Newsmax TV interviewed Peter Schiff earlier this week about the devaluation of the yuan. Peter did not agree with Donald Trump’s mainstream opinion that this news out of China will have terrible consequences for the United States. Instead, Peter emphasized how much more productive and robust the Chinese economy is compared to the US. When asked if the yuan might someday replace the dollar as the world’s reserve currency, Peter reminded the host that China has been buying a lot of gold recently:

I think the Chinese are accumulating a lot of gold. I think they’re being very quiet about how much gold they’re buying. In fact, I think they’re deliberately misrepresenting how much their gold holdings have increased. They’re taking advantage of the recent weakness in the price of gold to buy more. By the way, gold was up today. Not only was it up big in terms of the yuan, but it rose in terms of the dollar as well…

Highlights from the interview:

“There are a lot of problems for the US, but this is not one of them. China’s economy is not failing. This is a small devaluation… The Chinese currency has increased in value dramatically over the last several years, along with the US dollar. This move was motivated not by the exchange rate between the yuan and the dollar, but between the yuan and all the other currencies. The dollar is in a bubble right now. The dollar is very overvalued, and since the yuan was pegged to the dollar, that currency rose along with the dollar. This is a very small devaluation, which I think is only temporary… I think this dollar bubble is going to burst. Our economy is in much worse shape than the Chinese economy. I think the Fed is going to be forced to admit this. I think they’re not going to be raising interest rates. I think they’re going to be doing QE4. That’s going to sink the dollar, and then the Chinese are going to have to revalue their currency much higher in the future against the dollar. It’s the dollar collapsing that’s going to hurt the US, not this recent move by China…

“[The dollar] is propped up based on hope, based on hype, based on speculation. We have an enormous trade deficit with China. Obviously, the Chinese economy is better than ours – they produce all the things that we can’t produce. All the goods that Americans want to consume – they’re made in China. We don’t make anything the Chinese want to consume. I guess some motion pictures and music, but that’s about it. All the real products are manufactured over there. Their economy is far more powerful, far more dynamic than the American economy. That’s why we have these big deficits. But people believe in the myth of this US economy. They believe that this bubble is genuine. They made the same mistake in the late 1990s. They made the same mistake before the financial crisis of 2008. They’re making a mistake again. We are on the verge of a much worse financial crisis than the one we went through in 2008, and it’s going to take the form of a currency crisis. You’re talking about currency wars. America is going to win the currency war, which is a race to the bottom. You don’t want to win a currency war. A currency war is different from most wars in that the object is to kill yourself. Unfortunately, we’re going to succeed…

“[The yuan very well may replace the dollar.] Who knows. I think the Chinese are accumulating a lot of gold. I think they’re being very quiet about how much gold they’re buying. In fact, I think they’re deliberately misrepresenting how much their gold holdings have increased. They’re taking advantage of the recent weakness in the price of gold to buy more. By the way, gold was up today. Not only was it up big in terms of the yuan, but it rose in terms of the dollar as well…

“Take advantage of the overvalued dollar by selling into it. Buy gold while it’s on sale. Buy foreign assets. Buy foreign stocks. Get out of the dollar before the bottom drops out.”