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Speaker 3: And welcome you are listening to and watching the Financial
Survival Network. I'm your host, Carrie Let's. Michael Pento is
with us now pentoport dot com. Michael, you've had you
pretty much have called the rally in gold, the markets, bonds,
You've been nailing it for years. Now where are we
right now in this crazy cycle? We saw gold silver
prices take off, now they're pulling back. Is the bull
market in gold and silver over? And what about the
stock bull market?
Speaker 4: We're certainly thanks for having me on carry well. We're
certainly we're certainly in a pause that freshes right now.
For the precious market to say that, for me to
say the precious metals bull market, the primary bill market
is over, the secular bull market is over, I would
have to see some kind of complete redemption on the
part of the US administration and the government, the powers
would be listen. This is what I mean when I
say that, let's just go back a little brief walk
in memory lane. So I remember when I was a kid,
a young man, getting into this business in the early nineties,
and I had a conversation. I was speaking with the
Federal Reserve officials of the time at great length, and
I remember Richard Fisher was not wide and speaks directly
to Richard Fisher and his colleagues were saying that the
US would never suffer through any period of inflation problem
at all because we would never monetize government debt, would
never happen. And you know you here's a quote from him.
The hyper inflation comes from when the government monetizes trillions
of dollars in debt. And that will never happen here
in the United States. It's just an it's anathema, unfathomable.
It will never occur. So, so just so we go,
there be part of history here. You remember, right before
the Great Recession occurred, the balance sheet of the Fellow
Reserve was around eight hundred billion dollars. Because of this
financial crisis, Brank you took the balance sheet to around
two trillion dollars. But remember he said it would temporarily.
So what happens is to be specific, central bank prints
a bunch of money, buys bank's bad assets at the time,
which your mortgage backed securities, and then we'll take some
treasuries on on board too. Balance sheet goes from eight
hundred billion to a little bit over two trillion, and
that was supposed to be temporary. So the recession ended
in March of two thousand and nine. Carrie, did we
go back to eight hundred million dollars in a ballon sheet?
Speaker 2: No, No, that didn't happen.
Speaker 4: We went to we went By the time mister Powell
took office, we were at four and a half trillion
dollars the ballance sheet, and because of the pandemic, it
went to nine trillion. And did we go back to
four and a half trillion, No, we went to six
and a half trillion down. And guess what's happening now?
This maniac money printer is printing about twenty billion dollars
a freaking week, and balance sheets now rising back to
six point seven trillion dollars, and that's on his way
to seven trillion, back to seven trillion dollars. So I
agree with one thousand percent with President Trump that your
own power should be fired, but not because he's not
lowering innswoer strates. Because he's he's the biggest I don't
want to use the word counterfeiter. I was trying not
to do that anymore. He's the biggest money printer that
America has ever suffered through it. So you asked so to.
So here's the problem, and I'll let you, And I
just want to say this, There isn't going to be
any end to the inexorable rise of the Fed's balance
sheet because America's debt problem hasn't been solved. It's getting
much worse two trillion dollar deficits. In peace time deficits
usually go up by two hundred to three hundred percent.
So we're looking at four to six trillion in the
next recession. And who the heck's gonna buy it? You
think China and Japan are going to step up and
buy our debt? Now? Is Russia gonna buy our debt? No,
it's all on us. And it's not on us because
we're not paying four percent on a ten year note
when inflation is at back at nine percent. Because that's
where it's going, and it's going much higher. So their
answer is the Federal Reserve is gonna buy it. We're
gonna con continue monetizing our problems away, and gold and
silver and platinum are going much higher. Now they're taking
a pause that refreshes. We're not we're not in the
middle of a recession. Even though eighty percent of the
nation is in a recession, the twenty percent are keeping
is going So it's a pause, a consolidation, a pause
that refreshes. But they're going much higher in the future.
I'm going to try to time that the next phase
of the bull market should be happening soon.
Speaker 3: So inflation is going to be good for stocks.
Speaker 4: Uh well, why more Germany. You know, if you shorted
the wy More German stocks market, you will lost a
lot of money. So in nominal terms they might go
a little higher. In real terms, you're gonna you know,
you'll you'll be you'll be bankrupt. I mean so sort
of like social Security. Carry people laugh and they say, well,
you know social Security is back by the full faith
in credit the US government blah blah blah. I said,
you're gonna and I agree with you. You are going to
get your one hundred percent guarantee. You're one hundred percent
premium on your your sipepend on your and your Social
Security check. Absolutely, ask me what it'll buy you.
Speaker 2: That's a good question. Will it buy the oh much?
Speaker 4: Not much? But they fulfill their obligation. They fulfilled on
their obligations. But they monetize the crap out of the
US Treasury and they own they they own all the
bank badasses of banks and the dollar crash, and they've
they've destroyed the purchasing power of the middle class. However,
here's your check. Go buy a sticky gum.
Speaker 3: I'm glad I'm getting mine now. You know, I switched.
I switched to full retirement. Even the seventy I was
going to get more money, because I just said, you know,
it's a purchasing power or rush for the doors, and
I'm better off with the purchasing power or whatever it
is now, even for lesser money than I will be
later with more money.
Speaker 4: Yeah, yep. You know. I had some childhood friends stay
at my house recently, and my my friend's son is
four years old, works for the government. He's a very
very very good man. H looking to buy a house.
And you know what he told He makes a pretty
good salary working for the government, a nice income, and
they have a great retirement program. Can't afford to buy
a house? Carry can't afford it? And why is that?
Do you think it happened by osmosis? And the answer
is the home price to income ratio is higher today
than it's ever been before, even higher than it was
in the in the housing bubble. And why did that happen? Well,
we just talked about it. The federal reserve is monetizing
every single problem away. We have to get a grip
on the federal reserve. We have to stop their manipulation
of interest rates. We have to stop their ever inexorable
expanding of their balance sheet. And Kevin Worse, by the way,
is a good you know, I'm so. I'm a fan
of his. If he lives up to his billing, he's
going maybe lower interest rates on the margin. He's correct,
He's very correct in his assertion that inflation doesn't come
from growth or prosperity.
Speaker 3: I love it.
Speaker 4: He's correct. Yeah, you know great. You know, if you
look at every single single iteration of inflation problems in
this country, it was it was coinciding with high unemployment rates,
not low unemployment rates, high unemployment rates. So when you
tell people they can't they can't produce things, but you
give them a check in the mail like we did
in post COVID, you get your inflation and that's exactly
where that's exactly where inflation comes from. So I think
we're going to be doing that again. But if worsh
lives up to his billing, he's going to shrink the
balance sheet and only tinker interest rates on the margin.
That could be That could be the opportunity where Main
Street finally gets to prosper and woll Street finally has
some come upance here because if you look at the
total market value of equities as a percentage of of GDP,
it's two hundred and thirty percent carry. That is unprecedented
and untenable.
Speaker 2: Emerald.
Speaker 4: In other words, it won't last freaking very long. We're
gonna have that ratio come back more into been too
historical a pattern where it's more like eighty to ninety
percent of GDP, which means the stock market has to
crash by over fifty percent or GDPs to double. You know,
But and stock market says where it is. Uh that
that means that will be the first time in history
that in an acid bubble and this extent popped innocuously.
It's not going to happen, got it?
Speaker 2: So what about gold and silver?
Speaker 3: We saw silver hit one hundred and twenty gold, you know,
fifty six hundred I think.
Speaker 2: Was the high.
Speaker 3: Now they've pulled back somewhat. I mean, silver has totally
been slammed, but we the fact is we have what
will become an acute silver shortage for industry, and if
there's any up upward pressure on investment demand where the
metals are.
Speaker 4: Well, as I said already, they're going much higher in
the long term. They're in this secular, this cyclical period
of decline in collins consolidation. I would like to see,
specifically with gold, I would like to see the economy.
I'd like to see it. I would need to see
the economy roll over sharply and short term interest rates
plunge before I will get even longer than I am
with gold in the short term. But we're not here.
We're not there right now. We're just consolidating around five
thousand dollars an ounce. So I have no problem with that.
You know, I'm an active manager. Sometimes I have overweighted gold, silver,
and platinum, like I was all through twenty five, and
there are times like this when I'm a little bit
lighter on it because I'm an active manager. I just
don't right now, I don't see the reason to rush
into overexposure into these medals. I'll be up picking them
up on cell offs and pullbacks. And one of those
pullbacks occur, as I correctly assumed it wouldccur when worsh
was UH nominated for Kevin wors was nominated for fed Share.
I mean he lives. If he lives up to the building,
he's really going to hurt UH Precious Metals, and he's
really going to hurt Wall Street. He's going to hurt
these these AI stocks which are which are yeah, billions
of Kerry, hundreds of billions of dollars. This reminds me
exactly what happened in ninety nine dot Com. Lots of leverage,
lots of debt, over investment. Productivity isn't there right away,
and then when they see it's not there, they stop investing,
and these these companies that benefit from the investment collapse,
and you have a stock market that goes down eighty
percent in in you know, eighty three percent on the
NASDAK in a couple of years. That's that's what we're
setting up for. And I and carry love him on,
the proud American, love this country, love to be loved
the middle class. I think that's if it will be
a healthic and cathartic reset and rebalancing away from these
misallocations of capital. I mean, you know, the average person
should own four homes kerry, you know, rent them out. Hey,
what do you do for a living? I own real estate,
you know, you know I'm flipping homes. Flipping houses. That's
not a job. I mean, if you if you if
you could buy a house that's decrepit and you have
some skills, you know, if you're GC or if you're
really good, yeah, entree, you could. You can fix it
up and maybe hold on to it for a while
and then rent it out or flip it. That that
makes sense. But just to own real estate and do
nothing to it and think you're gonna get wealthy is ridiculous.
You've got taxes, insurance, maintenance costs, rent, rent, the problems.
I mean, why would you, why would anybody do that.
But they did that because they could borrow money at
three percent. At three percent mortgage and home prices were
going up twenty percent. That's a pretty good trade, right,
And I know so many This is why you had
twenty five percent of all home purchases post COVID were
done by investors. That's not good for this country. That's
why I talk about rebalancing things.
Speaker 3: Well, Trump's trying to put an end to that by
banning institutional.
Speaker 2: You know, Blackrock type.
Speaker 3: Hoovering up to single family homes. I don't think that
you can really do it legally, but he seems.
Speaker 4: Like carry carry you know. That's the things I'm ambivalence about.
You know, I support so much about what he does.
I don't agree with everything, but this is one of
those things like closing the border. What a wonderful What
an essential existential move that he made to save this country.
And then and then also, hey, listen, home ownership should
be first and foremo something that the middle class should
be able to afford, time home buyer should afford. Why
does Blackstone why why does Blackstone able to you know,
hoover up you know, thousands of and investors thousands, thousands,
of the single family homes because because of what the
Fed did.
Speaker 2: Yeah, who's Ray?
Speaker 4: Who is Raimy in the Federal Reserve? You want to
you want to disagree with something about Trump again, You
want to not like the man. Why is he pushing
Jerome Powell to lower interest rates? Why is he looking
for someone to cut interest rates. We don't need interest
rates to be manipulated. We need interest rates to be
a function of Guess what. In America, it's called the
free market.
Speaker 2: Supply and demand of.
Speaker 4: Savings versus demand for money. And you keep the money
supply m zero on the monetary base, physical currency and
fed credit. You you fetter that growth rate to two percent
per annum and guess what, you have Nirvana. And when
banks go bankrupt, that that's it. They overextend themselves. They
don't have liquidity. Bye bye. It's called it's called creative destruction.
Where where were we are so far away from the
founding principles of this nation? Where Article one sections had
money should be silver and gold. That is money. Money
is not shit coin, and it is not printing fed
credit trillions of dollars of FED credit to shove it
into the banking system, to rescue banks for no reason.
Why are we why are we right now expanding the
base money supply? Oh, we might have a problem with
the repel market. Oh my gosh, what about main street?
What about the middle class?
Speaker 2: Carry? Yeah? What about it? As an afterthought.
Speaker 3: Even though they would keep the cut tree running. But yeah,
so the AI stocks you see are just to dot
com two point oh or three point zero? Yeah, cloud stocks.
But now it's this AI gold rush. But AI really
is having an effect on things, isn't it.
Speaker 4: Well, you know, the Internet was having an effect on
things in two thousand and two. It wasn't a useless technology,
and neither is AI. It's very beneficial. But is the
productivity gains evident? Have they become manifest already that you
should be spending hundreds and hundreds of billions of dollars
on on on leverage to build out these massive, you know,
data centers. I listen it just I've lived through the
late nineties. It's very reminiscent thereof So it's it's a risk.
I can't guarantee it. I don't. I'm not. I'm not
one hundred percent positive, but you you darn well better
be with a with a manager who's looking at you know,
the financial conditions and credit spreads to understand when AI
becomes when and if AI investment becomes a problem, or
when repel becomes a problem and the long end of
the bond market becomes a problem becomes a problem. For
most people, would be a great I think it'd be
wonderful for me because I'll just you know, run, I'll
run into cash and I'll short the market. But for
those people who are just get you know, they get whiny.
I only may ten percent this year. You know, the
market is down on the year. By the way, you
might want to send a memo to Pam BONDI the
market and the Dow is below fifty thousand, the SMPS
down is negative on the year, and people get very
antsy when they don't make their twenty percent return?
Speaker 2: Does it?
Speaker 4: You know, it's all about own. This is like a
Gordon get go, don't I don't do anything, I don't work.
I own. Well, you know it's nice if you have,
Like you said so succinctly. Middle class is the is
they They're the ones who actually make things and produce
things and work in this country. They're not well, they're
not they're not funneling, you know, siphoning money off the government,
and they're not sitting there counting their interest income every
every month. We need, we need a viable, healthy middle
class for a viable and healthy country.
Speaker 3: And you know that that's the rent seekers, right, that's
extractive industries. I mean, we've read the articles. I'm actually
releasing a book shortly about what seems to be a
minor extracted industry. But when you've gotten a parking ticket
for no reason because the signs are confusing, all of
a sudden, it becomes a major pain.
Speaker 2: Uh.
Speaker 3: But you know, we're into the extracted industries, and there's
no greater extractive industry Michael than the government.
Speaker 4: Right. Well, you mad a great point. I'm looking forward
to reading your book. We talked about this in the
in the in the preamble to the show. You know,
you imagine like you know, you know, Sally Johnson pulls
up and she's eighty years old. She pulls up, but
she wants to see the sunset at the Benita Beach pier.
And she falls up and she says, you know, I
don't really have a phone on me right now, and
if I did, what's a QR.
Speaker 3: Code, and my hand won't stop shaking long enough for
me to actually be able to put in.
Speaker 2: The code in the phone.
Speaker 3: So it's aba non compliant, and it's a host of
other problems due process. I've outlined it in the book.
It'll be dropping next week along with a federal lawsuit
against five municipalities in Florida, including Palm Beach, the Town
of Palm Beach, the City of Riviera Beach, Boca Raton,
Delray Beach, and Fort Lauderdale. You'll be reading about it.
It's going to be a lot of fun. I mean,
this is what lawyers do in their retirement. Michael of
America's top recovering at turning here.
Speaker 4: I'm not all that familiar with the east coast of Florida,
but Riviera Beach that's a you know, a population that
needs help, right.
Speaker 2: Yeah.
Speaker 3: Well, there's the wealthy area which called Singer Island. That's
where they implemented this totally maronic parking regime with signs
and I mean, you can't even believe it. And then
there's the rest of rivi er Beach, which is undergoing
urban renewal, so they will basically throw out most of
the poor people in the prime areas, and they've already
done it. It's already happening. So yeah, well you know
how America works, right, I mean, this is what this
is what happens. So but this fascinating thing of Hey,
when we talk next year this time in February, you
think gold and silver prices will be higher than they
are now.
Speaker 4: Like I said, I picking dates and prices is you know,
fool's error. But I can tell you this, once the
US waxes into the next recession, which by the way,
they haven't repealed the business cycle. Yeah they think they have,
but they have not. They just they just postponed it
and exacerbated the business cycle. So yeah, it's going to happen.
It's going to happen sooner rather than later. And gold
is going to go rip ripping higher precisely because of
what I said. I mean, there's just no other person,
no other entity on the planet that has any interest
in owning US Treasury debt other than the Federal Reserve,
especially a four percent Now, if the inflation goes back
to nine percent and treasuries are offering ten you'll get
some buyers. But what will real estate in the stock
market be at that moment in time. Think about that.
So gold is going to be a you know, goal
is just beginning. And plus we have sanctions and confiscations.
The world is moving away from storing their excess reserves
and their trade surpluses and dollars don't want it anymore.
So buy some gold and hold it. That's that's that's
my My advice has always been to own five percent
physical gold in your possession or at a place that
you can get it without a third party interfering with you.
And that's your starting point. If you're not there, then
you listen. I've been saying this since gold was, you know,
eight hundred dollars an ounce, so.
Speaker 3: Yes, and now it's five thousand, so.
Speaker 4: Yeah, you might have been opportunity. So but if you
had the five percent, you're happy you did. And then
I toggled the investment. I call it liquid paper gold
because I want I want to invest in gold the
price going up, but I also want to be able
to exit it quickly if I had to. And that's
toggled between zero and twenty percent, So I'll be heading
to more towards the twenty percent. Once they're the whites
of the eyes of recession. It's not just not here yet,
but it's coming.
Speaker 3: Yeah, it's a little bit late this part of the cycle,
but you know there's definitely stress fractures. What do you
think the biggest indicators are that a recession?
Speaker 4: You know, I think this whole private equity you know,
it's funny because Wall Street actually they actually you know,
it was a technical technological advance where instead of just
investing in a company and not knowing what the value is, well,
how about if there was an exchange where we can
have constant transparency in pricing and constant liquidity. Well that's
what Wall Street did, since like the button would agreement,
you know, and then for some reason only Wall Street
can spin it. Well, that wasn't good anymore. That was antiquated.
Let's let it's much better to have something called private
credit where you can invest in a company and not
be able to get out and not know what it's worth.
That was an advancement, and that's been spun as an advancement.
Well that that that industry didn't exists really around the
global financial crisis. Now it's trillions of dollars. Try to
because Wall Street has to come up with new shiny
objects to attract money, so people can make commissions and
sell people things like mortgage backed securities. Right now, So
that's the that's so so my model, the inflation deflation economics,
like a model, monitors the health of the private credit
and private equity world, which is, by the way, not
that good right now. Okay, it's not exactly thriving. You're
seeing the fissures and cracks already. Well, when that spills
up to a tightening of financial conditions and credit spreads
begin to blow out, CNBS will tell you, well, just
buy and hold. You can't really time the market. That's good.
You keep saying that because that's what people on gon
be selling. Joke.
Speaker 3: In my book, I have a mythical character named Hunter,
and he drives a lime a lime green neon green Lambo,
and he's the securitizer. Basically, what the Hunter does is
he looks for cash flow streams to securitize. And he's
done mortgage backed securities, he's done parking revenue bonds, which.
Speaker 2: We're about to blow up hopefully in this book.
Speaker 3: And finally he's in Rome at the Trevy Fountain and
he's throwing the three coins over his shoulder, and the
first one he's praying for an uninterruptible, immutable, U perfect
cash flow stream to securitize. The next one he's praying
that his Neon Green Lambeau doesn't get repolled. And then
the third coin he throws over his shoulder. He wishes
that all of his wishes come true. And then he's struck.
He can securitize the cash flow from the Trevy fountain
and sell charity anticipation notes cans, and then it dawns
on him he can go to churches Buddhist temples and
securitize all that money flowing in through the collection plates
and the bowls.
Speaker 2: And all that.
Speaker 3: And that's Wall Street Hunter, the securitizer, right, He's a
twenty something.
Speaker 4: Nav securitize private credit loans so that now they go
from being you know, non as parent and non liquids
being liquid. I think, I we just I think we
just came up with some Yeah.
Speaker 3: Well, but also he's looking at kids allowances, uh to
securitize the kid's allowance and have smart contracts for chores,
so as they do their chores, the money is automatically paid.
Make it a fintech play and uh, you know allowances
are very are triple A rated. You know you can
definitely trodge.
Speaker 4: Them securitizing the cash low from the tooth fairy. That
would be really Yeah.
Speaker 3: No, there's a thoughce. Well, hey, we got us thinking
here how we get out of this mess? And we
got to we got to use every tool that's available
to us, Michael, anything we.
Speaker 4: Can do to avoid reality.
Speaker 3: Carry would be Yeah. I've been doing it my whole life,
and so far it's worked out okay, But after this podcast,
I'm not so sure anymore. Michael Pentoport dot com. How
do how do we invest with you? How do we
work with you?
Speaker 4: If you're a US citizen and you want and are
qualified for a long short portfolio, I will directly invest
your money in the inflation deflation in the economic cycle model,
which is based on the second derivative of inflation and growth.
If you don't have one hundred thousand dollars and you
are at US this and then you can subscribe to
my podcast. Was a free week, four or five week
free trial that's only fifty dollars a year, and I'll
give you my salient thoughts on the economic data and
a very high level view of the portfolio.
Speaker 2: All right, Hey, thank you so much.
Speaker 3: Links in the show notes, this interview, questions, comments, kl
at Carrie lets dot com and we will talk with
you again in a month or two and see how
this thing shakes out.
Speaker 4: Looking forward to with Kerrie.
Speaker 1: Thanks for listening to Carrie Let's this. Financial Survival Network
your solution to today's trying times. For the latest, go
to Financial Survivalnetwork dot com. Financial Survival Network now more
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