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Often credited with having anticipated the U.S. housing crash, Peter Schiff has maintained ever since that the real crisis is yet to come.Fred Lum/The Globe and Mail

Wall Street is by now indelibly familiar with Peter Schiff's portents of doom. Often credited with having anticipated the U.S. housing crash, which spurred a financial meltdown and global recession starting in 2007, the head of Euro Pacific Capital has maintained ever since that the real crisis is yet to come. His long-standing, dramatic predictions for the U.S. economy, its currency and its Treasury market, as well as the price of gold, however, have for the most part failed to materialize. But as Mr. Schiff told The Globe and Mail in a recent interview in Toronto, if he's been off on the timing, he's sticking to the substance of his warnings.

Why have you not wavered in your belief that a crash is coming, despite the relative stability of the last several years?

Everything that's happened just reinforces the fact that I was right. I knew the policies that [then-chairman of the U.S. Federal Reserve Board Alan] Greenspan was pursuing in 2003-04 were creating a big problem, and it really manifested itself chiefly in the real estate market. What Ben Bernanke and now Janet Yellen have done is an order of magnitude more destructive than what Greenspan did. They just took Greenspan's bad monetary policy and expanded it dramatically. Even if they raise rates again, it's too little, too late. Rates have been so low for so long, the distortions that have built up since 2008 are much bigger than the ones that built up pre-2008. Which means that when we finally have the recession to correct these mistakes, it's going to be much worse than the recession we had back then.

Most would say the economy is improving and the Fed is on track to tighten.

Whatever recovery there was, I think it's over, and cyclically we're starting the next recession. We're pretty much done with the tightening cycle. It started when they started talking about [tapering the Fed's monthly bond-buying program]. Then they raised interest rates. And that's it. The economy is already collapsing, the markets are imploding. Beneath the major averages, we already have a bear market. The average stock is probably down 20 per cent. Meanwhile, inflation is getting worse.

Is the consensus wrong in expecting further rate hikes this year?

They can never let the air out of the bubble. We can never escape. There's no way to take away the cheap money. And when people realize we can't normalize rates, they'll realize there's no way out of this policy. But it's not healthy for the economy. It's perpetuating inflation and asset bubbles.

Assuming that's true, what does a crash look like?

It obviously takes gold up. And U.S. stocks, I think, are going to go down. And when people realize they've been fooled, the dollar is going to collapse. With the boom I'm envisioning in resources, that will be very positive for the Canadian economy. If I was a Canadian, I wouldn't want to own U.S. stocks. Even if they go up because of inflation, they won't go up enough to offset what you're going to lose on the foreign exchange element of it.

Did you get those kinds of calls right prior to the last crash?

We did have the subprime [mortgage] short, which paid off in 2007. I got that one right. But in 2008, we had a bunch of gold stocks and a lot of foreign stocks. All of that stuff went way down in 2008 because the dollar went way up. That was something I didn't see coming. When the collapse happened, so few people really understood where the problems were emanating from, everybody reflexively bought the dollar.

Who's to say that doesn't happen again?

The dollar's been rising the last four or five years. Everybody's been buying the dollar, expecting rate hikes. When the Fed can't raise rates, when we go back to zero and do more quantitative easing, all those trades have to unravel.

You also predicted that gold was going to $5,000 an ounce. Why has the gold bug narrative not come to fruition?

I think a lot of it has to do with confidence in the Fed and confidence in the dollar. The strong dollar has kept commodity prices in check. The major economies are not seeing elevated rates of inflation. But there's always a lag. This lag is taking longer than I would have thought. But that doesn't mean it's not going to happen. People that are claiming victory, that's premature. At some point, inflation rates are going to go up, but they can't do anything about it. Countries that have lots of debt can't raise interest rates.

Could the unravelling you expect be years away rather than imminent?

It already has been years; the question is, could it be more years still coming? But I think it's coming soon, because the Fed either has to raise interest [rates] or admit that it can't. Either way, a collapse is coming. We've got to be getting close to it.

Wouldn't investors following that kind of advice over the last several years have missed out on one of the best bull runs in stock market history?

Yes, but that's only because everybody collectively decided that what the Fed did worked and everything is going to end happily. I'm saying they jumped to the wrong conclusions. Everybody said, this has been a success, the Fed is going to be able to normalize policy, raise interest rates, shrink its balance sheet, everything is great. But they were wrong. It's still a bubble.

This interview has been edited and condensed.

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