Harry Dent says goldbugs have two fatal flaws: We believe gold is a store of value, and we are ignorant of the dollar. Then Harry adds a bonus third flaw…
Everybody’s favorite Harvard Trained Economist has come out swinging in early 2018.
Perhaps you will recall that Harry Dent has been forecasting (for years) that gold is dropping to $400. Recently. last year he has upped his price target, presumably adjusting for inflation, to a gold price of $700.
Check out our archives page on Harry Dent to see all of his calls (which also include market crashes based off of the surge in sun spot activity, which ironically, actual scientists are saying there is a decline in sun spot activity).
Well, today Harry is out with a new forecast, and it’s uber-bullish – for the U.S. dollar.
Here’s the bottom line from Harry via Investing.com:
I have reason to believe that it’s going to have a substantial rally again in 2018.
Excuse me. Again?
Now I’m no FX expert, I’m no mathematician, and I’m certainly no Harvard Trained Economist. I’ve only graduated from UNC Chapel Hill (and a couple more lesser known schools of higher education), and they wouldn’t even let me create my own major, so I’m pretty sure my education is sub-par, and my memory is most likely blurred by the fog of war (literally), but I do believe that the US Dollar Index, as represented by ticker $DXY, going from 103 to 91 over the last year is not a rally.
Nonetheless, Harry is not pulling any punches.
In fact, in Harry’s corner is the fact that he has been right about both gold and the dollar ever since 2008, so he says.
See for yourself from the same Investing article:
The reality is that I’ve been right about both gold and the dollar since the 2008 crisis. He and his fellow gold bugs have maintained that gold prices would soar to the moon, and dollar prices tank, as the greatest money printing scheme in history unfolded.
And in case anybody isn’t convinced that goldbugs are wrong, Harry offers a third fatal flaw as a bonus and puts all of our flaws in a nice numbered list for all to see:
Really, gold bugs get three very important things dead wrong:
- They think that because we have been printing money at unprecedented rates, the dollar will crash; likely dropping close to zero. Either they’re smoking some good pot or they don’t understand that currencies trade relative to each other, and therefore cannot drop to zero, unless they fail like in Zimbabwe – which is rare.
- They believe money printing at such high rates will cause hyperinflation at some point, especially when central banks continue to escalate their efforts exponentially during the next financial crisis. The trouble with that is, it’s been nine years since QE and unprecedented stimulus efforts began, and countries the world over have barely been able to stave off deflation! That’s because we’re in a deflationary period of declining money velocity from the aftermath of the greatest debt bubble in history. And if we fall into an even deeper crisis (as they and I predict), especially after such massive money printing, it will be a sign that none of it works. Tell me, how are central banks going to sell their plan to Joe Public to go from printing $12 trillion globally to $100 trillion to stave off the next crisis after the last $12 trillion failed? There’s just no way!
- And perhaps the most egregious of all: They think that governments are on a never-ending inflation campaign to devalue the dollar and make their debts cheaper to pay off. I’ll grant you, there is an element of truth to that. After all, who wouldn’t want to make their debts cheaper? But the fact of the matter is that the dollar hasn’t been devalued to the extent they expound.They’re always throwing around the classic chart that shows that adjusting the dollar for the expansion of dollars since 1900 has resulted in the green back being devalued 97%. It’s all utter tripe!
In a humble response to Harry and his self-proclaimed forecasting par excellence:
- If the stated goal of the stewards of the greenback is to devalue the dollar’s purchasing power by 2% per year, in and of itself there would be no “money printing at unprecedented rates” even necessary. Though we do suggest Harry study history and the fact that there are only three ways out of debt – cut spending (which governments won’t), raise taxes (which can only bring in so much), or hyper-inflate it away (which is always always the case because politicians are elected and want to get re-elected).
- We would ask Harry to perhaps study Wiemar Germany for precedence, Zimbabwe of late, or maybe just take a trip to Venezuela. Hyperinflation is the inevitable outcome of out-of-control government spending and debt.
- That’s exactly the campaign the government is on, elimination of debt via inflation. But perhaps he hasn’t heard the Fed’s stated objective recently, or over the last several years.
And when we see gold hit pieces like this in mainstream investment websites, know the end of the gold and silver price manipulation is near.
And for that, we thank Harry for the tip-off.
– Half Dollar