in October 2019 during an episode of the Off the Chain podcast, saying it lacked substance, utility and was nothing like gold.
“When they created bitcoin, it was designed to mimic gold. It was a counterfeit of gold. They represented a gold-colored coin even though it has no color, it has no substance. You ‘mine’ Bitcoin, even though you don’t mine it. You solve a math problem. So they tried to make it out like they were creating gold out of nothing. But they’re not. You’re not creating gold. You don’t have any actual gold. That’s why it’s the ultimate fool’s gold.”