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Harry Dent Predicts $700 Gold In 2018

Posted in Money on November 7th, 2017

Harry Dent recently predicted that gold will head to $700 during 2018. With the yellow metal hovering near $1270 at the moment and a year high slightly above $1300, a $700-$800 price would be an approximate 40% drop in price. It should be of note that Dent has predicted other crashes that never came to fruition, relative to how one measures a crash. Harry Dent and Jim Rickards also have debated whether inflation or deflation is ahead and why.

Dent’s Case For $700 Gold

“Deflation is the natural state of [evolution], but it’s bad for the banking system.”

Harry Dent sees gold heading to $700 for 3 reasons:

  1. There will be a massive correction in 2018 due to deflation.
  2. People and countries will be forced to sell gold to cover for other losses, if the above point is correct.
  3. The very nature of something rising in price at a point becomes unsustainable because people can’t afford it (ie: like rising home prices). With consumers in increased debt, high prices become unsustainable.

While interesting, deflation has seldom been negative for gold. If we see deflation next year, this could be positive for gold.

Let’s assume Harry Dent is correct and gold is headed for a correction because countries will be forced to sell gold, not just individuals. While some countries in Europe may be forced to liquidate gold holdings, other countries will also be willing to pick up those purchases. For an example, Russia is on pace to pass China’s gold holdings this year and with a growing economy again, Russia has more funds available to buy gold. Turkey also recently liquidated some gold in a commodity swap and may need to pick up more gold. Finally, China’s interest in gold is always present, but the Chinese tend to only buy at lower prices – at this present time, they’re more interested in buying rare Earth elements.

If we see a market correction due to deflation, it’s unlikely gold will hit $700. If it does, we’ll see countries in the East that pick up more gold at those lower prices, so I don’t expect $700 gold to remain for a long period of time – if it ever reaches that price.

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