In an Unpredictable Market, the Future of Gold Remains Clear

Even though the markets haven’t behaved logically of late, it would have seemed a slam dunk for gold to rise if Donald Trump won. After all, we faced uncertainty around his policies, rising inflation from infrastructure spending, and higher expected growth rates.

But instead, gold has headed back down more sharply. It had its initial rise in the futures market when Trump looked like he was going to win. But since then, it’s reversed course – the opposite of the stock markets.

While I’ve been saying for a long time now that gold still has a lot to lose, a new and interesting dynamic has arisen to add more pressure to the downside.
Arm Yourself with the Knowledge to Prepare for What’s Ahead!

Before I explain, let’s first look at the chart pattern here…This pattern suggests that the rally from late 2015 had seen a clear a-b-c bear market or corrective rally, just as I’d forecast to around $1,400.

The next stop, coming from strong support in the 2008 mini-crash, is $700 and it looks like this move is already well into motion!

A slowing economy, with deflation, would be the biggest reason for gold melting to that level. The fall since the election would suggest such deflation is not very far away.
But we’ll only see this after a significant bounce ahead…

At the beginning of 2016, I forecast that gold was very oversold. It was at $1,050 per ounce in late 2015 and so due for a major bear market rally back up to as high as $1,400. As I said it would, gold did bounce and got to $1,373 per ounce in early July 2016, at which point I recommended selling again. Lo and behold, gold fell rapidly to $1,124 in mid-December.

Gold is now very oversold again, but on a shorter-term basis, and it’s due for a minor rally to around $1,250. But given how oversold it’s become, it could even go back to a slight new high near to $1,400. That could come by mid-February or so.

But my forecast of $700 is still looking increasingly likely by the end of this year… meaning the window to get out is closing.

Remember: This rally will be the last chance for gold holdouts to get out!

The ultimate downside for gold at the bottom of the 30-year commodity cycle, between early 2020 and late 2022, is $400 or lower to erase the bubble that began accelerating in 2005.

That’s when I would start to recommend buying gold again longer term, with a target of $4,000-plus by 2038-2040. The next 30-year commodity cycle could be the greatest ever seen because it will be driven by the demographically growing and still-urbanizing emerging world. Remember, they’re the ones who’ll be producing and consuming most of the gold and other commodities.

Gold isn’t the only market being influenced by demographics in the next couple years. Find out how else your financial future could be affected in the months ahead!

Harry
Follow me on Twitter @harrydentjr

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Harry Dent
Harry S. Dent Jr. studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of his chosen profession that he turned his back on it. Instead, he threw himself into the burgeoning new science of finance where identifying and studying demographic, technological, consumer and many, many other trends empowered him to forecast economic changes. Since then, he’s spoken to executives, financial advisors and investors around the world. He’s appeared on “Good Morning America,” PBS, CNBC and CNN/Fox News. He’s been featured in Barron’s, Investor’s Business Daily, Entrepreneur, Fortune, Success, U.S. News and World Report, Business Week, The Wall Street Journal, American Demographics and Omni. He is a regular guest on Fox Business’s “America’s Nightly Scorecard.” In his latest book, Zero Hour: Turn the Greatest Political and Financial Upheaval in Modern History to Your Advantage, Harry Dent reveals why the greatest social, economic, and political upheaval since the American Revolution is on our doorstep. Discover how its combined effects could cause stocks to crash as much as 80% beginning just weeks from now…crippling your wealth now and for the rest of your life. Harry arms you with the tools you need to financially prepare and survive as the world we know is turned upside down! Today, he uses the research he developed from years of hands-on business experience to offer readers a positive, easy-to-understand view of the economic future by heading up Dent Research, in his flagship newsletter, Boom & Bust.