Where Gerald Celente Puts His Own Money

Trends Research Institute Founder Gerald Celente forecasts a pop in the much-heralded U.S. recovery.  The U.S. consumer cannot continue to borrow and lead the U.S. out of its economic woes, he added.  The consumer bubble, he said, is about to pop, “soon.”  And as protection from the next popped bubble, he favors gold.

“Look what’s going on in the United States.  Interest rates are near zero,” Celente told King World News host Eric King on Monday.   “Does anyone need a calculator to figure this one out?  Go back to [year] 2000; the market crashes, the NASDAQ.  Remember the high-flying NASDAQ market, with all of those high-tech stocks that weren’t worth anything.  What happened?  Well, we went into a recession, but then 9-11 happened.  Then Greenspan began to lower interest rate to 46-year lows.  As a result we had the real estate bubble and that great speculative bubble that burst in 2008.” Sign-up for my 100% FREE Alerts

Agreeing with many economists, Celente stated that due to artificially low interest rates policy by the Federal Reserve under former Chairman Alan Greenspan, starting as far back as 1987 in response to the stock market crash, the Fed has created an illusion of prosperity through easy money and asset price bubbles throughout Greenspan’s tenure as its principal policymaker.

The last bubble before the final meltdown of the financial system was the real estate bubble—which, historically, has been the most dangerous consumer-driven bubble of them all.  Now that bubble has been popped.

Where to now for the Fed?  Celente said the Fed has engineered yet more bubbles, and the next bubble to pop is in consumer spending.

“Look at what they’re doing now?  Interest rate are near-zero,” Celente continued.  “What does it mean?  Hey, you see the economy is picking up. Oh it is?  Oh yeah, retail sales went up.  How come?  Couldn’t be because consumers are now putting more debt on their credit cards.  Could it?  Well, that’s exactly right, because in the last four months consumer debt climbed at the fastest rate in 10 years.  They’ve created another Ponzi scheme by keeping interest rates at all-time lows.  They’re building another bubble.”

While Wall Street points to successively positive retail sales as evidence of a U.S. recovery, Celente doesn’t see it that way.  In reality, he said, consumers are spending money they don’t have, using credit cards for even the most basics of survival.  According to him, the reason that consumer debt has soared at a rate not seen in a decade comes from consumers using plastic to buy many of life’s basic necessities, not because Americans has suddenly become more optimistic.

“So where the loans . . . so why are they borrowing?” asked rhetorically.  “Well they’re borrowing to buy cars; they’re borrowing to go out and eat; they’re borrowing to go to college, to education; they’re borrowing to go shopping; they’re borrowing just to keep their heads above water.  So all they’re doing is creating another bubble.  The first one was the real estate bubble.  This one’s the consumer bubble, and it’s going to burst soon.”

Celente, who always prefaces his discussion about investments with a disclaimer that he is not a registered financial adviser, said he holds a significant amount of his assets in gold, though has has also said in previous interviews that he has included silver among his investment holdings.

“I’m 80 percent invested in gold.  I continue to buy gold.  I believe gold prices are being manipulated downward, so that people will not dump out of these worthless currencies,” he said.  “Look what’s going on.  The European Central Bank dumped in well over a trillion euros to bailout the failing banks throughout Europe.  They don’t have any money, and now they can borrow all they want at very low interest rates, around 1 percent.”

As the financial media paints a picture of economic recovery and a strong dollar, Celente cautions investors to view the relative strength of the U.S. dollar against the euro as nothing more than a deception on the part of the Fed, Treasury and traditional media.  Don’t believe many of the Wall street economists who suggest that the dollar is strong, Celente advised.  Both currencies, he said, are dropping against tangibles, such as commodities and precious metals—and will continue to do so.

“It [easy money from central banks] only works for so long, and that’s why I believe in gold,” he concluded.  “And that’s why I believe they’re driving down the price.  Oh the euro is weakening and the dollar is gaining strength.  Yeah, I just jumped out of the Lusitania and took board on the Titanic.  A weak euro doesn’t make a strong dollar.” Sign-up for my 100% FREE Alerts