On the latest Money Metals podcast, host Mike Maharrey welcomed Michael Pento, founder of https://pentoport.com/" rel=”noopener noreferrer” target=”_blank”>Pento Portfolio Strategies, for an in-depth look at the gold market and broader financial trends.
https://www.cnbc.com/michael-pento/" rel=”noopener noreferrer” target=”_blank”>Michael Pento believes gold is in a clear consolidation phase after hitting a record $3,500 per ounce in mid-April.
“The rally was driven by two main factors,” he explained — https://www.moneymetals.com/news/2025/05/29/why-the-real-threat-to-your-wealth-isnt-tariffs-its-the-exploding-us-debt-004086" rel=”noreferrer”>tariffs weakening global trade and a decline in the U.S. dollar.
“When you cut off global trade, you’re going to really hurt growth,” Pento noted, adding that this dynamic pushed investors https://www.moneymetals.com/news/2025/06/05/gold-a-place-to-hide-004102" rel=”noreferrer”>away from stocks and bonds into gold.
Now, with the trade war on pause, Pento expects marginal trade deals rather than significant structural change.
“We were very long gold heading into the meat of the tariffs, and then we sold it off,” he said, noting his firm still maintains a 5% allocation to physical gold.
(Interview Starts Around 6:37 Mark)
A Looming Debt Explosion
Beyond tariffs, Pento sees massive debt growth as https://www.moneymetals.com/news/2025/05/30/the-us-dollar-is-at-a-critical-inflection-point-004091">the core economic threat.
Current U.S. debt stands at $37 trillion. But based on his models, Pento forecasts it will soar to $67 trillion within a decade.
“It took 250 years to amass $37 trillion — we’re going to do $30 trillion more in just 10 years,” he warned.
Such debt will force the Federal Reserve to massively expand its balance sheet.
“The Fed’s going to have to be a big monetizer of the debt,” Pento said. Foreign buyers, once reliable sources of demand for Treasuries, are now retreating amid sanctions and tariff risks.
“They’re going to park a lot of that money in gold. That’s exactly what’s happening,” he added.
Early Stages of a Bond Market Collapse
Pento believes we are already witnessing the early stages of a U.S. bond market collapse — a scenario he predicted in his 2013 book The Coming Bond Market Collapse.
“Interest rates could easily spike well towards 20% in the future,” he said.
In 1980, rates hit 15% despite a much lower debt-to-GDP ratio of about 35-40%. Today, debt-to-GDP stands at 130%, making the risks far greater.
“If the Fed doesn’t buy the debt, there’s not enough natural buyers,” Pento warned. “And if they do buy it all, we’ll have hyperinflation.”
Foreign demand is already shifting, with Japanese bondholders increasingly preferring their domestic market.
Passive Investing and the Risk of a Major Equity Crash
Pento also highlighted dangerous complacency among retail investors.
“For decades, the Fed and Treasury have taught investors that the government has your back,” he said.
Many younger investors have known only a zero-interest-rate world, with expectations of perpetual bailouts.
U.S. households now hold a record 70% of assets in equities — “the highest it’s been ever,” according to Pento.
He predicts that when the next recession triggers a 30% market drop, many retirees will panic-sell, potentially driving the market down 50%.
“If you’re down 50%, that just puts the total market cap of equities back to a normal balance — about 100% of GDP,” he explained.
The Fed’s Balance Sheet and Future Crises
The Federal Reserve’s balance sheet, once $800 billion pre-2008, surged to $9 trillion during COVID. It remains elevated at $6.6 trillion.
Pento expects the next crisis to push it past $15-20 trillion.
“That’s going to wreak havoc on the dollar and wreak havoc in the bond market,” he said.
Despite official denials, Pento emphasized that this is real debt monetization.
“The Fed does print money,” he stressed. “That is the monetary base — high powered money.”
Persistent Inflation and Structural Challenges
Inflation is far from conquered, Pento argued.
“Prices went up 40-50% post-COVID,” he said. Housing is now the most unaffordable in history, pricing out first-time buyers.
Even current inflation rates of 2.5-3% remain above the Fed’s 2% target — and tariffs will add further upward pressure.
“To say that it’s a tax only on the exporters is a lie. It is untruth. It’s mendacious,” he said of the inflationary effects of tariffs.
Cautious on Silver and the Gold-Silver Ratio
Turning to silver, Pento was measured.
“I would love to say I’m in love with silver… but gold is the purest form of money we have,” he said.
Silver performs best when global growth and inflation coincide, due to its industrial component.
While Pento sees value in owning some silver, he does not expect it to “catch up” with https://www.moneymetals.com/news/2025/06/06/silver-is-breaking-out-heres-what-you-need-to-know-004106">gold in the near term.
“It’s gold that is fulfilling the role of an alternative currency — not silver, and not platinum either,” he added.
The Growing Global Move to Gold
Central banks are https://www.moneymetals.com/news/2025/06/03/central-banks-added-more-gold-in-april-despite-record-prices-004098" rel=”noreferrer”>leading a global pivot to gold as a defense against dollar-based risks.
Pento explained: “China used to recycle trade surpluses into Treasuries. Now they say, ‘If the U.S. president doesn’t like me, they can confiscate my wealth.’”
Holding gold domestically ensures sovereign control of reserves, a compelling alternative in today’s environment.
Pento also noted that negative real interest rates, seen since the 2007-2008 financial crisis, further support gold’s appeal.
Preparing for the Grand Reconciliation
Looking ahead, Pento sees an inevitable “grand reconciliation” of global asset prices.
“We have bubbles in stocks, bubbles in bonds, bubbles in real estate,” he warned.
Crashes will come with greater intensity and frequency.
His Inflation/Deflation Economic Cycle Model (IDEC) aims to both profit in bull markets and protect against the coming downturns.
Finally, he cautioned about the current market:
“The stock market is trading at 22 times forward earnings with projected 14% earnings growth — but margins are already shrinking.”
With the economy slowing, Pento left listeners with a clear warning:
“If you don’t have an active manager who can get you out of harm’s way when this thing really collapses, you’re going to be very, very sorry.”
Michael Pento can be followed on X (formerly Twitter) https://x.com/michaelpento" rel=”noopener noreferrer” target=”_blank”>@michaelpento. You can reach him at https://pentoport.com/" rel=”noopener noreferrer” target=”_blank”>Pento Portfolio Strategies.
