Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why We Won’t See Gold $5,000

Commodities / Gold and Silver 2015 Dec 01, 2015 - 03:51 PM GMT

By: Harry_Dent

Commodities I have so many bets on the go with gold bugs like Porter Stansberry (Stansberry Research) and Jeff Clark at Casey Research… and I just keep winning ‘em.

That’s something to be happy about, right?

But I’m more pained than happy about it because, when I debate these guys (including Peter Schiff), we all agree that we’re in an unprecedented debt and financial bubble with QE adding kerosene to the fire. We all agree that things are about to end very badly.


But we disagree on the outcome of this bubble burst.

They see the dollar collapsing and gold going to $5,000-plus.

I see the dollar strengthening and gold going to as low as $250 an ounce (at the lowest).

This leaves worried investors like you throwing your arms in the air: do you buy gold, or sell it?

My research says to stay away from gold until at least 2023 or $250-$400, whichever comes first. And today I wanted to share just one of my reasons for saying so...

What sets my research apart from those gold bugs I battle is that I study longer term cycles, from where I can see clear oscillations between inflation and deflation – like the extreme deflation of the 1930s and the extreme inflation of the 1970s.

Both extremes, along with demographic downturns in spending, create financial crises and long-term downturns in the economy.

Gold bugs think gold responds in kind to each. They’re wrong. It responds differently.

The two great illusions in the gold camp are that:
  • Gold is a crisis hedge, and
  • Gold is the only true currency.

The real truth is that gold is the very best inflation hedge.

Look at this chart…

As you can see, gold correlates more than anything else with inflation. It was one of the very best investment during the inflationary crisis of the 1970s, when gold exploded nearly 10 times in value.

And gold bugs think we’re heading for more inflation.

That’s where we differ. I don’t see inflation on the horizon – I see more deflation, where we’ll see the deleveraging of massive debt and financial bubbles. This follows every debt bubble in history.

Their gold forecasts are based on the assumption that, after unprecedented money creation to stimulate the economy, we would see massive inflation… or even hyperinflation.

In such a world, gold would take off again.

Maybe I’m senile, but it’s been seven years and counting, and inflation is nowhere in sight.

There’s a couple reasons why.

For one, our economy had already over-expanded, with debt growing 2.6 times GDP for 26 years in the great boom. Consumers and businesses both over-expanded and over-borrowed... and our government ran unprecedented deficits in a boom period.

Secondly, all this new money the Fed threw at us didn’t go much into lending and expanding the money supply – which would have caused inflation.

Instead, it went into financial speculation in asset bubbles at zero short-term and long-term interest rates (adjusted for inflation).

In short, inflation is not the threat. Deflation is. With the largest, global financial asset and debt bubble in recorded history, when this goes belly up, trillions of dollars are going to disappear overnight, like magic… now you see it, now you don’t! That’s not only going to strengthen the dollar, it’s going to create a massive wave of deflation and the destruction of gold.

Still, the bugs cling to their gold: “But Harry, look at all the crises through history. Gold has soared during each one!”

True, but one little detail they’re conveniently ignoring is that almost all the crises we’ve witnessed over the last century have been inflationary. World War I. World War II. Vietnam. The Cold War. The OPEC embargoes and inflation crisis of the 1970s.

Only the 1930s were deflationary – and back then, gold was fixed in price and confiscated!

So we can’t judge its real performance during that time. But we can judge its real performance during the first short deflationary crisis in late 2008, when the banking and financial system melted down.

And what did gold do? It went running to mommy! Between June and November 2008, the greatest deflationary financial crisis we have seen in a long time, gold went down 33% and silver 50%!

And the dollar that was supposed to collapse? It went up 27% in that crisis.

We’re in for more of the same ahead, only worse.

Earlier, I mentioned there were two myths gold bugs relied on. I’ve debunked the first today, and I debunk the second in my newest book How to Survive (& Thrive) in the Great Gold Bust Ahead. I also delve into the numerous other myths gold bugs rely on to trap you like a moth to the flame.

That book is due for release on December 1. We’ve reserved a handful of copies to give to subscribers for free. Get your name on the waiting list now.

Sure, gold may well get as high as $5,000 one day – in the next great 30-year commodity cycle. But you may be dead before that day comes.

Don’t let gold be the anchor that drowns your retirement.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2015 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in