Economist Predicts that the Price of Gold & Silver will Drop this Year. Is he Correct?
I am reading a book called 'The Great Crash Ahead' by Harry Dent. He is an economist and a futurist and he is predicting that the price of gold and silver will drop this year:
I am thinking of buying silver at the moment but not i'm unsure whether it is the right thing to do. What is everyones thoughts about this guys arguements? Is he working on flawed assumptions or is he generally correct?
The guy was accurately able to perdict the lost decade in Japan and the 2008 crisis (amongst others) based demographic trends. He does therefore have some legitimacy.
Here is a quote from page 14 of this book:
"Here is where we perhaps have the most shocking of our forecasts for the ears ahead in this deflationary crisis: THe US Dollar will appreciate and be a safe haven - not gold, silver, the Euro or the Swiss Franc. Chart I-3 (in the book), which graphs the US dollar index from 1980 to 2011, shows that the US dollar was debased in the boom. It peaked in value in 1985 and has fallen nearly 60% in two major crashes. It was the massive creation of $42 trillion in private debt, which grew 2.65 times the growth of GDP from 1983 to 2008, which created massive amounts of new dollars and devalued the US dollar. Since the financial crisis in 2008 and early 2009, the dollar went up 23%! Gold and silver went down. Oil crashed most extremely. Stocks here and around the world all crashed. Real estate crashed. The dollar was the safe haven in late 2008, and it will be the safe haven for likely many years to come in the period of debt deleveraging ahead."
"During the periods where there is the perception of a financial crisis, gold and silver rise. But when the crisis actually hits, they fall and it is the dollar that rises. Why? During a financial meltdown, the massive $42 trillion in private debt will see major write-offs and restructuring and that destroys dollars. By destroying dollars you make them scarce and valuable again - you actually reverse the debt and credit bubble - and fewer dollars mean fewer dollars chasing consumer goods, or deflation in prices, not inflation! Understanding the difference between deflation and inflation is the key to prospering in the crisis unlike any you have seen in your lifetime."
Long term, I would say no. Short term, that's definitely a possibility.
I wouldn't invest in gold and silver short term unless you are very familiar with the market enough to speculate, and I wouldn't invest long term unless you are just looking for a stable placeholder for your cash.
In a collapsed economy, metal does not taste very good, unless it is formed lead and launched from a brass casing within a steel tube into something that once lived and now provides nourishment
Let them keep thinking Ron Paul supporters are just a little army. Every military strategy manual in the world has examples of the bad things that happen to arrogant commanders of massive armies that underestimate the enemy. They all lose. We will win because the human heart, despite its detractors, is meant for truth and freedom.
http://www.reuters.com/article/2012/...81S0GU20120229
Never invest more than you can afford to lose. Try to space out your purchases (ex: $XXX every other week).
Up or down, I'm alwyays gonna keep stacking, so his opinion is meh to me. Some people think the price will be $65 this year. As Ron Paul would say, all this talk is just talk. No one really knows what's going to happen short term.
Rand Paul 2016
Yes, in SHORT-TERM, it's likely to fall (as well as silver & other commodities) as the deflation sets in but here's the thing with something like gold - it's PURCHASING-POWER (the quantity of stuff you can get in return for something) remains pretty stable compared to most things (here's something on this - http://pricedingold.com/us-dollar/), especially against important things like & food, etc & in fact you may see increases in your purchasing-power
To paraphrase myself, let's say you can buy X stuff (let's say important necessities) with an ounce of gold right now, even if gold's price falls, you'll still pretty much be able to buy that much stuff with it, it's just that its value in terms of "dollars", "pounds", etc will have fallen because the quantity of money shrinks in a deflationary environment
Well, why not stick with currencies then, you can but I fear that Bernanke will anything & everything in his power to inflate the moneysupply & to counter deflation, he's a firm believer that Fed didn't increase the moneysupply enough during the Great Depression & I'm sure it's going to influence him into hyperinflating the dollar into confetti so there's always a risk with fictional-money so with gold at least you know what you're going to get, for the most part, with currencies, it could go either way - either it could be very rewarding or it might destroy you so take these things into consideration & then proceed accordingly
I've always been a little skeptical of silver because it can be extremely flaky because of its easy accessibility & liquilidy which are advantage & disadvantage at the same time but it wouldn't be too bad to put some money in silver since it's a little harder to liquidate gold; all in all, just DON'T PUT ALL YOUR EGGS IN ONE BASKET! Diversify - gold, silver, currencies guns & ammo & so on (things can get turbulent during crises so.......)
There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
- Milton Friedman
He is assuming they won't just run the printers 24/7 Weimar style. If they don't then he is right gold and silver prices in dollars will tank. If they do then nothing will fall in dollars.
i tend to disagree -- the markets are looking like obama is a lock to win another 4 yrs --the price of crude will stay above $90/ba and could go to $150-180 if someone attacks iran---countries are printing paper like crazy---gold is getting very hard to find as the easy gold has been mined--interest rates seem to stay low as the world is going to stay in a recession.
gold will go up versus all world currency's as the printing presses work overtime.
that's not to say gold could not go to $1500-1600 sometime this year , then it will be a bigger buy.
big money likes to go for the biggest returns , the big killer for gold would be if interest rates go up quite a bit.
Last edited by ILUVRP; 02-29-2012 at 08:03 AM.
The one thing to keep in mind about gold prices is that the price of real physical gold will be much higher than the spot price when people realize that most people invested in gold are holding nothing but paper backed by nothing. They are essentially using paper to inflate gold and drive down the price of real gold. When that scam blows up the price of real gold will skyrocket.
The dollar is up against the Euro yes. People are panicking to pick up the dollar as a safe house relative to the Euro. Long term, gold and silver is supreme.
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