Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20
Gold Gann Angle Update - 10th Jan 20
Gold In Rally Mode Suggests Commitment of Traders (COT) Data - 10th Jan 20
Disney Could Mount Its Biggest Rally in 2020 - 10th Jan 20
How on Earth Can Gold Decline During the U.S. – Iran Crisis? - 10th Jan 20
Getting Your HR Budget in Line - 10th Jan 20
The Fed Protects Gamblers at the Expense of the Economy - 9th Jan 20
Last Chance to Get Microsoft Windows 10 for FREE! - 9th Jan 20
The Stock Market is the Opiate of the Masses - 9th Jan 20
Is The Energy Sector Setting Up Another Great Entry? - 9th Jan 20
The Fed Is Creating a Monster Bubble - 9th Jan 20
If History Repeats, Video Game Stocks Could Soar 600%+ - 9th Jan 20
What to Know Before Buying a Land Rover Discovery Sport in 2020 - 8th Jan 20
Stock Market Forecast 2020 Trend Analysis - 8th Jan 20
Gold Price at Resistance - 8th Jan 20
The Fed Has Quietly Started QE4 - 8th Jan 20
NASDAQ Set to Fall 1000pts Early 2020, and What it Means for Gold Price - 8th Jan 20
Gold 2020 - Financial Analysts and Major Financial Institutions Outlook - 8th Jan 20
Stock Market Trend Review - 8th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

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

6 Critical Money Making Rules