Why Harry Dent’s Call For Gold To Go To $250 Is Wrong

Harry Dent has been negative on gold and has has some debates with some gold bulls like Peter Schiff where I agree with Dent’s deflationary take on the economy.

You can listen to that Dent/Schiff interview here (or copy and paste this link into your browser: https://www.youtube.com/watch?v=27q-rKPZMn0 ).

Harry Dent’s latest article Gold $5,000: Maybe When You’re Dead! calls for gold to fall to $250  I do suggest people read it.

Before I get into the rebuttal to Harry Dent’s article, on Dec. 1st Dent came out with a book, “The Great Gold Bust Ahead” predicting the same doom and gloom for gold to fall in price to $250.

In the sales copy for this book, Dent says the following; “Harry Dent has accurately predicted the dot com bust of the early 2000’s, the crash of the U.S. housing market in 2006, the financial meltdown of 2008 and the plummet in crude oil prices in 2015.”

This video debunks most of what Harry Dent successful claims from the past that he has predicted; https://www.youtube.com/watch?v=i3yzL-uqEk8 I hadn’t heard of this guy who critiques Dent, but I do like his attitude of doing your own research. I try to provide as much research as I can so you can make good decisions. I also take exception with anyone who writes a book and doesn’t put it out on Amazon.com or elsewhere so that it can be critiqued. It’s as if there is a hidden agenda involved, which I imagine there is. Almost all of these doom and gloomers, whether inflationary, hyperinflationary or in Dent’s case deflationary have an agenda. Some may say I have an agenda too. I do, and it’s the truth as I see it. What I hope you do with that truth is make good investment decisions. Simple as that.

After reading anything from Dent above, please read my rebuttal below to his extreme deflationary outlook below and know that I do not at all agree with his call of gold to $250 an ounce. I notice in his article that he only had one chart comparing gold to inflation, that’s it. What you will see below are links to articles I have written that agree on the deflationary aspect to the economy, but provide a greater detail as to why deflation is just beginning. But I also give you a hint of what I am currently writing about in my next book Illusions of Wealth. Hang in there gold bugs. I know I am, and I’ll let you all know exactly when I turn bullish.

Rebuttal to Harry Dent’s Call for $250 Gold

I just ran across this post by Harry Dent and I have listened to his debate with Peter Schiff which most should listen to.

November 27th, before Dent’s article on gold I wrote an article for Seeking Alpha; Deflation Will Drive The Price Of Gold Lower.

Why do I mention it here? First off I give much better reasoning as to why gold will fall to lower prices, and unlike Peter Schiff who is always bullish on gold and saying the dollar will crash (See here:  http://seekingalpha.com/article/3344695-april-call-to-wait-and-buy-gold-below-1000-still-in-effect ) I have been bullish on the dollar and calling for gold under $1,000. Second, this may mean something because I actually sell gold/silver for a living.

I have many waiting for my all in article and I can tell you flat out I don’t agree with Dent’s $250 price target for gold. I am providing all my reasoning above and beyond what I have written in the above articles in my new book, “Illusions of Wealth”  due out hopefully within the next month so investors can prepare.

But I will give you the main reason why gold won’t get to $250 an ounce. Gold is not just a play on the dollar but every currency in the world and it is the safe haven that all countries eventually turn to when that crisis hits which is when Dent thinks gold will rise in price. In 2008/2009 when the financial crisis hit, yes, gold was hit too as it fell from $1,000 to $700 range, but it did bounce faster than any other asset on the planet and was at $1,900 by March of 2011 when the dollar started to climb. The one thing that Dent leaves out though is the Fed will fight deflation tooth and nail. Yes, the Fed is reactive, and can’t see a bubble in front of their face as they are set to raise rates in December, but this deflation that will be upon us will wreak havoc on their 2% inflationary goals and more QE will come. It is this next round of QE that will begin the onset of fear in that the Fed can’t get anything right. It is “perception” that the Fed is incompetent that will set gold moving higher along with the dollar because it is also perception around the world that the dollar too is a safe haven. The Euro/Yen/Pound all have worse of Debt to GDP ratios than the U.S. and when you add in all of the emerging markets chasing the safety of the dollar, you get an even stronger dollar.

The Fed has to do something to quell the strength of the dollar if they want our economy to pick up steam and get inflation and money velocity moving. The Fed’s other option is to simply tell the banks we are not paying you any more interest on the reserves held with them (currently 0.25) or resort to paying them negative rates. Banks have been very profitable of late and don’t need the Fed to help them any longer.

P.S. Lost in Friday’s unemployment report was the fact U-6 increased to 9.9%.http://1.usa.gov/qKtfTW The market goes up almost 350 points on a basically flat employment report and even overall negative. This market only is concerned with what the Fed may or may not do and is not based on valuations or anything that used to matter in knowing whether an asset is priced correctly or not. This is not your father’s market. It’s driven by Fed fantasyland where the winners are only those that can figure out what their next move is.