by Steve St. Angelo, SRSRocco Report:

Harry Dent says gold is in a bubble, and according to his analysis, warns that it could go back down to $700.  If the gold price were to crash lower to $700, as Dent forecasts, then 50+ % of the gold mining industry would have to shut down.  Why?  Because the top gold miners total cost of production is now above $1,200 an ounce.

Of course, Harry Dent doesn’t take into consideration what it cost to produce gold as he pays no attention to the impact of ENERGY on the market.  He, like many analysts, must believe that gold comes from the Tooth Fairy. And, maybe we can’t blame them as the world has taken energy for granted.  Unfortunately, the overwhelming majority of economists and financial analysts do not incorporate energy into their forecasts.  Thus, most of the market analysis today is seriously flawed.

Let me start with Harry Dent’s newest article, Gold Fails Bullish Breakout… Stocks Likely to Breakout Instead.  Dent provides the following chart and analysis:

(chart from Dentresearch.com)

Gold’s Bad Break

Peter Schiff – who is also living in Puerto Rico – emailed me recently and asked when I would turn more bullish on gold. My answer was $1,525. I have been eyeing that as the key resistance; if pierced, gold would have substantially higher targets –$1,600 to as high as $1,800.

But Tuesday’s news caused gold to fall sharply just as the futures markets showed gold breaking up to $1,540+ … that would have been a clear breakout. Is this the end for gold for now, or is this news transitory? These two reversals in gold and stocks look convincing for now, and bullish for stocks.

Dent conveniently shows in his chart that gold hasn’t broken above the $1,525 level, but failed to acknowledge the huge $165 BREAKOUT  above the key 5-year resistance level of $1,360:

While Dent criticizes gold for not breaking through the $1,525 level, nothing goes up in a straight line.  The gold price shot above the 5-year $1,360 resistance level, which is now the new support level, by $165 in less than two months.  This is an excellent sign.  Of course, gold would hit some resistance at the next technical level of $1,525.  Thus, the gold price may need to consolidate a bit before moving higher.  Dent should know this, but he also seems to be conveniently overlooking the fact that stocks and commodities tend to correct lower after a large breakout.

I explain this in detail in my newest YouTube video update: Gold & Silver Continued Summer Rally Or Correction.

Regardless, Dent has been playing the ANTI-GOLD CARD for as long as I remember.  In his newest Gold E-Book, called The Great Gold Bust Ahead, Dent provides and an even lower worst-case level for gold of $400-450:

(chart from Dent’s The Great Gold Bust Ahead

It seems that Dent is providing a “Worst Case” $400-$450 gold price because, that is where he suggests the “Gold Bubble” began. If we take a look at his most recent gold chart again, I would like to fill in some important MISSING KEY FACTORS that Dent is excluding from his analysis:

(chart from Dentresearch.com)

First, you will see in the chart at 2005; this is where Dent labels the gold “Bubble Origin.”  And, if we just looked at paper charts for our analysis, then maybe Dent would be on to something.  However, these charts represent what is taking place in the REAL WORLD.  So, if we want to understand better what the charts are showing us, we have to look at the main factor that drives the gold price and market… and that is ENERGY.

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