(Kitco News) – Gold, which has been trading up for 2023 and is currently at around $1,930 per ounce, will reverse the trend and have a dramatic decline as “the biggest crash in our lifetime” enters its second wave, according to Harry Dent, Founder of HS Dent.
Dent is calling for gold to reach as low as $900 per ounce by mid-2024.
“Gold is not a safe haven,” he maintained. “I’m predicting that gold goes down to $900 to $1,000. That will be a lot less than other commodities… that is still a 40 to 45 percent fall from here.”
Dent’s track record includes correctly forecasting the Japanese asset bubble, the DotCom bubble, and the election of Donald Trump as President in 2016.
Dent said that an “everything bubble” has been manufactured by the Federal Reserve’s loose monetary policy, which had caused booms in most asset classes, especially stocks.
“The boom from 2009 to late 2021 in stocks was 120 percent artificial,” he stated. “It was just [The Fed] stimulating more and more to keep the stock market going up… That is taking a toxic financial drug, which when it finally goes down and fails, you have a hangup.”
He predicted that a “massive crash’ will occur, amidst an already bearish market, once the NASDAQ hits its 2022 low of 10,088.
“I feel like the ultimate low at this point for stocks is likely to be… July or so of 2024,” Dent said. “So, we’re still in the early stages. To know that this crash is continuing and will go a lot deeper, we need to break the last low… which is 10,088.”
“The next wave” downwards will occur once this critical level is reached, he added. From its all-time high, Dent expects the NASDAQ to fall 92 percent and the S&P 500 to fall 86 percent.
Gold will crash, along with other assets, to $900 per ounce, said Dent, but will ultimately reach $4,000 after markets recover and the next economic boom takes place.
Dent spoke with Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News.
The Fed Cannot Fix This
The Fed, which has increased its interest rates by 425 basis points over 2022 in an effort to cool rising prices, will not be able to prevent a market crash, Dent predicted.
“If [Jerome Powell] turned around and pivoted on this, it would look really ridiculous that he tightens a little bit, and then has to turn around and go back to easing,” he said. “That would prove how weak the economy is and make the Fed look reckless.”
He added that the Fed would lose credibility if it pivoted towards loose monetary policy.
“By the time the Fed realizes they overtightened after overstimulating, and want to stimulate again, they’re not going to have much credibility,” he stated. “The government [printed money] long enough… that it’s not working now and it is backfiring on the central banks.”
Although he suggested that a Fed tightening pause would be “smart,” he claimed it would not prevent the inevitable crash in equities.
“This economy has been going only on escalating stimulus,” he said. “You don’t have to tighten in this bubble. All you have to do is stop feeding this bubble. So, even if they pause, we’re not going to go back to normal. The stock market is still going to be on the weak side.”
The next economic superpower
Dent, whose economic analysis revolves around demographic trends, forecast that India would emerge as the world’s next economic superpower due to its growing population and large share of young people.
“India and Southeast Asia will do much better than China [in the long-run],” he predicted. “One day, around the 2050s or 2060s, India will be the largest economy in the world and the U.S. will still probably be a little bigger than China.”
Dent claimed that China’s aging and declining population, along with its overinvestment in buildings, will weaken its economy over the century.
“China is already peaking in their demographics,” he said. “China is going to go by 2100, from 1.4 billion people down to 770 million. They’re going to be the first emerging country to peak in demographic trends and go down.”
He added that China had “overbuilt their economy… 22 percent of their homes and offices are empty. They just build stuff to stimulate their economy. They don’t print money. They print condos.”
His prognosis for India was more positive.
“India is the next super large country that can urbanize at 1 percent per year,” he said.
Although he forecast a low gold price by 2024, Dent said that the growth of India bodes well for gold’s long-term price forecast. He alluded in particular to consumption of gold in the country, which is the world’s second-largest gold importer.
“If India is the next big thing, gold is going to boom, because Indians buy and use gold for security and jewelry and everything else,” he said. “So, gold, for fundamental reasons, will do well and go up in the next boom.”
To find out Dent’s long-run prediction for the price of Bitcoin, as well as how to weather the “massive crash’ he predicts, watch the video above.
Follow Michelle Makori on Twitter: @MichelleMakori
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