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.