Posted on 02/19/2015 2:43:10 PM PST by blam
February 18, 2015
Jeff_Clark
Some of you may be aware that investment guru Harry Dent has publicly stated that gold will fall to $250-$400. He specifically predicted:
Around $700/ounce is a certainty in gold by 2015 to 2016, and $250 is a possibility well down the line by 2020–2023.
His forecast is largely based on his belief that deflation will prevail.
Governments are fighting deflation. If government stimulus fails, we will have deflation, not inflation.
(snip)
As a gold analyst who’s spent every day of the last seven-plus years watching this market, I can’t let this pass. I’m sure gold will not fall to $700, much less $250-$400—not in real terms (who knows if the US dollar will even exist in 2020?… Or maybe there will be new dollars with several zeros cut off).
Is this just because I’m a stubborn gold bug? No, because I agree that we’re seeing some deflation, too. But I definitely think some type of crisis is headed our way, and gold does well in crises—even deflationary ones.
Is it perhaps because I don’t like Mr. Dent? Not at all—at my suggestion, he was a speaker at one of our Summits.
Quite simply, I think Harry Dent is resoundingly wrong. And I’m so sure he’s wrong that this is a public invitation to him to enter a wager with me and put his money where his mouth is, which I’ll detail momentarily.
Why Harry Dent Is Wrong
There are a number of reasons why I think Mr. Dent will be wrong about the future gold price…
(snip)
(Excerpt) Read more at marketoracle.co.uk ...
Gold at $250 an ounce?
If I had the money I would buy a pound of it at the price.
UK Good Deflation Election Boost for Conservatives But Inflation Mega-trend Remains Exponential
BTFD
Shiny metal worth something for 6,000 years versus promissory notes on green paper issued by an insolvent central bank? No contest.
I think we’ll see 2,000 before 200. Long before.
Yup.
If and when gold drops down to $250 / Oz., I will stop drinking Scotch for an entire year and purchase an even ton of gold instead. I’ll make up for the lack of Scotch by drinking Tequilla instead.
Here’s the problem... they’re both a little right. Gold will go lower. Why? Simply because it has priced in the end of the monetary system. People hoarded gold expecting the end of the world (since 2003). The problem is that gold will be worth what everything else is worth in that scenario. In a real, global crisis, gold will not have the demand it has now. It will be worth a sandwich to most people because someone who has a pile of gold in his living room will quickly come to the place where he will gladly trade with his neighbor for a sandwich. If you truly expect the end of the economic system buy a farm... have a food source, a water source, fuel and shelter... and ammunition to defend it all. Failing that... gold isn’t your savior. Like everything else, the price of gold depends on supply and demand.
However, gold does have intrinsic industrial and wealth-preservation value. Although the value should fall from current levels, I don’t think it will go south of $700/oz.
I think he was tryin to learn me a lesson about investing in gold. He's still right...an ounce of gold will buy you a good men's tailored suit.
I also think we are in deflation but gold is not going to go to $250. Our currency is likely to degrade and we may lose our reserve currency status. That will make gold very attractive.
Around $700/ounce is a certainty in gold by 2015 to 2016, and $250 is a possibility well down the line by 2020–2023. His forecast is largely based on his belief that deflation will prevail.If crude reaches a long-term equilibrium below $40 a barrel, there's hardly any way to avoid the cratering of the gold price bubble.
I agree
What about Silver?
Funny how that works, eh? :’)
Sure, gold will be $200, when the fed starts burning dollars by the kiloton.
Betting is the whole point, isn't it?
As the saying goes: “That's what makes a market.”
I've begun to think that the historical relationship between “inflation-deflation” and “monetary policy” has begun to de-couple.
I think the World Wide Web is the primary reason.
First, the average person now has instant “price discovery.”
If even 10% of customers are well informed about prices, that can exert downward pressure on prices all over the world.
Second, the World Wide Web has allowed business owners and business managers to instantly locate highly profitable parts of the economy where prices are rising, or supply is limited.
That means that business vs. business competition now begins much more quickly for those high value customers, which, once again, puts downward pressure on prices.
I agree that debasing a currency creates some inflationary pressure.
But, well informed business managers do not borrow money and build new capacity just because money is cheap.
Business managers now understand that most industries have very little pricing power, so they are not expanding.
Consequently, most of the “free” money that has been printed is loaned to governments, or it just sloshes around in the world's financial markets where speculators borrow it.
Deflation will only exist while there is excess inventory in storage. That will be followed by significant inflation. (IMHO)
Well, about 12 years ago Gold was under $400 an ounce.
The market price today is highly inflated by fear. It will come down then the fear stops or the economy collapses. Ironically, it is worth very little in a real SHTF situation that these people are afraid of.
It has no practical use in a collapsed economy so the value goes way down when that does happen. I’ve read accounts in such situations (including by my grandmother) that people were trading 1/10oz gold coins for a single crappy meal. Before the war, such a coin was worth a monthly salary.
Practical consumables like dry food, water filters, paper, matches, lighters, fuel, medicine and ammo become far more valuable than gold when SHTF.
The thing that is going to jump up between now and then (”a funny thing happened on the way to $250”): people all over the world, all of a sudden, all at once, cease to believe in the value of the $whatevercurrency. It happens almost overnight.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.