Investor Peter Schiff believes both the S&P 500 and the U.S. dollar are fundamentally overpriced.

For Schiff, a long-time dollar critic, this "valuation gap" creates an illusion for investors who interpret rising equity markets as a sign of wealth creation.

This trend is the "nominal mirage." Investors see portfolios rising, but fail to account for the dollar’s declining real value. Thus, Schiff argues the worst mistake is not overexposure to equities, but hiding in cash. Holding U.S. dollars during a period of structural devaluation guarantees a loss in real terms, even if account balances appear stable.

Instead of a retreat, he advocates for repositioning – pivoting toward assets that resist currency debasement, namely gold and foreign equities.

“The biggest mistake U.S. investors can make is holding too much cash. Sure the U.S. stock market is overpriced, but so is the dollar. A weakening dollar, and the monetary and fiscal policies that will drive it lower, will support nominal stock prices. Own gold and foreign stocks,” he wrote on X.

The Great Gold Pause

Unlike fiat currency, gold cannot be printed, manipulated, or diluted by policy decisions.  In periods of aggressive monetary expansion—the very forces Schiff identifies as drivers of dollar weakness—gold historically preserves purchasing power.

However, 2026 has complicated gold's narrative. After a massive rally in 2025, gold experienced sharp volatility in Q1, including a dramatic March selloff of over 13%, its worst since the 2008 Financial Crisis.

This decline puzzled many, especially amid geopolitical turmoil, including escalating conflict in the Middle East and the closure of the Strait of Hormuz.

The explanation lies not in geopolitics, but in interest rates. Gold is highly sensitive to rate expectations. As inflation surged alongside oil prices (Brent crude at $110), expectations for Federal Reserve rate cuts evaporated, giving way to chatter of a rate hike.

Yet structurally, gold's bull case remains intact. Owing to central bank accumulation, the de-dollarization trend, and persistent fiscal deficits, support for long-term demand remains in place.

The HALO Effect

Alongside gold, European stocks have emerged as an option. Ritholtz Wealth Manager CEO Josh Brown coined the term HALO: "Heavy Asset, Low Obsolescence"—companies built on physical infrastructure that cannot be easily disrupted by artificial intelligence.

European equity markets have an advantage, with roughly 38% of real-asset industries—energy, utilities, transport, and materials—compared to just 18% in the U.S. This composition makes it a natural refuge in an era when AI threatens capital-light, software-driven business models.

The immunity factor is critical. You cannot automate away electricity grids, mineral extraction, or transportation networks. These industries are not only essential but often capital-intensive, and in true European fashion, regulated and protected by high barriers to entry.

Thus, recent outperformance by Norway's Equinor (NYSE:EQNR) or Kongsberg Gruppen (OTCPK: KBGGY) is unsurprising. The former has gained 69.98% year-to-date, while the latter rose by 63.2% in the same period. Both were beneficiaries of the ongoing conflict in the Middle East.

Meanwhile, hybrid "extremely HALO" firms like ASML (NYSE:ASML) occupy a unique sweet spot—producing the physical machinery that powers the AI revolution.

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