Michael Pento On Gold, Inflation, and Interest Rates

One of the few sane economists out there is Michael Pento of Pento Portfolio Strategies (formerly of Peter Schiff's Euro Pacific Capital).

Here is an interesting interview he did with Bloomberg back in December where he discusses his typical range of topics: Gold, Inflation, and Interest rates


Notable comments:

  • Half of the DXY is against the EURO, so that's the headwind for gold, but the tailwind for gold still is the fact that we have negative real interest rates & they probably won't rise for a very long time
  • M2 is up 10% YOY
  • QE3 will come in Q2 FY'12, which will be another tailwind for gold
  • Nominal GDP is rising, you take out a legitimate rate of inflation, and we are in a recession
  • U.S. and Europe = Stagflation
  • How long can an investor accept a negative real return after interest and taxes? A buyer strike of an Auction and you'll see yields rise just as they did in Greece and Italy. It's going to happen in this country
  • People are always talking about the tremendous amount of cash on the corporate balance sheets. What about the tremendous amount of debt on corporate balance sheets? They have $7.6 Trillion dollars of debt on their balance sheets. What happens to that debt when interest rates rise & they have to roll over that debt



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