Gold Up or Gold Down?

Why The Gold Price Will Fall to $750

By Rodney Johnson, Editor of Survive & Prosper

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When I give speeches, I love the Q&A part of the program. It gives me the chance to connect with people. To hear what’s on their minds and to provide, as best I can, insight on what might lie ahead.

The topics people want to discuss change with the times, but some topics are evergreen. For example, interest rates are always front and center of people’s minds. And for the last several years, gold has been a hot topic. Is it gold up or gold down? Buy gold or sell gold? Should we be gold bugs and gold bears? What can we expect from the gold market?

Instead of being something people want to talk about, it seems gold is something people want to either defend or crucify… without much middle ground. And that’s a problem because it puts people into dangerous positions while leaving opportunities on the table.

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Meet the Experts
Harry S. Dent Harry S. Dent - Editor-in-Chief

Harry identifies and studies demographic, technological and consumer trends so he can accurately forecast economic changes. He regularly speaks to executives, financial advisors and investors around the world, has appeared on “Good Morning America,” PBS, CNBC and CNN/FN, has 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, and is a regular guest on Fox Business’s “America’s Nightly Scorecard.” Harry has written numerous books including The Great Boom Ahead (1992) and The Great Crash Ahead (2011).
Rodney Johnson Rodney Johnson - Editor

Rodney works closely with Harry to study how people spend money as they go through predictable stages of life, how that spending drives our economy and how readers can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs and is featured on television where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy.
Adam O'Dell Adam O’Dell - Investment Editor

Adam aims to find investment opportunities for subscribers that return the maximum profit with the minimum risk. He achieves this with his perfect blend of technical and fundamental analysis. Tactically, he does exhaustive back-testing and probability-based research. He previously worked for a spot Forex firm, where he excelled at trading the volatile currency markets and expanded into the commodities, equities and futures markets. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets.

Here at Survive & Prosper, we are NOT gold bugs. Nor are we gold-haters. We are merely observers of economies, markets and trends. This puts us at odds with both gold bugs and gold-haters because we don’t clearly stake out a position and hold onto it for dear life. We don’t do this because we don’t see how either position is supported by the facts.

Instead, we use those facts to determine our path to maximum gains. And right now, our facts are telling us the gold price could melt down to $750 by next year.

Ultimately, the question is: what is gold worth?

What should the price of gold be?

Typically, the answer is given in terms of a currency. An ounce of gold is worth so many dollars or euros. The gold spot price is delivered in dollars. But how do you know that the gold price is a true reflection of the value of the precious metal?

Because the screen said so.

But what will the gold price be in a year?

Ah, that’s a more challenging question...

What Will the Gold Price Be in a Year

The long answer is: that depends. Gold’s “worth” is a combination of what’s happening with monetary and credit expansion and whatever you think the value should be.

Credit and monetary expansion is easy. If they’re growing, the price of gold in dollars or euros should move up. In other words: gold up.

The “whatever you think the price of gold should be” is the hard part. And this is where people get angry.

“The gold price should be at $5,000 per ounce because our government is killing the currency!” is a common cry among the gold bugs.

Or, “The gold price should be priced for its use as jewelry, around $100 per ounce, because it is not part of the monetary system,” to quote the gold-haters.

But how about a third rail? Instead of gold being worth nothing or a zillion dollars, can’t it be a fluctuating barometer of current demand and views, exacerbated by ETFs like GLD?

It’s not gold up all of the time. It’s not gold down all of the time.

In the current economic climate, which we call the Economic Winter Season, the gold price has risen sharply in response to fears about economic collapse. Along the way we’ve seen central banks take extraordinary measures to pump up financial systems while private and public debtors collapse their credit (think mortgage write-downs, credit card charge-offs, GM bankruptcy and Greek debt cram-down). These opposing forces keep fighting over the direction of overall money and credit.

At the same time, the fear trade is long in the tooth. This doesn’t mean investors no longer fear economic collapse or upheaval. It just means we’ve lived with it for some time. It’s become normal.

So this leaves us with the mushy middle. We see the price of gold rising. Then we see the price of gold falling. Gold up. Gold down. Gold sideways.

The current gold price is around $1,700 an ounce now, having visited just over $1,900 and dropping back down to near $1,500. So what’s next?

Our view is that while it could be up near $1,800 in the short term, the next move is gold down… We're thinking gold $750.

The reason?

A debt implosion that sends credit falling in on itself, and a corresponding spike in the U.S. dollar. This would likely happen in 2013 as the euro zone finally gives up the ghost and the U.S. recognizes the extent of the continued housing debacle.

What this means for gold bugs is continued frustration at the lack of respect the barbaric relic receives. For gold-haters it means continuing to deal with invitations to attend “sell your gold” parties… and enduring the ads on TV that show how gold owners have out-earned equity markets by many times over in the last decade.

Our call? In the next few months we’ll see gold up. By next year, we’ll see gold down… to $750.

As far as your physical gold goes, the gold that sits in storage for no purpose other than to provide you with peace of mind, that’s for you to do with what you will.

The time has come to sell gold, not buy gold, particularly in your speculative. When we see gold falling, on its way to gold $750, it will be lucrative to go short the precious metal. When gold hits one of two levels, you’ll know it’s time. And as a subscriber to the free eletter, Survive & Prosper, we’ll tell you when gold price has hit one of those levels and it’s time to act…

One of the Greatest Investment Opportunity of Our Lifetimes!

Our mission at Survive & Prosper is to empower you to see ahead of the curve so that you can not only survive during the great gold $750 crash ahead, but prosper as well. The only way to do this is to show you what no one else is paying attention to… predictable, profitable trends.

We look ahead for things the average investor just can’t see… the next Harley Davidson's and Microsoft’s… the best times to buy gold and sell gold and be in real estate. When to get into Dow stocks and when to get out.

Subscribe to Survive & Prosper and discover what most investors will never know about making money. Plus, you’ll get instant access to my FREE, eye-opening report called "Gold Will Fall to $750/oz." Inside, we’ll show you how it will all unfold... how you can be one of the few to sidestep the carnage as we head towards gold $750.

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Are you prepared for gold $750?

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