Michael Pento – Here is Why Gold & Silver Will Not Collapse

September 29, 2011

With worries surrounding the recent decline in the metals, today King World News interviewed Michael Pento, of Pento Portfolio Strategies. Pento had some strong thoughts on why gold & silver would prevail, “The main reason why gold is in this secular bull market for the last roughly twelve years is because interest rates in real terms have been falling. This is what happened recently with “Operation Twist,” where the Fed went out and endangered its entire balance sheet, by going out along the yield curve and extending its duration.”

“So now we know that not only will real yields be negative on the very short end, but they will also be negative in the middle and on the long end of the yield curve. So real yields are falling and we all know that when real yields are negative, it’s like rocket fuel for the gold market.

If you look at the other factor that is rocket fuel for gold prices, it’s not only the condition of real interest rates but it’s also the state of money supply growth. So let’s look at the largest aggregate kept by the Federal Reserve and that is M2. M2 rose at a 27% annualized rate in the last quarter.

So you have real interest rates that are falling out along the yield curve, and you have rapid, in fact very rapid money supply growth….

Continue reading:

via My Blog.

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