On the heels of Ben Bernanke signaling that the U.S. economy is weak and needs a highly accommodative Fed policy, today one of the top economists in the world said that despite the recent capping of gold at $1,300, gold is heading to new all-time highs. Michael Pento, founder of Pento Portfolio Strategies, wrote this piece for KWN.
Pento: “The prevailing mantra on Wall Street is that gold’s bull market is now over and it’s time to bury precious metals as an investment theme for the indefinite future. The rational for this is based on the belief that many investors held misguided fears during the credit crisis about a breakout of massive inflation and economic chaos, which drove gold to nearly $2,000 per ounce….
“Of course, (the perma-bulls on stocks claim) those worries have now completely failed to materialize and will never be a genuine risk in the future. This argument is patently false because it assumes that the final chapter has been written on the Great Recession and debt crisis that paralyzed the entire globe back in 2008.
The truth is the most pernicious effects of the devastating economic collapse that began five years ago have been merely held in abeyance due to record low interest rates and an aggressive expansion of central bank assets; which is being used to boost real estate values, equity prices and the economy.
On the heels of another wild week of trading in global markets, today one of the top economists in the world sent King World News an exclusive piece warning that a key market collapse will shake the world financial system. Michael Pento, founder of Pento Portfolio Strategies, wrote this piece for KWN.
Pento: “The U.S. Ten-Year Note yield has been surging of late. Absent another recession, or renewed European debt crisis that threatens the existence of the Euro currency, or the Fed launching QEV; the yield should approach 4% by the end of this year. How much should we be concerned about yields rising to that level?….
“Well, the surge in yields from 1.6%, to 2.6% since the beginning of May has already caused purchase applications for new homes to plunge 28% month over month. Mr. Bernanke predicated the economy’s healing on saving the real estate market. Since the Fed is now threatening to begin removing its stimulus programs, that primary support column for the economy is being eliminated.
One has to question what rising rates will do for this so-called recovery. The U.S. economy (and indeed the rest of the globe as well) is already suffering from anemic growth. Now we are told by the puppet masters of the economy that the manipulation is going to end. But can we really believe them?
On the heels of continued volatile trading in key global markets, today one of the top economists in the world warned King World News about Wall Street’s worst call in 20 years, the sucker trade and also spoke to KWN about gold. Here is what Michael Pento, founder of Pento Portfolio Strategies, had to say in his powerful interview.
Pento: “The entire Wall Street community is absolutely convinced that not only is the U.S. economy healed, but they also believe the U.S. dollar is going to have a massive surge from current levels. They also believe the end of QE is right around the corner, and that higher interest rates will not put a damper on the housing market or GDP growth.
That trade is so overcrowded, especially when it comes to how those factors affect gold….
“Investors would be very misguided not to take the other side of that trade. If you look at the U.S. dollar and how it relates to gold, that is one of the most overcrowded trades in my 20 years of experience on Wall Street. So it’s long the dollar, short gold, the United States healing, and the end of QE.
But I believe that trade is completely wrong. If you look at what’s happening with the 10-Year note hitting 2.75%, and you look at how it’s already negatively affected mortgage refinancing and initial purchases, people all over America are canceling their contracts because they cannot afford the new rates.