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moneymetals

WHY HARRY DENT’S $400 FORECAST FOR GOLD IS WRONG…. Price Is Heading Up Much Higher

Harry Dent has been making the rounds suggesting that for gold to get back to its pre-bubble price, it would need to fall to $400 or $450. If we were to believe Mr. Dent, then it would be bad news for gold investors. However, Harry Dent’s gold price forecast is quite faulty because he fails to consider the most critical factor.

Harry Dent has become well-known on the internet for his $750 gold price forecast. He bases a low gold price upon what he calls “The end of the Commodity Super-Cycle.” Dent sees nothing but massive deflation ahead. Thus this will cause the gold price to fall along with all commodities.

Unfortunately for Dent, his gold price forecast is incorrect because he fails to incorporate the Falling EROI (Energy Returned On Investment) and energy into his analysis. Dent, like many in the financial industry, believes in the “Energy Tooth Fairy” (a term coined by Louis Arnoux). What I mean by the Energy Tooth Fairy is the notion that economy will continue to grow forever because plenty of cheap energy will always be available. Thus, economic and business cycles, forecasted by Dent, will also continue forever.

Before I explain in detail why Dent is totally wrong on his $400 gold price forecast, here he is in a recent interview on Kitco:

(https://www.youtube.com/watch?v=62jrl_irLzs)


Dent makes several forecasts in the interview, but his price target for gold is the most startling for precious metals investors. He says gold is heading for $650-$750, but that is just the first target. Dent then says, “Ultimately for gold to erase its bubble and get back to its bubble origin, it would be $400-$450. Once gold hits $400 or $450, then Dent would be a buyer.

I gather Dent is suggesting that gold became a bubble in 2004 when it went above $400 an ounce:

Gold price 20 year chart june 11 2018

As we can see in the chart above, the gold price never fell below $1,050 since the 2008 Financial Meltdown. Is Harry Dent suggesting that the gold price will drop another $600 from its low of $1,050 in 2015??




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