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Peter Schiff thinks investors are now walking into a trap.
The economist and longtime contrarian investor told TheStreet that investors are ignoring major risks as stocks climb to fresh all-time highs — and warned that the U.S. market could be setting up for a painful reckoning (1).
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“I think investors have gotten a lot of things wrong, but that hasn’t stopped the market from going up,” Schiff said in the interview. “The majority of investors don’t understand the fundamentals. And they buy stocks anyway.”
The upward momentum has been hard to ignore. The benchmark S&P 500 is up 80% over the past five years, while the tech-laden Nasdaq has soared 96%.
But Schiff argues the rally is being built on shaky ground.
“In the long run, the fundamentals are going to ultimately bring the market back down,” he said.
And he isn’t warning about a garden-variety correction.
“Even if everything was good, the U.S. market is expensive,” Schiff said. “But it’s not — it’s a ticking time bomb.”
In his view, investors are looking past too many warning signs.
“The markets, I think, are really looking past a lot of problems and pricing stocks based on hope and not reality,” he said.
According to Schiff, the fragility is not limited to the stock market.
He said the U.S. economy is “in a lot of trouble” and argued that America is on the verge of “not just a financial crisis, but a U.S. dollar and sovereign debt crisis.”
With the U.S. national debt now around $39 trillion and still climbing, that warning lands against an increasingly troubling fiscal backdrop (2).
During a quick Q&A segment, Schiff was asked to choose between a “resilient economy” and “recession delayed.”
His answer: “Recession, maybe depression.”
When pressed on when that could show up, Schiff said he believes the U.S. has already been in a recession for years, but that the official numbers have masked the pain. He said an official downturn could arrive this year or in 2027, depending partly on whether policymakers try to delay it with stimulus ahead of the midterms.
And when asked what would have to happen for his bearish thesis to be wrong, Schiff argued that many of his past warnings have already played out — leaving, in his view, just one major event yet to unfold.
“The only thing that hasn’t happened yet is the ultimate collapse — the ultimate crash,” he said, calling it “the consequence of all these forecasts that have already come true.”
Schiff has built his public profile on making big, contrarian calls — including warnings ahead of the 2008 financial crisis. His latest message is simple: Investors sitting on big gains should not assume the rally is safe just because the market is high.
So what can everyday investors do if they’re worried Schiff is right — or even partly right?
Protect your wealth with a time-tested hedge
Schiff’s answer for investors preparing for a downturn was straightforward: Take profits and look for alternatives.
“One would be precious metals — gold and silver,” he said.
Viewed as the ultimate safe haven, gold has long been seen as a hedge against inflation, currency weakness and financial stress. Unlike a stock, it does not depend on corporate profits. Unlike a bond, it does not rely on an issuer making payments. And unlike fiat currency, it can’t be printed in unlimited quantities by central banks.
That’s why gold often attracts attention when concerns rise about government debt, geopolitical instability or a potential market crash.
Schiff argued that gold has already been driven higher by a “de-dollarization trend” led largely by foreign central banks, but he believes retail investors and private institutions could become bigger buyers over time.
Despite a recent pullback, gold prices have surged by more than 35% over the last 12 months.
Schiff isn’t the only prominent market voice sounding bullish on the yellow metal. JPMorgan CEO Jamie Dimon recently said that in this environment, gold can “easily” rise to $10,000 an ounce.
One way to invest in gold that can also provide significant tax advantages is to open a gold IRA with the help of Goldco.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold. This makes it a compelling potential option for those wanting to ensure their retirement funds are diversified during rough economic times.
Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.
If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.
Read More: Here’s the average income of Americans by age in 2026. Are you falling behind?
Work with an expert
Schiff’s warning is dramatic. He says stocks are expensive, the dollar is vulnerable, bonds are unattractive and the economy may be heading toward something worse than a recession.
But even if you find that argument persuasive, the answer is not necessarily to sell everything and hide in cash. Panic selling can lock in losses, trigger tax consequences and leave investors on the sidelines if markets keep rising.
That’s why moments like this can be a good time to review your portfolio with a qualified financial adviser.
An advisor can help you stress-test your holdings, identify concentration risks and determine whether your current mix of stocks, bonds, cash and alternative assets still fits your goals. They can also help you build a plan before volatility hits, rather than trying to make big decisions in the middle of a downturn.
If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.
Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.
From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.
You can then schedule no-obligation consultations with your matches to determine who is the best fit for your long-term goals.
WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties and specific financial results are not guaranteed.
A finer alternative
Warnings like Schiff’s are why diversification can matter so much when markets look stretched. And he’s not alone in sounding the alarm.
“It’s likely there’ll be a 10 to 20% drawdown in equity markets sometime in the next 12 to 24 months.”
That’s according to Goldman Sachs CEO David Solomon, speaking at the Global Financial Leaders’ Investment Summit in November 2025.
Meanwhile, the Shiller P/E has just soared past 40x, a level last seen in 1999, hinting that the decade ahead may bring below-average returns for those tied to the S&P 500.
With these warning signs, diversification isn’t just smart — it can be essential. Billionaires like Jeff Bezos and Bill Gates continue to invest heavily in stocks, but they also carve out a portion of their portfolios for assets that behave differently from the market.
One standout example: post-war and contemporary art, which outpaced the S&P 500 by 15% from 1995 to 2025 while showing near-zero correlation to traditional equities.
Until recently, this world was off-limits to most investors. Now, with Masterworks, you can buy fractional shares in multimillion-dollar works by icons like Banksy, Picasso and Basquiat. While art can be illiquid and typically requires a long-term hold, it offers unique portfolio diversification.
Masterworks has sold 27 artworks so far, yielding net annualized returns like 14.6%, 17.6% and 17.8%.*
Moneywise readers can get priority access to diversify with art: Skip the waitlist here
*Past performance is not indicative of future returns. Investing involves risk. See important Regulation A disclosures at Masterworks.com/cd (3).
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YouTube (1); U.S. Department of the Treasury (2); Masterworks (3)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
