Michael Pento says gold remains an essential purchase for prudent investors in the upcoming year, with the governments of OECD nations "rac[ing] towards both bankruptcy and inflation" while their central banks aggressively push for higher inflation.
Writing for King World News Pento, President of Pento Portfolio strategies, highlights the debt problems of the US in particular, noting that it "should now be clear to all Americans that our government is completely incapable of voluntarily reducing our fundamental problem of excess debt."
Pento says the monetization of surging Treasury debt means that inflation and interest rates will both surge beyond historical averages, which in turn means that deficits and debt will be significantly higher than anticipated by policy-makers. The US government will be forced to avail itself of measures from the Federal Reserve to "maintain the illusion of solvency in the future."
According to Pento this predicament is far from exclusive to the United States, but one which blights most of the developed world, including Europe and Japan.
They operate within insolvent governments that need to have their central banks purchase most if not all of their debt. Given the fact that these governments are racing towards both bankruptcy and hyperinflation, it would be foolish to store your wealth in yen, euros or dollars.
Pento implores investors to raise their exposure to physical gold and precious metals equities on the eve of 2013, as he believes that tremendous macroeconomic dangers lie in wait over the next twelve months.