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Gold Will Soar As The World Sinks Further Into The Abyss
Today Michael Pento upgraded his bullish stance on gold by telling King World News, “I now predict that Chairman Bernanke’s actions will send gold to an all-time high.” Pento has been deadly accurate in his predictions regarding moves by the central planners. He now believes gold will hit new all-time highs, “… both in nominal and real terms.”
Michael Pento writes exclusively for King World News to let readers know what to expect from central planners going forward, and how it will impact the economy and key markets such as gold.
Here is Pento’s piece: “Last week, Fed Chairman Ben Bernanke announced that the central bank would launch an unprecedented form of quantitative easing. This ‘new and improved’ iteration of money printing will be without limit and duration. The Fed Head launched QE III ($40 billion of MBS purchases every month) on September 13th and stated that it will remain in effect until the labor market ‘improves substantially.’”
“He also promised that, ‘The Committee will continue its purchases of agency mortgage backed securities, undertake additional asset purchases, and employ its other policy tools, as appropriate, until such improvement is achieved.
In other words the Fed will continue to counterfeit money and buy everything for sale in America, if need be, until there is a substantial decline in the unemployment rate. But there is a major problem with his plan.
“The unemployment rate doesn’t fall when the dollar is devalued, but the middle class is further dissolved and the inflation rate rises.
The first round of Quantitative Easing began in November of 2008. At that time the unemployment rate in the U.S. was 6.8%. The second round of QE began in November of 2010 and ended by July of 2011. However, after printing a total of $2 trillion and taking interest rates to virtually zero percent, the unemployment rate had risen to 9.1%.
After four years of money printing and interest rate manipulations, the economy still lost 16k goods-producing jobs, and 368k individuals became so despondent looking for work that they dropped out of the labor force last month alone. The unemployment rate has now been above 8% for 43 consecutive months.
First off, the money Ben is printing will not make it to us in Main Street America. It is going to be used to buy toxic MBS’s and once the banks get the cash, it will go to bolster their reserves and buy treasuries. Why do you think Ben announced the QE……so he doesn’t have to buy all the T bills himself. Additionally, the metals futures will continue to be manipulated just as they have been for the last 3-4 years to keep the “appearance” of inflation in check. Most people look to the price of gold and silver as a gauge of commodity prices and to see how the dollar is going to be doing. There have been some CTFC investigations into silver manipulation but it has stalled and doesn’t seem to be leading to any prosecution. So in summary:
- The new printed money will go to the big banks and mostly sit in their vaults and buy T bills.
- Some of the money will make it to the market to influence stock prices but it will cause a rise in prices on low volume (manipulation of the equities futures)…much as it has over the last few years.
- Gold and silver will continue to be manipulated via shorting to control the perception of inflation.
- Interest rates will continue to be held down due to the banks “stimulating demand” by purchasing T bills.
- People on fixed incomes will continue to be devastated by increases in food and energy prices (which aren’t included in the CPI for inflation reporting)
So in short, we will continue this road to financial purgatory where the rich get richer and the rest of us fade into a 3rd world status. At least until the the war with Iran starts or people in this country grow some balls and march on DC and the FED to put an end to this farce and stop the wealth extraction of the middle class.