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Peter Schiff: Rising Rates Do Not Signal US Recovery

Few traders have such a strong point of view on the markets as Peter Schiff of Euro Pacific Capital. How’s he positioning for 2011?

We know that Schiff is a tad dramatic – some would say alarmist – but his forecasts are not without merit.

In late 2006, Schiff predicted the housing bubble and resulting subprime mortgage crisis and in late 2008, he predicted the automotive industry crisis and the crisis in the banking and financial markets.

And whether you find his calls prescient or fear-mongering, there’s always value in learning what bears like Schiff expect and how they’re positioning.

Here are three themes Schiff tells us should be on your radar.

All are pegged to his belief that the dollar is on the brink of collapse because of government and Fed policies that he doesn't consider sound.

SELL U.S. DEBT IF YOU GOT IT

As you can imagine, a dollar bear like Schiff doesn't like Treasurys.

”Rates in the bond market aren’t moving higher because the economy is improving it’s because the bond vigilantes are coming out of their comas and realizing the Fed is out of ammunition here,” he says.

“The bull market is likely over (in bonds) and the mother of all bear markets has begun.”

BUY PRECIOUS METALS, COMMODITIES

Because Schiff thinks the dollar is challenged (to put it mildly), it stands to reason he likes commodities. “I’d own the precious metals,” he says

BUY EMERGING MARKETS, FOREIGN CURRENCIES

Although Schiff doesn’t like domestic plays he does like putting money to work overseas.

“There is economic growth in countries that are producing goods,” he says. “Look at countries that have invested, saved – have capital and factories. Countries that have legitimate economic growth based on savings and under-consumption and capital investment.”

We had quite an explosive conversation with Schiff about moves in the dollar in the Word on the Street segment. Check it out around 5 minutes.


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Trader disclosure: On December 15, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AAPL), (BAC), (F), (GE); Pete Najarian owns (DD) calls; Pete Najarian owns (DRYS); Pete Najarian owns (YHOO); Pete Najarian owns (BBY) calls; Pete Najarian owns (C); Pete Najarian owns (F) bonds; Pete Najarian owns (GE); Pete Najarian owns (LOW) calls; Pete Najarian owns (MSFT) call spreads; Pete Najarian owns (MS); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman's firm is long S&P puts; Finerman's firm is long Russell 2000 puts; Finerman Owns (AAPL); Finerman Owns (BAC); Finerman Owns (GOOG); Finerman's firm owns (JPM) and (JPM) leaps; Finerman owns (JPM); Finerman owns (MSFT); Finerman's firm owns (MSFT); Jon Najarian owns (CSCO), is short (CSCO) calls; Jon Najarian is short (V) puts

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