Money Flows In To Gold & Silver Are About To Skyrocket
April 6, 2013
Money flows in to gold and silver are about to skyrocket according to renowned economist Michael Pento, who is CEO of Pento Portfolio Strategies. Pento also believes the dollar is going plunge in terms of purchasing power because of the weight of the massive US debt and yearly national deficits. Below is Pento’s tremendous piece:
“There is still an incredible amount of misunderstanding on Wall Street about the relationship between the price of gold and the true value of the U.S. dollar. Most pundits simply claim that a rising dollar, as measured by the Dollar Index (DXY), causes gold prices to fall…and that is the end of their analysis.
In truth, the dollar’s intrinsic value carries the most weight in determining the price of gold and not simply how the dollar is faring vis a vis a basket of other fiat currencies. According to many market analysts, the 5% rise of the dollar on the DXY since February has been attributed to the return of “king dollar” and that, as they claim, is why gold prices are falling.
But they simply choose to overlook the fact that the economies of our major trading partners are in recession and the Bank of Japan’s monetary policy is more aggressive in relative terms towards the depreciation of the yen than our Federal Reserve is to the dollar. The BOJ will increase the size of its balance sheet by $1.4 trillion by the end of 2014. Our Fed may end up doing the same but the Japanese economy is just one third the size of the U.S….