The 1929-1932 market crash is considered a minimum expectation for future market declines, with potential for the Dow to lose 89% of its value and 9,000 banks going bust.
Current economic risks are amplified due to increased US involvement in international trade, complex supply chains, and greater credit risk.
The credit bubble, valued at $14.5 trillion in foreign investment holdings in US equities, poses a significant threat of massive selling as equity markets decline.
The gold price rally is driven by central banks accumulating gold, sovereign wealth funds buying gold, and Chinese housewives moving savings into gold accounts.
The gold to silver ratio is at a historic 100:1, with silver not being priced as money while gold is viewed as a safe haven from credit risk.
The gold leasing system, which provided liquidity in London and Basel markets, is ending due to central bank accumulation, potentially leading to a systemic crisis.
The bullion bank community is split, with larger institutions feeling secure due to bullion and liquidity, while smaller traders face difficulties from bullion shortages and rehypothecation.
Credit deflation is causing stock prices to decline regardless of company fundamentals, with banks forced to sell collateral as markets slide.
Tariffs, when combined with a credit bubble, are deflationary and economically destructive, potentially delivering a “death blow” to America rather than China.
Despite reaching all-time highs of $3,300, the gold price receives little attention in mainstream media, with buyers primarily in Asian markets and central banks.
The Fed’s dual mandate of stable prices and full employment is a “Gordian knot” constraining effective inflation control, as employment rates have little bearing on inflation stemming from fiat currency devaluation.
A triumvirate of asset bubbles in stocks, bonds, and real estate is set to burst simultaneously, potentially leading to a 50% drop in the S&P 500, compared to the average 34-37% drop in previous recessions.
The Fed’s cutting bias under Powell means waiting for unequivocal evidence of 2% inflation before reducing rates, likely too late to prevent market devastation, mirroring the 2001 NASDAQ debacle.
Passive investing in market-cap weighted indices like the S&P 500 concentrates capital in overvalued stocks, amplifying market volatility and creating a massive bubble that contributed to the current economic crisis.
Michael Pento’s 20-point model considers credit spreads, real interest rates, financial conditions, consumer sentiment, inflation expectations, and liquidity to inform investment decisions and predict market movements.
Allocating 5% of net worth to physical gold for safety, with additional exposure to liquid paper gold (ETFs and mining stocks) based on market conditions, serves as a hedge against inflation and economic instability.
The collapse of the stock market, credit market chaos, and real estate market are incipient collapses that will converge to create a bond market, credit market, and equity market debacle when the Fed finally acts.
The Fed’s balance sheet expansion to $9 trillion and interest rate cuts will be insufficient to save the dollar and bond market from chaos when faced with $2.4 trillion deficits and debt at 67% of GDP before the recession starts.
Tariffs imposed by Trump have exacerbated economic instability by creating uncertainty for businesses, complicating financial decision-making, especially for manufacturers considering relocating production.
The chaos and debacle in the bond market, coupled with real interest rates heading back to zero and nominal rates potentially going negative, is the most salient factor driving demand for gold, rather than geopolitical conflicts.
The gold price has quietly surged to a historic high of $3,300 per ounce, receiving minimal attention from mainstream financial media despite significant market movements.
BRICS+ nations are collaborating to create an alternative financial system, including the Belt and Road Initiative and digital RMB, to reduce US dollar dominance in global trade.
The People’s Bank of China has fully connected its digital RMB cross-border settlement system to 10 ASEAN countries, marking a significant step towards a new global monetary system.
The gold-to-silver ratio remains extreme at 100:1 or higher, historically indicating a strong opportunity to trade gold for silver as demand increases, particularly from India and China.
Silver is positioned as the most undervalued asset class with high upside potential, crucial for modern technologies like electronics and solar panels.
The US debt market is highly fragile, with $28 trillion in treasuries due by 2028 and only $15 trillion in tax revenue, making it susceptible to sudden, violent moves in the bond market.
The US dollar risks collapse due to the country’s massive debt burden, which could be intentionally devalued to reduce financial obligations, significantly impacting global markets.
Big money players like central banks, hedge funds, and sovereign wealth funds are driving the gold market, accumulating and repatriating gold for potential reintroduction into the monetary system.
The basis trade opportunity in the bond market, where hedge funds buy treasuries and short futures, is a risk-free trade that can quickly destabilize with small rate increases.
The Fed’s decision to bail out hedge funds and large financial institutions could lead to potential systemic collapse due to high leverage and large market positions.
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