In his first Schiff Report video of the year, Peter Schiff explains the Swiss news that rattled the foreign exchange markets this week. Peter had predicted that Switzerland would eventually be forced to drop its euro peg, just as he’s been warning that countries like China will be forced to abandon their ties to a weakening US dollar. If investors don’t want to experience even worse losses than Europeans were hit with this week, they need to start preparing for a dollar crisis. Gold has performed very well this year, even while the US dollar and stock market moved higher, which Peter sees as an indicator that a new bull trend has started in precious metals.

Video length: 00:24:29

Highlights from Peter’s video:

0:05 – On Thursday, January 15th, Switzerland dropped its currency peg to the euro, surprising the foreign exchange markets.

0:44 – Just recently, the Swiss claimed they would defend the currency cap until the end.

1:05 – Keeping the peg was part of the propaganda effort to prevent people from voting in favor of the “Save Our Swiss Gold” Initiative.

1:27 – Peter has been expecting this from the beginning. He knew the Swiss would be forced to cut their losses eventually.

2:18 – The Swiss National Bank did something few central banks do: admit that they were wrong.

3:11 – Switzerland was the only country where gold was down this week. It was up almost $50 in US dollar terms.

3:55 – Switzerland is better off, because the franc now has greater purchasing power.

4:26 – Switzerland is a microcosm of the bigger peg relationship that is going to end. When the Chinese abandon their peg with the Hong Kong dollar and the yuan, the US dollar is going to be the biggest loser.

5:42 – The Swiss peg meant that Switzerland would be subsidizing Europe.

6:10 – China has $4.5 trillion in foreign reserves. How many more dollars are the Chinese going to buy before they give up like the Swiss?

7:15 – Peter thinks that QE4 in the United States will be the catalyst for China to surrender the currency war.

8:25 – Peter doesn’t think European QE will be as big as people are expecting. New rumors suggest that it might not take place at the ECB level, but for individual central banks and each currency.

9:14 – The country most likely to do QE next is the United States.

9:49 – Consumer confidence numbers were the highest in 10 years, which Peter thinks is a contrary indicator. Consumers are excited about a recovery they’ve been promised, but they’ll be disappointed.

10:34 – Is China going to load up on more dollars when the United States does more QE?

11:07 – Maybe the tough love from Switzerland could help Europe; maybe it will inspire structural reforms instead of QE.

11:57 – The entire goal of European QE was to raise inflation. When did inflation become the holy grail of economics?

13:02 – Do economists really think that Main Street is dying for higher prices?

13:18 – Nobody will say honestly that inflation is meant to wipe out central bank debts and create asset bubbles.

13:48 – At some point, all the QE will lead to a major increase in consumer prices and inflation will become a concern again.

14:14 – Peter has been saying for years that the Swiss would drop this peg, but plenty of foreign exchange traders ignored his views and lost all their profits this week.

14:40 – Just because it’s taking longer than people expect for consumer prices to start rising, doesn’t mean it’s not going to happen.

15:07 – New Zealand was the first central bank that implemented an inflation cap of 2%, and its goal was to keep inflation under that number. 2% was not the goal.

16:24 – Why is 2% the ideal number for inflation?

17:25 – Governments can’t tell the truth that they’re creating inflation because they cannot afford to pay off their debts.

18:55 – All of the countries subsidizing the United States with their weaker currencies are going to face the same problem as Switzerland.

20:55 – Economic fundamentals always win out in the end. Don’t become complacent like the investors leveraged against the Swiss franc.

22:00 – When it comes to preparing for a dollar crisis, you must be prepared in advance, because you won’t have time to act once it takes place.

22:30 – Gold still surged against a strong dollar and strong stock market on the Swiss news.

23:10 – Peter believes gold will have a big first half of 2015, and an even bigger second half. Smart money is buying gold right now.