I apologize ahead of time for the length of this post. The extreme length is a function of Harry Dent’s most recent diatribe on why you should not own gold and why should “sell it short when he tells you to”. Mr. Dent has so many incorrect thoughts and what he calls “facts”, you might want to grab some popcorn for this one as we will correct the misstated facts and bogus logic. The best way to prove his logic faulty is to use his own words and charts as proof. We would like provide a link for you but reproduction is prohibited by copyright law. Since we cannot use his charts, I will describe and try to duplicate his charts. As I see it, Harry Dent is one of THE most dangerous writers out there …dangerous to the financial survival of anyone who reads his work.
His premise is simple, gold is a commodity rather than “money”, this is the very core of his miscalculation. He says gold will drop to $700 when the coming crisis hits and will possibly bottom in the $250 area. This drop will be caused by “deflation” as dollars will be destroyed via default and bankruptcies. This in turn will mean there are less dollars outstanding which means fewer dollars chasing the same amount of goods. Fewer dollars outstanding will make the remaining dollars “more valuable” because of the scarcity factor. Simple right?
Let’s start at the beginning with his first chapter titled “gold is an inflation hedge”. Here he says there are $247 trillion outstanding and predicts $100 trillion will be destroyed in the coming crisis. He says what gold bugs (a disparaging term) don’t get about debt and money printing is that it is like magic, on one hand you get something for nothing, on the other, dollars will disappear in a now you see it now you don’t fashion. His bottom line is this, if $100 trillion disappear, the Fed has no way to replace them via printing or channel stuffing the banks. The various QE efforts have only stalled the onset of deflation which will overwhelm the financial markets, the banks and ultimately the Fed’s ability to reflate.
In my opinion he is correct to this point but is conveniently forgetting something at the very foundation of his argument. Today’s dollar IS debt in and of itself! Today’s dollar is not your grandfather’s dollar. Back in the early 1930’s, dollars and gold were interchangeable. $20.67 equaled one ounce of gold and one ounce of gold equaled $20.67. You could walk into any bank and make this exchange. In effect, “dollars were gold”. The reality of course was that dollars were “receipts” for gold, technically speaking, dollars were the derivatives of gold. It is this “minor detail”, so crucial to the thought process which entirely eludes Harry Dent.
In this first chapter, he says gold bugs are wrong because we have not had “inflation” after all of the global money printing. His “proof” is the CPI index running under 2% for the last six years. I would ask, has anyone’s “cost” of living gone up less than 10% in the last five years? I don’t know about you but I know my taxes have gone up substantially, my health insurance has doubled in only four years and a $100 bill at the grocery store is a joke! I would also ask him why “inflating” financial assets doesn’t fit his definition of inflation? Stocks and bonds have been inflated to ridiculous levels. Harry Dent says so himself, why is this not “inflation”? In reality, it is massive inflation but considered “good” inflation.
In the next chapter he says the dollar’s days are NOT numbered. Really? Then why has the entire world (including long time U.S. financial and military allies) been making trade deals, setting up currency hubs, alternative clearing systems and banks to the exclusion of both the U.S. and her dollar? Even the World Bank and IMF see the writing on the wall, they have both endorsed the new Asian Infrastructure Investment Bank. Harry goes on to poke fun at gold bugs by stating gold is not a currency. He challenges anyone to go into a WalMart or Target with a sliver of gold and see if they accept it? I would simply ask him this, if he is correct (I believe he is) and $100 trillion gets smoked and “disappears”, will there even be a WalMart or a Target store open? Would not distribution of everything completely stop dead in its tracks if credit gets shut down? Does he really believe we can have a complete and total financial collapse and “dollars” (which are the “credit” of a bankrupt United States) will be the only thing to hold value? Where would you “store” these dollars? In a bank? Will the banks survive? Will the FDIC who has less than one quarter of one penny for every dollar they insure …be able to protect your deposit? More “minor details” I guess?
Then he goes on to say practically everything trades in and is priced in dollars all over the world and asks the question “what could possibly replace the dollar?” and supports his question by listing all of the various currencies. None are big enough he says to supplant the dollar and the Chinese are unwilling to allow the yuan to float so that couldn’t work either. I would suggest “gold” can and will replace the dollar which leads into his next chapter where we will inflict a direct head wound to Harry Dent’s fantasy logic!
The next chapter, “no currency could ever return to the gold standard” is his coup de grace!. He actually said “there is not enough gold in the world, it would all fit into an Olympic sized swimming pool, how do you base currencies on that?”. He also says that new gold supply is simply not growing fast enough to support or drive our economy. Gold he says is no longer the best standard for money since we are not a commodity based society. Top this off with “if you think deflation is bad today, you can’t possibly imagine how bad deflation would be under a true gold standard with too little gold to chase the same goods”. Before commenting on this, now would be a good time for an intermission, please refill your popcorn and re read this paragraph at least once and think for yourself what exactly Harry Dent just said …what he REALLY said!???
In a nutshell, Harry Dent just admitted to gold’s “rarity”! There’s just not enough gold to go around and the mines cannot produce it fast enough to provide growth. “Deflation” would be out of control! Broken down in even simpler language, Harry Dent is admitting the price of gold is too low! To say “there is not enough gold” is just plain ignorant, what he should have said is “there is not enough gold AT CURRENT PRICES”! Would there be enough gold to support a monetary system if it were priced at $1 trillion per ounce? And there is not enough production to provide for economic growth? What if the price of gold was revalued to some higher number (so there would be “enough” of it) and then the price is ratcheted higher each year by 1% or 2%? Add this together with a 1%-2% growth of stock via mine supply and we have a 2%-4% inflation rate. Why would we even need an “inflation rate”? In this one chapter alone, Harry Dent exposed the most serious flaws to his logic and argues for higher gold prices, NOT crashing prices!
Moving along to his next chapter, “it’s not going to be the currency crisis they expect” speaks mainly to currency cross valuations. Here he talks about how the dollar rose during the 2008 crisis, is rising now and will probably rise another 20% after a minor correction. The chapter is a yeah rah rah session for how well the dollar has done since 2008. I would remind you, gold peaked in 2008 at $1,000 per ounce. If the dollar is king and has done so well, why is gold in dollar terms now 20% higher than the 2008 peak …and AFTER a concerted effort to depress its price via paper derivatives? He comically ends this chapter by reminding readers that gold does not pay any interest or dividends. Gold he says is a very “tenuous safe asset” as you rely from day to day on how others value your asset. My question would be this, does anything in today’s upside down, zero and negative interest rate world pay much of any dividend or interest? Is there any asset or investment in the world that does not rely on “pricing” by others to create a market price? Yes, if you have a one of a kind painting or gem or whatever, you can simply not sell and ask a higher price, but in order for a trade to occur doesn’t someone have to make a bid? Don’t all assets get “re priced” with each trade? His logic here is ridiculous, gold is “dangerous” because it pays no interest and “goes up and down”. Does he not understand that gold pays no interest because it IS MONEY IN ITS PUREST FORM and doesn’t have to? Fiat currencies must pay interest to compensate for risk to attract “buyers”, gold “attracts” buyers because it is the ultimate, safest monetary asset there is because it is no one’s liability! Does he not understand the reality, gold is not priced in dollars, dollars are priced in gold? It is not the ounce of gold that “changes”, it is the perceived value and the supply of dollars that changes!
The next three chapters, “gold is only a commodity …only the miners care that gold is at production cost …and adjusted for inflation, gold is not all that shiny” are chocked full of broken logic. Dent says “gold is not really all that useful” with the exception of jewelry and some industrial applications. He even went so far as to say “only the extravagantly wealthy or perhaps the criminally insane use it for much more than that”. So I guess 2 billion plus Indians and Chinese are criminally insane? Maybe he is calling the world’s central bankers “criminally insane” (I would agree here) because they hold reserves of gold?
As for production costs, he points to shale oil still being produced and housing busts where distressed sales take place below replacement cost. If he could put 2+2 together, he would understand that current production is and will be vital to satisfy demand that’s been running double or more than current production. Where does he think the supply has come from? The answer of course is Western vaults …and they are not an unlimited supply. In fact, a case can be made these vaults are already running on fumes, how can he explain current backwardation in London? Supply and demand DOES matter!
Now for one of his charts:
Harry posted a similar chart to this one displaying the purchasing power of the dollar since 1900, he calls it the “greatest BS chart in history”. It doesn’t matter if the dollar has shrunk he explains, living standards are far greater today than they were 100 years ago, this is proof that “inflation, over the long term, correlates with growth, innovation and a rising standard of living”. Never mind technology! The inventions of light bulbs, telegraph, cars, jet planes, the internet, radio and television, and all the rest have nothing to do with us no longer living life like as he says “Little house on the prairie” …it was all made possible by “inflation”!
Time to wrap this marathon up as even my head is spinning. First and foremost, it needs to be said that what Harry Dent is professing is beyond dangerous. Gold is in fact money in its purest, simplest and direct form, everything else is “credit” and is someone else’s liability. Dent is recommending you “buy insurance” for the upcoming financial collapse from the very “insurance company” that has caused the crisis in the first place, the United States. Never mind the U.S. is flat broke no matter what spin angle you look at it from. Not only does he recommend selling your true, natural and historically proven insurance policy, gold, he recommends you also become an insurance company yourself and insure others by selling gold “short”. This is a sure recipe to not only lose all your purchasing power, you stand to “owe” what you cannot deliver! Harry Dent in my opinion is an ignorant man who refuses to look at history or even use logic, yet he runs around like the pied piper encouraging people to sell their only insurance just prior to the largest financial hurricane in history making landfall! As I’ve written previously, I would love to debate Mr. Dent on this very topic in any forum of his choosing. This however will never happen, because real history and real logic versus dangerous fairy tales make it unfair.
Thank you Bill for pointing out that Harry is the new ‘Danger’. I took the advice of gurus like Peter Grandich and James Dines over the years and lost ‘nutin but money’, so Gold and Silver are my new adviser as it actually has centuries of history and has never been proven wrong and I still actually have it in my possession!
gold is no one else’s liability.
Hello Bill, First time commenter but I’m a
regular reader and appreciate your candor.
I happened to catch Harry Dent this morning
on Gregg Hunters USA Watchdog. I read the interview
and must say I think Dent is either a shill or
has lost touch with reality. I also read Dave Kranzler
on a regular basis and like his logic.
Since I read you regularly I would appreciate your
opinion on the SDR concept that has been floated
around. The last I read is that a basket of currency
weighted by country would comprise the SDR and the
countries with the most gold and or natural resources
would be weighted heavy and the countries with less gold
or natural resources weighted lighter. Do you have any
thoughts on this, Thanks
it’s a tough call, may try to compete with the Asian block currencies?
Kudos to you Bill for ‘pulling apart’ Harry’s off the wall basis, of what passes for financial analysis!
Maybe some historical evidence of gold/oil correlation will help, since both have an historical price relationship.
In 1950 one ounce of gold would buy 19.4 barrels of WTI crude.
Today, that same ounce of gold will buy 21.6 barrels of crude.
Among those existing in reality today, its generally accepted that the price of gold is manipulated and capped. What this tells me, is that both gold and oil will be revalued much higher going forward. Can the economy afford $122.63 per barrel oil, or higher? I don’t think so. There may be a global oil glut at present, but this will not persist for long. As the global yearly gold supply remains fairly constant, maintaining it’s position as the ONLY TRUE MONEY.
Only you Bill could respond to Mr. Dent and his full of holes argument as eloquently as you did.
In my opinion charts mean little now. For years the system has been hijacked by the powers to be that have publicly stated they will do whatever it takes….
History however does tells us much and the history of fiat currency only shows failure.
Only real money has the ability to protect us from the reality of toooooo much debt.
I am sorry but Mr. Dent and his argument do not in my view past the test of common sense or the laws of mother nature.imho
he refutes his own argument in many cases.
I think Harry has a dent in his head! Can he really be that stupid or is he a paid troll for the government? I didn’t waste my time watching Greg Hunter’s interview with Harry Dent this morning. Greg Hunter usually has pretty good interviews on his USA Watchdog. This is the first one I refused to watch since he last interviewed Karen Hudes last year – another crackpot.
I have already asked Greg if he would consider doing a debate between a Cowboy and the “dented” one. We’ll see?
Bill you ROCK !!!! I read his synopsis on Greg Hunters website and was wondering, just who is this nut working for. Great job!!
Harry might be correct if it was a replay of the 1930’s movie, but in the current system the fundamentals smell of a full blown historic “CURRENCY CRISIS”.
I hope I’m wrong!
Can we all say, “Haveth No Counter Party Risk”.
God Bless You
absolutely NOT! What was revalued higher by 70% in 1933? Was it the dollar? NO, IT WAS GOLD! We already have a real life case showing what happens to gold during outright deflation.
Bill, as I listened to Dent’s interview with Hunter, I was thinking what sort moron is he.
Your response is very good and accurate.
As you know I have said that gold is still in a downtrend and people should be careful buying at this time because it could go lower,price wise.
I am not saying it will,there is a strong base but its not going up either.
However if you own or buy now you would still have your gold, which is money. Dollars and digits are not.
Most people and Dent do not know that and would sell out should it go lower because they live in a dollar centric world and think they are losing money.
What was that about fools and their money are easily parted?
trying o time it is very dangerous.
WTH “dollar” Bill?
“Does he not understand the reality, gold is not priced in dollars, dollars are priced in gold?”
Gold is in fact, “priced in Dollars”
And THAT is Statutory Law too, precisely 42.22 $ per Troy oz of Gold/ 1.29 $ per Troy oz of Silver
Only trouble is, 98% of the population simply do not have ANY “Dollars” whatsoever, as all they have are those “fractionally reserved” counterfeited fiat FRN paper IOUs for $ / Dollars.
Here, fixed it for you:
“It is not the ounce of gold that “changes”, it is the perceived value and the supply of (digital or printed, created out of thin air, fiat FRN IOUs for) dollars that changes!”
And given that it is not just the Phed Reserve/ U.S., but every country on the planet which is engaged in “fractionally reserved” currency printing / creating at this very moment in the Great Race To Debase (even the Euro is presently QE’ing 10’s of Billions monthly)
ALL 10’s if not 100’s of Trillions of worldwide fiat, which can enter the Market on any given day without any notice to swap that paper a**wipe into hard, physical Gold & Silver, it is only the idiots who have not yet even begun to Stack the Physical.
China and other Asian Countries Get It, India Gets It, even Russia with its current economic hardships Gets It, as they just added another 30 Tons of Gold to their Stack, and I would bet that even the OPEC M.E. Gets It, and are stacking like mad, ergo, I wouldn’t doubt where same and the banksters buy off the likes of Harry Dent; Louise Yamada; Edelson, et al, to deliberately mislead others to hold off stacking physical PMs until after they have unloaded all of their worthless fiat IOUs.
Cheers, S. Rex
I am a first time writer, but a long time reader of your work. Thanks for the down to earth logic regarding Gold. I too was watching the Greg Hunter program and I couldn’t believe what this guy was saying. I finally turned it off half way. If gold ever sees $250 again, I will literally “back up the truck” because I know it will not be for long, then the whole world will know what it is really worth when it goes well over anyone imagination (many 1000s of $$$$). Actually, what would be premium on $250 gold? Probably about a thousand bucks. Thanks again for your writing. I always enjoy reading what you have to say. God bless!
thanks and God bless you too Edward. Welcome to the blog!
Execellent response to Mr. Dent. I stopped listening to Harry Dent years ago when my gut told me he was stupid.
However, he reminds me of the type of person who wants to be above every one else and he is doing this by owning gold (I bet he does), but tells every one else to sell their gold and go short gold.
His followers (if there are any) are in a dangerous situation!
where have you been Farrell?
I have been out of the country.
Hated to come back to Slavelandia.
hope it was a good trip.
Go get’m Bill!
The only part of Dent’s rabid hatred of gold and surety of deflation that concerns me is the similarity to the Kondratieff Wave theory. I haven’t been able to formulate an argument against fewer people buying things; resulting in lower prices and a subsequent deflation.
…and what exactly happened with gold in the 1930’s?
His niche is saying things no one else is to get his name out and sell books but we know better.
yes, for the shock value.
Might Dent be a misinformation specialist? Or maybe he’s just got a dent in his head.
whatever it is, his logic is broken.
I dont listen to “Dent”, “Middleton”, “Schiff”, “Hudes”, and I understand you are already booked for USA WATCHDOG, lets guess, this wed. morn, or next sunday early release?
yes, I believe in two weeks on May 8.
Schiff still believes price of gold goes down due to supply of sellers Serling their gold investments. I think he knows better but acts it’s all legit i assume so he can run again for politics. I do agree with his other economic analysis just not on gold
I agree with most of what Harry Dent says except his response to preparation. You do not sell your insurance , he is suggesting you become a part of the flush by holding dollars.
change in play;
allen ols 04/21/2015 •
bill says; he will be on May 8th, so esr may 10
Greg Hunter 04/21/2015 •
Actually Allen I move him up to this coming week. He and Dent agree on a few points such as there is going to be a huge paper loss. They disagree on how to protect your assets and your family. It will be interesting. I think Dent is a good man with legit credentials. He sure made us all think, and that is always good.
yes, I will be interviewed tomorrow rather than May 8
I do a lot of blogging on the KE REPORT….BIG AL needs to get you on…good, good job sir…you, my friend are spot on! Unfortunately, westerners (not cowboys,,,haha!)dont get it but billions of “Easterners and their governments get it…and what is that 4 to 5 billion people….I think we have a supply…demand problem coming and coming fast for the physical PM’s….ooops!!..:)
thanks Marc, they started to publish all of my work but they have a big advertiser who is a PM dealer and put the brakes on my work.
There’s already blood in the streets of Athens….I expect you wont be kind to HD on Watchdog in that regard either!!
Please make it as painless as possible. Too much air-time already wasted ….more important things to discuss than making a stance against broken arguments/ pov’s. After all…the consensus is out.
HD still living in the 20th Century…when there were things such as charts and cycles and markets. Amazing what Algo’s and HF’s can do with a paint brush these days.
there are no markets anymore.
Bill, you’re on a roll today with 2 posts published on the same day (Monday)! Planning to take day off tomorrow (Tuesday)?
yes, these two will run again today.
Dent did a great job here.He got you, Bill, out of your corner with the gloves ready,like a tiger looking for his next meal.Good job sir.
thanks Jimbo, Dent is doing a huge disservice.
The weakest point in Harry Dent’s (and other gold bug belittlers) argument is their ignorance of economic history.
In his book, The Golden Constant: The English and American Experience 1560-2007, Roy W. Jastram and Jill Leyland provide historical data showing that gold is not only the generally agreed upon inflation hedge, but that gold performs better as a hedge against deflation than inflation. In other words, the *value* of gold has been relatively constant.
Having said that, we also live in a special time that has never been seen before in Western civilization; that is, the need for government to suppress gold and silver prices relative to fiat currencies in order to maintain the illusion that today’s fiat currencies have value. In fact, it is only because of our advanced world-wide technology combined with centrally controlled financialization that makes the illusion is possible.
So yes, when the system breaks down due to loss of confidence in the dollar by the average person, gold will jump in price, but not value! My estimate of how much the dollar has been abused, puts gold at ~$55,000/Oz when the great-reset occurs. But that also means that a loaf of bread may coat ~$100.
the best background for gold is deflation.
Great piece. But you did not identify what Dent’s “diatribe” was. Was it a book? A report? (You talk about “chapters” so it must be more than a blog post.
it was a VERY long blog post, I could not provide a link because of copyright law …don’t want to get sued and pay for his faulty logic.
Just my call.
HD is either a dangerous half-wit or a misinformation agent.
But he sure gets us WD commenters fired up!
As I keep saying – ‘you are a straight shooter’.
Am looking forward to hearing you on WD soon.
Will be interested to get your take on Greece if Greg asks you.
IMO their financial crises and their inevitable exit from the Euro will be the catalyst that brings down the whole house of cards worldwide.
The timeframe will be months not years.
thanks Colin, my article for tomorrow will be about Greece.
Bill, please please please offer to get back on with Greg Hunter and repeat what you explain above on the air. Dent is so hypnotic I nearly decided to take my cash allocation back above 1%.
thanks Ben, I believe I will be on again May 8th.
Harry Dent. What can I say? Why would anyone listen to this guy?
Does anyone remember his call in 2004 for a Dow 40,000
and Nasdaq 20,000 by the year 2009?
THATS 5 YEARS FOLKS.
Try and explain that one Harry!
The guys predictions are laughable!
Enough said. Someone needs to hold this comic’s feet to
the fire. Don’t even bother listening to this guy!
Great job on exposing Harry Dent for who he is. He talks
with a fair amount of passion on subjects, but his accuracy and grasp of the Capital Markets reminds me more of “Baghdad Bob” who entertained us in 2002.
You will have a field day with guy!
his logic chain is broken.
I would like to debate him …good luck with that!
Bill, Thanks for exposing this POS. This is the same guy telling people to go out and buy guns and bullets. How can you tell people about personal protection and cause them to fall financially. This will make them terrorists seeking to take what is not theirs when they loose. This guy is no different from the leaders today who gain wealth on the back of others suffering.
Back in the day, this “Dent” would have been already removed, because it is not good to be reproduced. This guy is telling people to buy “dented canned goods” for long term storage”.
He also said that inflation is what caused people to have a better life. In that same statement, people were creating things for a better life with no money at all. Matter of fact “Money is the end result of every thing we create and transact”.
Please don’t waste your time debating this guy. Never ever bring a fool up to your level of understanding. It only gives him a platform for other fools to become known!
In the words of Robin “Holy Batshit Batman, is this Harry Dent or Harvey Dent?” LOL
this is a good’ern Marco!
harry dent, and now rick ackerman this morn on usawd w/greg hunter, seems like they agree on the dollar, and bonds.
sooo why did russia buy 3k tonnes of gold yesterday, and india and china buying gold and silver voraciously, do they not notice this, and no comment on aiib, sge, union pay, new dev. bank, cra crisis res. account, and cips swift alt.
they ignore soooo much.
they are wrong thinking the dollar is the safe haven.
Bill recently we have heard reports about US banks advising clients that it is no longer acceptable to hold cash in safety deposit boxes. Also we have heard that banks will no longer allow bills to be paid at banks with cash..
What is this all about.
Are we trying to force all cash into traceable transactions or is this about keeping cash in form of bank deposits thus increasing the banks ability to increase leverage through fractional banking.
Would be curious to hear your point of view.
I am sure this is where they would like it to go, “cashless”. I have not seen where banks are refusing cash to pay bills yet.
I read it somewhere this week.
I have seen stories online re no cash payments to credit cards but this was much more than that…I will look for the piece I saw yesterday
Here is the piece I was referring to:
As of March, Chase began restricting the use of cash in selected markets, including Greater Cleveland. The new policy restricts borrowers from using cash to make payments on credit cards, mortgages, equity lines, and auto loans. Chase even goes as far as to prohibit the storage of cash in its safe deposit boxes . In a letter to its customers dated April 1, 2015 pertaining to its “Updated Safe Deposit Box Lease Agreement,” one of the highlighted items reads: “You agree not to store any cash or coins other than those found to have a collectible value.”
not sure how this will work as FRN’s clearly state “payable for all debts public and private”.
I don’t think even my 10 year-old daughter would make some of the simple-minded conclusions Dent has made. For example, he states that dollars will be destroyed via default and bankruptcies, therefore, making the fewer dollars more valuable against the same amount of goods. What?? Has Dent ever studied economics 101 about supply and demand? He conveniently talks about (less) supply of dollars without addressing (less) demand for the dollar and anything else. Does this crackpot think that the dollar can collapse and also be in great demand? Has he ever looked at a chart showing the price of gold versus several currencies during their respective periods of strength and weakness? If he ever made the effort he would see that there is a very strong correlation between the strength/weakness of a currency and it’s value in gold. Again, my 10 year-old daughter who is just learning about charts and trends in the 4th grade could see the strong correlation.
So, the real question is, why would a mother name her son Harry Dent? Maybe this is the problem. He has an anger issue and wants to hurt people. Harry Dense would be better.
break his faulty logic down Brad, that is what you should go after.