Economist Predicts that the Price of Gold & Silver will Drop this Year. Is he Correct?

[RP-AUSTRALIA]

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?

 

[RP-AUSTRALIA]

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."

 

[MooCowzRock]

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.

 

[azxd]

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

 

[ronpaulfollower999]

http://www.reuters.com/article/2012/02/29/us-iran-oil-payment-idUSTRE81S0GU20120229

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.

 

[Paul Or Nothing II]

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.......)

 

[The Gold Standard]

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.

 

[ILUVRP]

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.

 

[The Gold Standard]

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.

 

[flynn]

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.

 

[Bossobass]

Silver is up 30% in 60 days. I'd say that's as short term as it gets and beat the hell out of hanging onto dollars.

Since September '08, silver is up 300% with huge upside potential.

Meanwhile, debt has not been written down one iota. Trillions have been printed to prop up the debt.

The guy's insane and couldn't have called it more the opposite of reality.

You can have the dollar, I'm in silver. We'll see what happens.

Bosso

 

[Trigonx]

All I know is that it's dropping all the gains from the past 2 days in less than one hour. At the time of posting this silver is back to 35.50

And I bought some silver on Monday and Tuesday, so silver is gonna drop under $30 now.

I have given up on timing, I just dollar average my purchases.


dammnn... $34.37 now. Over a dollar dropped after posting this less than 5 min ago.

 

[Guzabuza]

What deflation? ECB just pumped in 1 trillion euros into the banking system. BOE pumped another 50 billion pounds, Japan went all in and said they wont allow inflation under 1 %, noticed gold priced in YEN lately? The fed is STILL buying bonds and doing the twist, a form of interest manipulation. Have you seen oil and gas lately? Deflation wont be tolerated. He is right that the natural forces in the economy are deflationary, but central bank printing presses are more powerful. Go read Ron Pauls book , The Case For Gold. It is free on mises.org. Look at the index for wholesale prices going back from 1800-1980. I put all those numbers and made a graph to see it visually. From 1934, when Presdient Roosevelt made it illegal for people to hand in their fiat for gold there has been 1 year of deflation. That was in 2009 with a 2,5 annual deflation rate. In other words, since central banker 100% took over the issuance of monies in 77 years there has been 1 year of deflation.

Could the metals drop? Sure they can, in todays digital manipulated bullshit market everything can happen, will it change the fundamentals? no. For instances like todays bullshit drop in pm. The stock market is 100% rigged casino, where three guys behind a computer screen can sell 10 billion $ of gold or silver futures and drive down the price down 8 % . Price support the market was building for 1 week gets wiped out without any resistance in 30 min? Use these bullshit opportunities and hoard as much as you can.

 

[Guzabuza]

"BULLET: GOLD: More on the sell-off in April COMEX gold -- an.
29-vlj-2012
GOLD: More on the sell-off in April COMEX gold -- sources saying an
estimated 55,000 gold futures contracts were sold withing a 12-minute
window."

So lets do some math, 55000 * 100 (each contract is 100 ounces) = 5500000 ounces. Looking at April comex gold futures chart i would say most sales were done between 1730-1750 $. So 5500000 * take average of 1740 $ = 9,570,000,000. Somebody sold 10 billion of gold in 12 minutes. Who the fuck has 10 billion $ of gold sitting around on his balance sheet ? If you cant send these cocksukers to jail then either join them and short or thank them and look at it like a gift and buy cheaper pm.

I would rather want to see these cocksuckers to be be-headed but since i am just a common serf the only thing i can do is to buy cheaper pm

 

[ctiger2]

Harry Dent is NOT correct. Harry predicted a crash for fall '11. WRONG!

Dent's advice is actually good fodder for the contrary investor.

 

[ILUVRP]

mainly headge funds , they just move in mass which ever way the markets move , their margin is only about 6% , thats a lot of leverage .

its a game to these guys , gold at $1700/oz= $170,000/contract X 55000=$9.35 billion face value

gold at $1700/oz=$170,000/contract X .06 =$10,200 X 55000= $561 million ( with 6% margin ).

leverage is a big mover. also as soon as gold price went below the maintance of the margin people started receiving margin calls to get the margin back up , i am sure thousands said " no way get me out " , which leed to more selling , these things feed on themselves.

 

[tmg19103]

I think Dent relies too much on age demographics and this is demonstrated in how he missed the housing bust. He only saw a "softening" instead of a collapse.

Age demographics do play a role. I follow the Austrian school mostly and what the Fed is doing, but you need to add many factors to the equation and age demographics is just one and not a panacea.

So far the Austrian school has been right on everything except rampant price inflation, and if you understand why we don't have rampant price inflation while having bigtime monetary inflation you are ahead of the game.

Still does not mean there are many investment options out there unless you are a skilled trader looking at options, commodities, shorts, etc.

 

[Guzabuza]

Thats the whole point of the takedown.

How many hedge funds have 561 million $ laying around just to cover the margin?? This not even a trade. There is not even any technical evidence to justify such a large trade. This is 100% speculation to drive down the price.

 

[ILUVRP]

thats one reason i keep posting that the CFTC should raise the margins on crude oil from 6% to 75% and run the funds out of crude mkt , also make all contracts that are bought delivery only , if you buy a contract you must take delivery.

you would see crude at $50-60/ba very fast.

headge funds have trillions of dollars .

 

[NewRightLibertarian]

How can people be predicting gold and silver to go down when the debt levels are only skyrocketing and the Fed is throwing trillions around and shows no signs of stopping their approach?