Gold & Silver: Why Investors Should Go “All-In” (GLD, SLV, IAU, AGQ, PHYS)
Dominique de Kevelioc de Bailleul: Calls for the Fed to make a QE announcement in September by Jim Rickards and John Taylor got another handicapper, Michael Pento, to go on the record for a likely announcement following the annual Jackson Hole meeting of the world’s central bankers in late August.
“My first impression was that the reports we had from the Wall Street Journal that the Fed was imminently going to interfere with the markets (with more QE), once again proved to be untrue,” Pento told King World News Thursday. “Bernanke is waiting for Jackson Hole. He’ll make some kind of announcement, like he did back in 2010, and then he will start to put his plan to destroy the currency in effect, probably in September.” Get my next ALERT 100% FREE
That’s the situation in the U.S., as Pento sees it. But within the EU, the situation is more dire and murky. Laws there don’t allow for the ECB to intervene in the bond market like the Fed can. But Pento has drawn the same conclusion as former Asst. Secretary of Treasury Paul Craig Roberts has: the laws will be broken in Europe—again, Germany’s outrage to the suggestion that the euro be monetized away will be ignored, and the EU will be taken over by a supranational cabal.
“In my estimation, the ECB is about three or four weeks away from giving a banking license to the EFSF and the ESM,” said Pento. “This will lead to unlimited purchases of European debt, and an unlimited dilution to their currency.”
With Spanish 10-year yields soaring back over 7 percent today, ECB President Mario Draghi’s “do whatever it takes to preserve the eurozone” speech to save the euro from cracking 1.20 lasted only three days. After touching approximately 6.5 percent Tuesday, the 10-year yield soared right back up past the 7 percent mark Thursday, likely putting more pressure on the euro in the coming days.
In the meantime, ‘main stream media (MSM)’ paints a picture of Draghi as an independent, yet dependent, central banker, pointing to the hurdles of corralling 17 sovereign nations before the ECB can intervene in a Fed-like manner to purchase Spanish sovereigns, implying that Draghi is in a box and panicked Monday when he awoke to a 7.6 percent Spanish yield.
“From a communication point of view, he [Draghi] misguided the markets,” Commerzbank’s chief economist Jörg Krämer told the New York Times. “He raised expectations which he could not fulfill.”
Analysis such as Kramer’s observation of what the ECB can or cannot do is either naive or intentionally misleading the markets, according to former U.S. Asst. Secretary of Treasury Paul Craig Roberts.
In an interview with Slovakia’s TV24li, Roberts stated that Greece and Italy have been taken over by former Goldman Sachs bureaucrats in Europe, with Italy’s president and entire cabinet appointed by those close to the nefarious U.S. investment banker. The entire drama played out in Europe is a scam to save banks and to consolidate power to a supranational body, according to Roberts.
“Democracy [in Europe] is being destroyed. And of course the EU bureaucrats are using the crisis [in the EU] to takeover the economic policies of the individual countries,” said Roberts. “They say, we can’t trust the governments. Look what’s happened, and so we are going to consolidate and we will make the tax decisions, budgets decisions for all the countries.”
To Pento’s credit, he’s picked up on Robert’s theme playing out in Europe, and has advised clients of Pento Portfolio Strategies to expect a dual last-minute ‘stick save’ from both the Fed and ECB. Reports by the MSM of an imminent death of the euro are greatly exaggerated, he speculated.
“I am telling my clients, I am gearing them towards the inevitable inflation. But I think it’s silly to go ‘all-in’ right now,” Pento concluded. “We have significant holdings in precious metals and we have written covered calls against that strategy.” Then, we are ready to go all-in once we have a firm commitment on the part of these two central bankers to massively monetize the debt.”
Watch for Bernanke’s speech at Jackson Hole for hints of a ‘favorable’ announcement following the FOMC meeting in September. All inflation-sensitive assets should soar, “but you will see the most salient moves in precious metals, base metals, energy and agricultural stocks and commodities,” he said.
Related Tickers: SPDR Gold Trust (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), iShares Gold Trust (NYSEARCA:IAU), ProShares Ultra Silver ETF (NYSEARCA:AGQ), Sprott Physical Gold Trust (NYSEARCA:PHYS).
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