On Friday, Peter Schiff reviewed the Halloween stock rally as an effect of the end of the Federal Reserve’s quantitative easing program. He focused on comparing the irrational euphoria of Wall Street to the dismal performance of gold stocks. Gold investors need to remain patient, because eventually the markets will realize that the United States is headed to another recession.

Here are a few transcribed highlights from the video:

If you look at gold stocks, they’re lower than they were than when gold was at $400. Yes, gold closed below $1200. I think it was down about 50 bucks more on the week. Silver was down about a buck-and-a-half. But we’re not far below $1200. Yet gold stocks are lower than they were when gold was below $400. Gold stocks are lower not only than they were before the Fed began QE3, but before it began QE – before anyone knew what QE was. Gold stocks are the only asset class that hasn’t gone up as a result of QE1, 2, and 3. The Fed has printed this money and just about every asset in the world has gone up nominally in price, except gold stocks, which is counter-intuitive. You’d think that gold stocks would be the primary beneficiaries of all this money-printing. Instead, it’s back-fired and they’ve been the biggest losers. They’ve been the biggest winners until recently. Until the last couple years, gold stocks were the asset class that was responding most positively to quantitative easing.

So what’s changed? Why did gold stocks go from the best-performing assets in a QE environment, to the worst performing assets? What changed is the perception that QE has worked. Early in the QE process, there was a lot of skepticism. A lot of people believed that QE wouldn’t work. Now most of those people are convinced that it did. They’ve thrown in the towel on doubt… All the people like me, who were very critical of the process from its inception, who were warning about the danger… We have theoretically been proven wrong… [The proof that we don’t need more quantitative easing] is that we’ve just hit a new high [in stocks], even though the Fed just announced an end of the program…

We actually have the biggest disconnect I’ve ever seen in the financial markets between perception and reality… I think [that the number of people who don’t understand the true state of affairs] is bigger now than in 2007, 2008…

Why did we do QE3? Everybody forgets. We did QE3, because QE2 didn’t work. Why did we do QE2? Because QE1 didn’t work. Why do people think it will be any different with QE3? … The difference now is that when quantitative easing comes back, it’s going to be a new ball game. Because I think we’re going back into recession…

I still think the markets ultimately will roll over without the support of the Fed. It’s not going to be enough to have [the quantitative easing from the Bank of Japan] in there. They need to have a full-fledged QE program by the Fed. If we are headed back towards recession, if the third-quarter GDP number is downwardly revised (like I expect it to be), the Q4 number comes in low two’s or in the one’s… What is the Fed going to do? Is the Fed going to raise interest rates in the middle of 2015 after such a decline in GDP? No, they’re not going to do that. They’re most likely going to start a brand-new program. And then it’s going to dawn on people…

I think the taper process was the tightening. I think this is as tight as the Fed’s going to get – bringing QE to zero. They’re not going to raise rates. The next thing the Fed is going to do is ease…

Mark my words – [more QE] has to come. When it does, that is the big game-changer. That is the big wake-up moment. That is when these markets have to reverse. I think the reversal is going to be enormous… This looks like the capitulation stage to me…

Why does everybody think the price of gold is going to collapse? Because they assumed that QE worked, and it’s not going to be repeated, and interest rates are going to go up, and everything is fine, and therefore gold prices should go back down to where they were before the crisis. Before we had any QE. But of course, the cost of gold production is much higher now than when QE began. So I guess people just assume that these gold stocks will just go out of business, because gold mining will no longer be a profitable enterprise…

If everybody is debasing their currency, trying to create inflation, why is gold not rallying? The only reason is because everybody thinks the dollar is a better safe-haven than gold. Or stocks… So that’s stealing some of gold’s thunder. But it’s this mis-belief that the US is an island of safety, that we’re the only country that’s not going to do QE, we’re the only central bank that’s going to be raising interest rates… They’re just as uninformed and naive as they were on the eve of the 2008 financial crisis. They’re buying the US dollar right now as confidently as people used to buy US mortgages… We just have to be patient and ride it out…

I expect Janet Yellen to react to this coming recession the way Ben Bernanke and Alan Greenspan reacted to the last one… Remember, when this recession starts, they can’t start with rate cuts… You can’t cut from zero. All they can do is revamp QE, and it’s going to have to be a lot bigger than QE3. QE4 is going to have to be bigger than QE3 for the same reason QE3 had to be bigger than QE2. The economy builds up a tolerance…