Hi, I'm Harry Dent - a Harvard-trained economist and bestselling author. I've made my name by using my market analysis to give great insight into the upcoming - and potentially devastating - economic trends.
The accuracy of my research has proven to be very helpful for enthusiastic investors looking to make the most profitable investment decisions.
One topic I am asked about on a daily basis, is gold. "What's going to happen to gold prices? Should we be gold bugs or gold bears?" That’s what I always hear.
The oddest part about all this is that gold is not something people want to discuss objectively. It seems most people want to either defend it or crucify it… there’s little middle ground.
That’s a problem, because it’s difficult to be a successful investor if you look at each opportunity with a foregone conclusion. And that’s why I am NOT a gold-lover. Nor am I a gold-hater.
What I am is an observer of economies, markets and trends. And those observations are clearly signaling that gold prices could melt down (pun intended) to as low as $700 in the years ahead.
I know that’s a bold prediction, but it’s based on 35 years of research, during which I studied every major economic bubble of the last four centuries. And what I learned from that pioneering analysis is very simple:
1) Gold prices follow very distinct trajectories during financial booms and busts.
2) Gold prices are predictably impacted by inflation and deflation.
So why should you listen to my research when there are others saying that gold will always be a safe and secure investment? I’ll let my track record speak for itself.
Over the last 25 years, I’ve predicted nearly every major economic boom and bust...
In my 1989 book, Our Power to Predict, I foretold of the economic collapse that hit Japan in 1990.
Then in The Great Boom Ahead, I predicted America’s completely unanticipated boom at the end of the 20th century.
In February of 2000 — at the exact moment the tech bubble peaked — I released an alert to my Economy & Markets readers, warning them to get out of Internet stocks.
And in 2011 — months before the euro zone crisis began — I sounded the alarm of the coming European fiscal nightmare.
Each time, the “experts” said I was wrong. Each time, I was exactly right.
So when I see unmistakable signs of gold’s direction during the next few years, it’s not just guesswork.
The price of gold depends on a lot of things. It is a combination of what’s happening with monetary and credit expansion and whatever you think the value should be.
Credit and monetary expansion are easy. If they’re growing, the price of gold in dollars or euros or whatever should move up. In other words: gold up.
The “whatever you think the price of gold should be” is the hard part. And this is where people get angry.
We often hear the gold bugs cry: “Gold should be $5,000 per ounce, because our government is killing the currency!”
At the same time, the gold bears shout: “Gold should be priced for its use as jewelry — around $100 per ounce — because it is not part of the monetary system.”
But there’s a third option. Instead of gold being priced too high or too low, can’t it be a fluctuating barometer of current demand and views, exacerbated by ETFs, like GLD?
It’s not gold up all of the time. And it’s not gold down all of the time, either.
In the early years of the current climate, which we call the Economic Winter Season, the gold price rose sharply in response to fears about collapse.
Eventually, that story grew long in the tooth. This doesn’t mean investors no longer fear economic collapse or upheaval. It just means we’ve lived with it for so long that it’s become normal.
So this leaves us in the mushy middle. Gold has already dropped sharply. Now it hovers in no-man’s land. So what’s next?
As I said before, our view is that gold will continue to melt down, all the way to $700, if not lower because of the great economic crash we forecast for this year.
There are at least 13 different triggers that could cause the next collapse (another topic for another time). Regardless, the result will be continued frustration for gold bugs as their beloved yellow metal steadily collapses.
Our suggestion? Sell your gold investments!
As far as your physical gold goes — the gold that sits in storage for no purpose other than to provide you with peace of mind — that’s for you to do with what you will.
But non-physical investments related to gold are an entirely different matter.
The time has come to sell. As the gold price plunges to $700 an ounce, it will be lucrative to short the precious metal. As a subscriber to Economy & Markets, our free daily e-letter, you’ll learn the best ways to take advantage of gold’s demise and, more importantly, precisely when to do it.
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