Wall Street veteran and well-known precious metals investor Peter Schiff said he was surprised that Bitcoin has been able to hold onto its gains while gold has given back its earlier advance, but he still expects Bitcoin to fall to new lows.

Both Bitcoin and gold rallied sharply after the U.S. Treasury announced it would double the size of its long-term bond buybacks to at least $4 billion per operation.

Schiff added that before the Treasury released that statement, Bitcoin was trading at around $60,000, and it has now climbed to nearly $85,000. By contrast, after the news was released, gold briefly spiked to about $4,700 before pulling back to around $4,000.

He said, "I do expect it to make a new low. I just thought it would have happened by now."

Schiff said Bitcoin is riding the same rally that has lifted technology stocks, a rally that has already pushed most large-cap stocks higher. He said he expects Bitcoin to fall as well once this technology stock rally fades.

Strategy (MSTR.US), the company that holds the largest amount of Bitcoin in the world, sold some Bitcoin earlier this year to fund its preferred stock dividend as planned. So far, the company has repurchased some of its Stretch preferred stock (STRC) and restarted small-scale Bitcoin purchases. In response, Schiff called these moves by Strategy "all just window dressing."

In Schiff's view, the midterm elections on November 3 could have an impact on Bitcoin. He claimed that Republicans have turned Bitcoin into a partisan issue, while Democrats see Bitcoin as a source of funding and votes for their political opponents. Schiff said, "Bitcoin is now a Republican thing." He predicted that if Democrats take control of Congress, they will take action against the industry, saying that "when it comes to Bitcoin, Washington will be more of an enemy than a friend."

In addition, Schiff said he does not want the government to support Bitcoin through a strategic reserve. "I want the government to stay neutral."

Bullish on Gold and Silver Over the Long Term

In contrast to his pessimistic view on Bitcoin, Schiff remains firmly bullish on precious metals.

Schiff pointed out that the market is going through a deeper bond bear market. The conventional view holds that rising bond yields reduce the appeal of gold, which pays no interest, but Schiff believes the market has misunderstood the logic.

Schiff said, "This is the most bullish thing for gold and silver, because rising bond yields mean bond prices are collapsing. Bond investors are losing money, and if they want to stop losing money, they have to sell bonds. So what will they buy with the money? Gold or silver."

Schiff attributed gold's recent pullback to trading algorithms automatically selling gold when interest rates rise, calling it "garbage in, garbage out." He also noted that in the 1970s, interest rates and gold rose together, and the key is not whether rates rise, but whether they can outpace inflation. He said, "What if rates go to 20% but inflation is 30%?" "I would rather hold gold, earn nothing, than take a 30% loss."

Schiff believes global central banks have not been deterred by gold price volatility. Data from the World Gold Council showed that global central banks net bought 39 tonnes of gold in August; China's central bank increased its holdings by about 23 tonnes in September, its 23rd consecutive month of buying. At the same time, Russia's central bank has sold 56 tonnes of gold this year. Schiff said this precisely shows that gold can serve as a usable reserve asset during wartime, saying "it is a reserve you can actually take out and use." He expects that eventually sellers will run out, and gold will become "the last safe haven still standing."

Attendees at last week's annual London gold market conference expected gold prices could approach $5,000 a year from now. Schiff believes gold could reach that level even sooner.

He also mentioned that if another crisis like the 2023 collapses of Silicon Valley Bank and Signature Bank occurs in the future, it could become a catalyst for gold's next leg higher, because the Federal Reserve typically stops tightening after "something breaks."

On silver, Schiff said the price has stabilized around $60 per ounce, clearly above the $50 "double top" area that it failed to break through in both 1980 and 2011. He believes $125 per ounce is not the peak of this cycle, but merely the "initial breakout level," and the next leg higher will have even more room to run.