(Kitco News) – Gold, which is up for 2023 and currently hovers around $1,930 an ounce, will reverse the trend and take a dramatic fall as “the biggest crash in our lifetime” enters its second wave, according to Harry Dent, Founder from HS Dent.
Dent advocates for gold to reach just $900 an ounce by mid-2024.
“Gold is not a safe haven,” he insisted. “I predict gold will fall from $900 to $1,000. That will be a lot less than other commodities… that’s still a 40 to 45 percent drop from here.”
Dent’s track record includes correctly predicting the Japanese asset bubble, the DotCom bubble and the election of Donald Trump as president in 2016.
Dent said an “everything bubble” has been created by the Federal Reserve’s loose monetary policy, which had caused an explosion in most asset classes, especially stocks.
“The boom from 2009 to the end of 2021 in stocks was 120 percent artificial,” he said. “It was just [The Fed] incentivizing more and more to make the stock market go up… That’s taking a toxic financial drug, that when it finally goes down and fails, you have a hang-up. ”
He predicted a “massive crash” will happen, amidst an already bearish market, once the NASDAQ hits its 2022 low of 10,088.
“I feel like the ultimate low right now 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 will continue and go much deeper, we need to break the last low…that’s 10,088.”
“The next wave” down 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 86 percent.
Gold, along with other assets, will crash to $900 an ounce, Dent said, but will eventually hit $4,000 after markets recover and the next economic boom happens.
Dent spoke with Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News.
The Fed cannot fix this
The Fed, which raised its interest rates by 425 basis points in 2022 to cool rising prices, will not be able to avoid a market crash, Dent predicted.
“If [Jerome Powell] flipped and pivoted on this, it would seem really ridiculous that he tightens a little bit, and then has to flip and loosen again,” 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 moved to loose monetary policy.
“By the time the Fed realizes they’ve over-stimulated and want to re-stimulate, they won’t have much credibility,” he said. “Government [printed money] long enough…that it doesn’t work now and backfires on the central banks.”
While he suggested a Fed tightening pause would be “smart,” he claimed it would not prevent the inevitable stock crash.
“This economy has just continued with escalating stimulus,” he said. “You don’t have to tighten this bubble. All you have to do is stop feeding this bubble. So even if they pause, we’re not going back to normal. The stock market is still going through the weak side.”
The next economic powerhouse
Dent, whose economic analysis revolves around demographic trends, predicted that India would become the next economic powerhouse in the world due to its growing population and large proportion 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 US will probably still be a little bit bigger than China.”
Dent claimed that China’s aging and declining population, along with its overinvestment in buildings, will weaken its economy over the course of the century.
“China is already peaking in their demographics,” he said. “China will disappear by 2100, from 1.4 billion people to 770 million. They will be the first emerging country to peak demographic trends and then fall back.”
He added that China had “overbuilt their economy… 22 percent of their homes and offices are empty. They just build things to boost their economy. They don’t print money. They print condos.”
His prognosis for India was more positive.
“India is the next super-big country that can urbanize at 1 percent per year,” he said.
While he predicted a low gold price for 2024, Dent said India’s growth bodes well for the long-term gold price forecast. In particular, he alluded to the consumption of gold in the country, which is the second largest gold importer in the world.
“If India is the next big thing, gold will boom because Indians are buying and using gold for security and jewelry and everything else,” he said. “So gold will do well for fundamental reasons and rise in the next boom.”
Watch the video above to learn Dent’s long-term prediction for Bitcoin’s price and how to weather the “massive crash” he predicts.
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