"We are headed for a recession that will last a decade,” declares Peter Schiff, president and chief global strategist of Euro Pacific Capital and author of Crash Proof: how to Profit from the Coming Economic Collapse and The Little Book of Bull Moves in Bear Markets. "That's why nontraditional investment strategies are needed. [Investors should] get out of dollars and dollar assets and into commodities and foreign assets.”
Schiff believes the housing correction is far from over—and that there is a bubble in U.S. Treasury bonds as a result of government deficit spending. "Foreigners, through their massive purchases of U.S. Treasuries, are footing the bill, but will it last? When the Treasury bubble bursts, the resulting spike in interest rates will push the housing market and the U.S. economy over a cliff,” he cautions.
Inflation, not deflation is the ral danger on the horizon, he adds. "The rapid expansion of the money supply will eventually raise prices violently. For now, the inflationary tide is being held back by the countervailing pressures of bursting asset prices, but when the dust settles, trillions of new dollars will remain, chasing a diminished supply of goods.”
Furthermore, Schiff predicts the dollar index will weaken further—to test the lows in the low 70s before year and if it breaks below 60, it could go all the way down to 40 before the down trend is over.
Therefore, Schiff suggests investors look at commodities for their inflation-hedge potential. "I'd invest in companies that produce natural resources and those that export because they will benefit from the weak dollar,” he says. Agriculture is a good example. "I don't own any farmland,” he says. "But if I were going to buy land, that's what I'd look at.”