Renowned economist Peter Schiff: The correlation between gold and oil is reversing, with both a buying opportunity in gold and signs of a market bottom emerging.

Renowned economist Peter Schiff warned that gold’s strength amid rising U.S. Treasury yields signals institutional investors are quietly positioning themselves for profound structural shifts. Meanwhile, severely distorted employment data and tariff policies that defy basic economic principles are pushing the United States into a situation 'worse than a recession.'

Recently, in his latest video interview, well-known Wall Street economist Peter Schiff offered an in-depth analysis of current macroeconomic asset performance—diverging from market consensus—and the underlying fundamentals of the U.S. economy. Despite a notable rise in U.S. Treasury yields, the precious metals market has not come under pressure as traditionally expected.

Schiff noted that this anomaly, combined with potential spillover effects from Japan’s looming debt crisis, is brewing a significant market storm. He also thoroughly dissected the recently reported record-low U.S. initial jobless claims data, bluntly stating that the new round of tariff policies not only suffers from fundamental legal flaws but also serves to obscure America’s increasingly unmanageable fiscal crisis.

Reversal of Gold–Oil Negative Correlation and Soaring Mining Stocks Signal a 'Quiet Bottoming'

Despite this week’s rising bond yields and sharply higher oil prices, gold has shown no signs of weakness. Data shows gold prices rose approximately 1% this week, while silver climbed 2.4%. Schiff pointed out that although silver is still down about 20% year-to-date and gold has declined roughly 7%, this actually presents an excellent buying opportunity.

More importantly, the market is witnessing a subtle shift in inter-asset correlations. Schiff emphasized: 'Since the outbreak of conflict—particularly during the Israel-Iran tensions—gold and oil prices have generally moved in opposite directions. But I’ve always believed this relationship would eventually change, and that gold and oil would begin moving in the same direction again. That moment may be happening right now.'

Beyond the metals themselves, mining stocks are sending an even stronger signal of a bottom forming. This week, the GDX index (a gold miners ETF) surged 5.6%, and the GDXJ index (a junior gold miners ETF) rose 5.8%—more than five times the gain of gold itself. Although both indices are still down 12.25% and 14% year-to-date, respectively, Schiff remarked: 'This seems to indicate the market is nearing a bottom, with further upside potential ahead. These stocks remain highly attractive investment opportunities.'

He cautioned investors that when markets stop reacting in line with consensus expectations, it often means institutions are adjusting positions ahead of positive news becoming public. 'The key to preserving wealth lies in watching broken correlations—not dancing to the tune of what’s on TV.'

187,000 Jobless Claims a 'Mirage': Gig Economy Distorts True Labor Market Conditions

Regarding the recent drop in U.S. initial jobless claims to 187,000—a figure politicians have touted as the 'lowest level since 1969' and a sign of economic strength—Schiff directly countered with historical data: 'In fact, the number was even lower in September 2022, at just 182,000 claims.'

He pointed out that extremely low unemployment claims do not indicate a healthy economy; rather, they obscure structural deterioration in the labor market. The distortion in official data primarily stems from three fundamental shifts:

First is the stagnation in corporate hiring. 'Over the past few years, corporate hiring activity has nearly come to a standstill. If companies aren’t hiring to begin with, there’s no large-scale layoffs or unemployment claims to speak of.' Second is the persistently declining labor force participation rate—many individuals have exited the job-seeking pool altogether and thus lost eligibility for unemployment benefits. The most significant distortion, however, comes from the rise of the 'gig economy.'

Using Uber drivers as an example, Schiff sharply observed: 'If your only job right now is driving for Uber, you won’t be fired. If you’re self-employed, by definition, you can’t “fire yourself.”' He emphasized that when demand declines, drivers see a sharp drop in ride requests and earnings—the pain is diffused. 'Those who drive for Uber only a few hours a week are effectively in the same situation as the unemployed, yet they are still classified as “employed” in official statistics.'

Tariffs Are Effectively a 'Covert Domestic Tax'; Government Spending Is the Real Culprit Behind the Crisis

During the interview, Schiff also strongly questioned the policy of imposing tariffs ranging from 10% to 12.5% on approximately 60 countries under Section 301 of the Trade Act of 1974 (intended to prevent forced labor).

He deconstructed the absurdity of the policy's legal justification with data: 'Take specific figures, for instance—Canada faces a 10% tariff, while Switzerland is hit with an even higher rate. Are Americans buying Swiss products because they’re made with forced labor? Absolutely not. In fact, average wages in Switzerland are higher than in the U.S. The claim about “preventing forced labor” is nothing but a pretext.'

Schiff cut straight to the core, stating that these policies are fundamentally driven by economic interests and political narratives. Tariffs have not genuinely weakened the competitiveness of foreign exporters; instead, they have undermined the production competitiveness of U.S. businesses. 'These tariff burdens ultimately fall on American consumers… effectively functioning as a disguised form of domestic taxation.'

On macro fiscal guidance, Schiff warned that the U.S. is heavily reliant on external funding and faces the predicament of being a net debtor nation, with a crisis likely to spill over rapidly into the U.S. through a domino effect triggered by Japan’s debt problems. 'To truly resolve the issue, what’s needed is substantial cuts in government spending—not continual tax hikes. Yet instead of reducing expenditures, the government continues to expand its fiscal outlays.'

Transcript

Peter Schiff: 00:00

Gold prices rose by approximately 1% this week, while silver prices climbed by 2.4%. Although both remain down about 20% year-to-date, this rebound is already sufficient to constitute a buying opportunity. Many had assumed that war would cause gold prices to fall and that rising interest rates would negatively impact gold—but they were wrong. In reality, gold prices have risen. Regardless of whether Japan makes the right or wrong decision, a crisis will inevitably ensue. This poses a problem for Japan—and potentially an even greater one for us. Initial jobless claims declined by 22,000, falling to 187,000.

Peter Schiff: 00:36

Trump claimed that under Biden’s leadership, our economy is in the worst shape in history. To have such a strong economy, there must be a very stable labor market, where virtually no one is being laid off. Currently, Trump is imposing tariffs ranging from 10% to 12.5% on approximately 60 different countries. This action is carried out under Section 301 of the Trade Act of 1974, with the stated objective of protecting American workers from unfair competition arising from forced labor. Switzerland, it is alleged, has not taken any measures to prevent forced labor. There has also been a lot of negative news this week, which I will detail shortly. But before that, I’d like to highlight a few areas that performed well this week, such as the gold and silver markets.

Peter Schiff: 01:22

Precious metal assets performed well this week. Gold prices rose by approximately 1%. While this gain may not seem dramatic, it is noteworthy because it occurred against a backdrop of significantly rising bond yields. Oil prices also surged substantially this week. Typically, higher oil prices should have a positive impact on gold due to their historical correlation, but recently this relationship has been less evident. Since the outbreak of war—particularly during the Israel-Iran conflict—gold and oil prices have moved in opposite directions. However, I have long believed that this correlation will eventually shift, and gold and oil prices will once again move in tandem. We may now be witnessing the early stages of that transition.

Gold prices saw little movement this week, while oil prices rose sharply—but gold did not decline in response; instead, it edged higher. I believe gold’s ability to maintain upward momentum signals a shifting market dynamic, which is critically important for precious metals investors. Silver prices climbed 2.4% this week, though they remain down roughly 20% year-to-date. Gold is down about 7% for the year. However, considering that both metals experienced significant interim rallies in 2025, these declines are relatively modest. Markets are cheering higher bond yields, yet gold continues to follow its own distinct trajectory.

Narrator:

Peter Schiff notes that despite rising bond yields and surging oil prices, gold still managed to gain approximately 1% this week—a sign that market conditions are subtly shifting, though many investors have yet to recognize it. When markets cease reacting in line with consensus expectations, institutional investors often adjust their positions well before related news gains widespread attention. The key to preserving wealth lies in monitoring broken correlations, not in reacting to headlines on television. Next, Peter Schiff will explain why the relationship between oil and gold is changing—reflecting institutional investors’ growing awareness of deeper structural shifts, a realization that in itself may already present a compelling buying opportunity.

Peter Schiff: 03:34

Many people predicted that rising interest rates would be bearish for gold, but in reality, higher rates are bullish for gold—their prediction was wrong. This week’s price action may indicate that investors are beginning to grasp this reality. Consider also the performance of mining stocks: the GDX index rose 5.6% this week, while GDXJ gained 5.8%, representing substantial outperformance. By comparison, gold itself only rose 1%, meaning mining equities significantly outpaced the underlying metal. This suggests the market may be nearing a bottom, with further upside potential ahead. These stocks remain highly attractive investment opportunities. Year-to-date, GDX is down 12.25%, and GDXJ has fallen 14%.

Moreover, whether Japan makes the right decision or the wrong one, it will face problems—and ultimately, so will we. We are more dependent on external factors. Although our debt-to-GDP ratio is relatively low, we lack the capacity to repay our debts and are burdened by the challenges of being a net debtor nation. The U.S. government’s wealth is concentrated overwhelmingly among a tiny elite—the top 1% holds staggering wealth—but America’s middle class does not possess the same robust resources as Japan’s middle class.

Narrator:

Mining stocks have risen more than five times faster than gold itself, yet this phenomenon rarely makes headlines. From Peter Schiff's perspective, the outperformance of GDX and GDXJ relative to the metal suggests that investors with stronger conviction may already be positioning themselves, placing early bets on future market movements. While retail investors remain fixated on daily price fluctuations, institutions often quietly enter the market during periods of widespread pessimism. Next, Peter Schiff will explain why Japan’s debt crisis could escalate into a U.S. financial problem sooner than most anticipate—and why, when that moment arrives, we may be even less capable of making sound decisions, significantly increasing the risk of losing control and spiraling into hyperinflation.

Peter Schiff: 05:43

The Japanese may reach that decisive moment before we do. And once it happens, it will trigger a domino effect—starting in Japan and quickly spreading to the United States.

Peter Schiff: 05:58

Next, I’d like to discuss some other U.S. economic news, specifically the latest data on unemployment insurance claims. The Trump administration has consistently highlighted the weekly decline in initial jobless claims—a trend that is indeed evident. In the most recent week, initial claims dropped sharply by 22,000, bringing the total down to 187,000.

Peter Schiff: 06:31

The Trump administration claims this is the lowest level since 1969. But that’s not actually true, because the figure was even lower in September 2022—at just 182,000 claims. Clearly, they’re choosing to overlook that data point to attribute this achievement solely to Trump, as if it were an unprecedented success of his presidency. However, the fact that the same milestone was reached in 2022 under Biden significantly diminishes the significance of this statistic. If Biden’s numbers were even lower than Trump’s, then by Trump’s own logic, Biden could argue he presided over an even stronger economy—contradicting Trump’s frequent assertion that Biden inherited or created the worst economy in history.

Even so, the figure of 187,000 remains quite low. One might argue that Trump still deserves some credit. However, it’s important to note that low unemployment claims can mask deeper structural weaknesses and may not accurately reflect the underlying health of the economy.

Narrator:

Peter Schiff pointed out that the much-hyped figure of 187,000 unemployment insurance claims has significantly diminished in importance, as similar or even lower figures were recorded several years ago. This selective comparison is effectively manufacturing a political victory while obscuring the broader trend of economic deterioration. Savvy investors should ask themselves: why are inconvenient data points quietly disappearing from official reports? Furthermore, Peter Schiff will explain why today’s labor market appears healthier than it actually is and what fundamental shifts underlie this illusion.

Peter Schiff: 08:16

If the economy were truly this strong—strong enough to produce such a resilient labor market that virtually no one is being laid off—that would be extraordinary. Typically, employers continue hiring only when economic conditions are favorable; layoffs occur when the economy weakens. Yet today, with businesses barely hiring new workers at all, the low number of unemployment claims has lost much of its traditional significance.

In recent years, several major structural changes in the labor market have further undermined the relevance of these figures. First, corporate hiring activity has nearly ground to a halt over the past few years—even government statistics show almost no meaningful hiring taking place. If businesses aren’t hiring aggressively, it suggests underlying economic weakness. Fewer hires naturally mean fewer layoffs, because once a worker is hired, employers tend to hesitate before letting them go; but if companies aren’t hiring in the first place, large-scale layoffs—and the associated unemployment claims—simply don’t materialize.

Second, the labor force participation rate continued to decline during Trump’s presidency.

Narrator:

When the size of the labor force shrinks, the number of people businesses hire also declines accordingly. This gradual stagnation in hiring often signals deeper problems on the horizon, with subsequent layoffs eventually dominating headlines. Peter Schiff argues that subdued hiring levels inherently suppress future unemployment claims, meaning current labor market data is less reassuring than it appears on the surface. Markets frequently misjudge the impact of economic lags, as official statistics often trail actual corporate decision-making. Preserving wealth requires recognizing which business activities have already ceased—well before recessionary news breaks. Next, Peter Schiff will explain how the declining labor force participation rate has quietly distorted one of America’s most prominent economic indicators.

Peter Schiff: 10:35

Individuals who might otherwise be unemployed and eligible for unemployment benefits lose their eligibility because they fail to meet two key criteria: being formally laid off and actively seeking work. If you haven’t been laid off—or aren’t actively looking for a job—you cannot file for unemployment insurance. Thus, the logic holds: as the pool of active labor market participants shrinks, so too does the number of unemployment insurance claims.

Peter Schiff: 11:00

The third reason is that an increasing number of Americans are working but are, in fact, self-employed individuals relying on the gig economy to make a living. For example, some people drive for Uber as their primary occupation. If your only job right now is driving for Uber, you cannot be laid off—because these drivers are not formal employees of Uber, and Uber does not need to include them on its payroll. When Uber experiences a decline in ride requests, it does not need to carry out layoffs, nor does it generate unemployment claims; drivers are not entirely losing their jobs, but rather everyone’s workload is reduced, spreading the hardship across all participants. As demand falls, each driver’s income correspondingly shrinks, yet no one is officially considered 'unemployed' in statistical terms. The end result is—

Narrator:

This situation prevents individuals from qualifying for unemployment benefits. By definition, if you are self-employed, you simply cannot 'fire yourself.' The gig economy can mask underlying economic weakness without triggering immediate household financial crises. As Peter Schiff has pointed out, unemployment statistics no longer fully reflect reality because the very nature of work has fundamentally changed. Millions of people may be experiencing declining incomes, while officially reported layoff figures remain unusually low. This misleading portrayal of economic resilience leads investors to rely solely on surface-level employment data for decision-making, thereby overlooking mounting economic pressures.

Peter Schiff: 12:57

These gig workers were never formally employed by Uber, so they cannot be laid off by Uber and are ineligible for unemployment benefits. Even if their working hours have drastically declined, they are still classified as 'employed' in official statistics, because, under current definitions, only those who perform absolutely no work are counted as unemployed. This is why the unemployment rate itself lacks substantive meaning—individuals who drive for Uber just a few hours per week, despite being in circumstances virtually indistinguishable from unemployment, are still categorized as 'employed' in official data. Before the rise of the gig economy, such individuals would have had no opportunity to earn even sporadic income through occasional driving and thus would have been directly counted as unemployed.

The figure itself is actually meaningless. I believe the Trump administration should take this issue seriously, but in reality, it has made no substantive response—it has only generated unnecessary noise.

Peter Schiff: 14:07

Another major development this week was Trump’s announcement of a new round of tariff measures to replace previously expired tariffs. However, these new tariffs are also facing constitutional challenges. It remains unclear how long it will take for related legal challenges to be resolved, but these tariffs are likely to be overturned eventually. Currently, Trump has imposed tariffs ranging from 10% to 12.5% on approximately 60 different countries. These tariffs are implemented under Section 301 of the Trade Act of 1974, which was originally intended to protect American workers from unfair competition posed by low-cost labor abroad.

Narrator:

Peter Schiff notes that modern labor market indicators increasingly classify struggling gig workers as 'fully employed,' thereby creating an unrealistic illusion of economic health. Policymakers celebrate these statistics, while ordinary households face the reality of declining purchasing power and income instability. Next, Peter Schiff will explain the legal basis behind the new tariffs.

Peter Schiff: 15:29

There is a contradiction here, though few commentators specifically address it. The underlying logic of this provision is that if a country compels individuals to perform involuntary servitude or forced labor, enterprises in that country gain an unfair competitive advantage through lower labor costs. American workers are thus placed at an obvious disadvantage when forced to compete against foreign firms that rely on coerced labor.

Peter Schiff: 15:54

Of course, the real motivation behind this policy decision is not genuine concern for the suffering of those laborers, but rather economic and political considerations. Politically, the narrative of 'protecting American workers and ensuring fair competition' is more palatable, yet the core rationale driving the policy ultimately remains rooted in economic interests.

Peter Schiff: 16:15

It should also be noted that excessive reliance on forced labor is, in fact, a highly inefficient method of utilizing labor. Slaves never work diligently of their own accord, as they have no fear of being fired—in fact, they may even wish to be dismissed. In contrast, in a free market, workers strive to improve their performance to retain their jobs, earn promotions, and secure wage increases. Slaves lack any such incentive mechanism: no matter how hard they work, their status remains unchanged, and they receive no additional compensation. Consequently, forced labor is inherently an inefficient mode of production.

Narrator:

Peter Schiff points out that while these policies may sound morally justified on the surface, a closer examination of their economic logic reveals significant inconsistencies. Concern over forced labor alone cannot fully account for the motivations behind tariff policies. When governments increasingly resort to creative legal interpretations to justify such measures, investors should carefully scrutinize the true intentions underlying them. Next, Peter Schiff will explain why invoking this provision to impose tariffs globally leads to a series of internal contradictions that are difficult to reconcile.

Peter Schiff: 17:45

From an economic standpoint, the justification for this provision is that if companies in a given country pay no wages at all, this clearly constitutes unfair competition, thereby granting the president the authority to impose tariffs on goods produced using forced labor. However, the countries currently targeted by Trump do not actually engage in forced labor practices.

Trump’s justification for this is that imposing tariffs on these countries aims to prevent goods produced with forced labor from entering the U.S. market; even if a particular country does not export forced-labor products to the United States, it still matters because the issue lies in those countries’ failure to take sufficient measures to prevent forced labor.

To illustrate with specific figures: Canada faces a 10% tariff, while Switzerland faces an even higher rate. Trump claims that Switzerland has taken no action to prevent forced labor, whereas Canada has taken some steps. However, this argument simply does not hold up. Consider this: Do Americans buy Swiss products because they are made with forced labor? Absolutely not. In fact, average wages in Switzerland are higher than those in the United States.

Narrator:

Peter Schiff points out that invoking forced labor provisions to impose tariffs on affluent economies like Switzerland severely undermines the credibility of this policy. When economic reality directly contradicts the legal rationale cited by officials, their claims become difficult to believe. Next, Peter Schiff will further explain who ultimately bears the cost of these tariffs.

Peter Schiff: 20:01

Swiss products enjoy a competitive advantage, but this has nothing to do with low wages—Swiss workers actually earn higher wages than their American counterparts. Switzerland’s competitive edge stems from other factors, such as exceptional craftsmanship and technological innovation. The claim about 'preventing forced labor' is merely a pretext.

Donald Trump claims these tariffs are intended to protect American workers and businesses, but in reality, this approach has failed to deliver the desired outcomes. Since Trump’s re-election, the U.S. trade deficit has increased rather than decreased, and manufacturing employment has declined instead of rising. More importantly, the burden of these tariffs ultimately falls on American consumers—not on the Swiss or Canadians. Americans are the ones paying for these tariffs. Given the U.S. government’s massive fiscal deficit and its urgent need for additional tax revenue, these tariffs effectively function as a disguised form of domestic tax increases.

Peter Schiff: 21:02

On one hand, Trump claims these tariffs are paid by foreigners; on the other, he uses tariff revenues to offset the fiscal shortfall caused by tax cuts. These two assertions are inherently contradictory. Attempting to counteract the fiscal impact of tax cuts through tariffs is itself an irresponsible approach. Worse still, these tariffs actually erode the production competitiveness of U.S. businesses, thereby exacerbating the very trade imbalances they were meant to address, while the fiscal deficit remains persistently high. The real solution requires substantial cuts in government spending, not continuous tax hikes. Yet, rather than reducing expenditures, the Trump administration has continued to expand fiscal outlays.

Peter Schiff: 22:07

Since Trump's election, the issue of excessive government spending has never been resolved. Despite repeated tariff hikes, the trade deficit remains persistently high—contradicting initial promises. Peter Schiff argues that tariffs essentially function more like an implicit tax on domestic consumers than an effective tool for penalizing foreign exporters.

Narrator:

Tariffs have not genuinely undermined the competitiveness of foreign exporters; instead, they have shifted costs onto American consumers, eroding their purchasing power. In the long run, this approach not only fails to correct trade imbalances but also continuously drags down the real wealth of ordinary households.

Editor/Deng