The Federal Reserve is stuck in a catch – 22 scenario and the economy is likely to suffer because of it. One economist is advising you to acquire gold before the next looming recession reaches epic proportions. Read why here.
It’s not yet known how the first interest rates hike since 2004 will affect the U.S. economy, nor the consumer. Economist Michael Pento, however, has a strong guess: Janet Yellen and the rest of the Fed are about to lead us to another recession.
In a Newsmax article by Rob Williams, Pento warns that the rates hike will create bubbles everywhere, from stocks to emerging markets. The central bank will then have no choice but to turn to the usual dangerous ways of boosting an economy: money printing.
Pento, himself the president of his own investment-managing company, finds this forecast to be a great one for gold. Before the Fed can move off the zero-bound range, the economy will melt down and “real yields will become more negative, the U.S. dollar will lose more of its purchasing power and economic instability will intensify over time — the perfect fundamental backdrop for rising gold prices.”
It’s clear that Pento is a big believer in the yellow metal, calling it the “best form of money known to mankind” due to its qualities. But it’s more than that – he notes that the case for gold becomes even more bolstered when real interest rates are negative and faith in currencies drop.
“Every few decades a reminder is needed that all fiat currencies throughout history have lost all of their value,” Pento says, expecting investors to seek comfort in gold during another round of economic crises, as the Fed’s policy grows less effective. After all, central bank machinations already helped gold jump from $712 to $1,923 an ounce between 2008-2011, before settling at its current price.
Investment strategist Michael E. Lewitt is another expert siding with gold on the road ahead. Lewitt attributes investors’ lack of love for gold to complacency and ignorance on their part. He advises “those who know better” to make use of current price weakness by increasing their exposure to physical gold.
Lewitt points out that all currencies are subjected to debauchery by central banks, even the dollar, whom he calls “the single most important financial instrument in the world for investors to monitor”. “For that reason, regardless of what happens, investors should continue to buy gold and save themselves,” Lewitt advises.
The U.S. might be headed into a currency crises? Read why here.