Gary Bow sits down with Michael Pento of Pento Portfolio Strategies to break down why the current financial system is heading toward a crisis unlike anything we have seen before and why gold miners may be the best trade nobody is watching.
Key Points
Key Highlights:
- The US is borrowing $24 billion every week just to pay interest on the national debt, and deficits that are already over $2 trillion will automatically spike to $6 trillion the moment a recession hits
- The Fed cannot raise rates without crushing the economy and cannot cut rates without sending long term yields through the roof, leaving Worsh with essentially no good options this year
- When the crisis finally arrives the Fed will be forced to cap long term yields just like Japan did, which means printing unlimited money, which means real interest rates collapse and gold rockets
- Gold miners are trading at severe discounts while posting their best balance sheets in years, and falling oil prices are cutting their production costs at the same time
- Two rate hikes are already priced into markets but Pento believes there will be zero hikes this year and possibly a cut, meaning as those expectations get priced out gold and miners should rally
Takeaway This is not a normal cycle. The 60/40 portfolio is broken, stocks face a potential 50% drawdown, and the only assets built for what is coming are gold, miners, and anything that thrives when real interest rates fall.
