Henrik Zeberg - Gold Is Going To $800 before it gets to $5000!

Zeberg is a polarising character. He has recently been chastised by many gold bulls for daring to suggest that gold could fall to US$890/oz. We wanted to dig into the data behind this assertion.

Zeberg has been living in Copenhagen for the last 26-years. He's an IT consultant and macroeconomist and runs a website called 'The Zeberg Report.' He releases a weekly podcast/live show where investors can ask questions about the latest developments in global markets and what this could mean for the future.

Zeberg bases all of his market forecasts on a model that he has constructed. It is based on an understanding of the long-term perspective rather than simply looking at the next few months. From a 'Kondratiev Wave' perspective, and for the last 20-years, we have lived in an environment where the spiralling debt of the world has placed a large burden of pressure on growth. This has created a deflationary environment with prices being pushed down. This is why the central banks can't get inflation going no matter how much quantitative easing they engage in. This is in line with what Kondratiev describes as the 'Kondratiev Winter'. This is where we are right now according to Zeberg. If one is to study throughout history, when we have experienced a build-up of similar debt levels, this deflationary environment lasts for some time. It isn't resolved and growth isn't kickstarted until governments realise that they must eliminate debt. However, monetary stimulus is the primary strategy right now.

Matthew Gordon talks to Henrik Zeberg, 8th July 2020

Within this environment, gold has risen as expected based on historical evidence. What some gold investors may be looking past is that all bull markets have major corrections. From 1999 to 2011, gold experienced a major bull market, tracking from just US$250/oz to US$1,920/oz. From 2011 to today may well have been a correction loop. Based on the 'Elliott Wave' principle, the market needs another decline. There was a decline in 2015, but Zeberg is confident another correction is on the horizon. He expects the decline to be "quite powerful," in the form of 'Wave C'. He also anticipated it will be "quite extended." He references the silver market as supporting evidence: silver reached the bottom in 2015, peaked in 2016, and hasn't risen as high since then. Moreover, if one is to consult the GDX, they may notice some quite bearish price trends. Maybe, in light of all these circumstances, the gold market is the one that is wrong. The strong dollar thesis further reinforces this idea.

Some bullish gold investors are just reading the headlines and haven't noticed that Zeberg is agreeing with them long-term. Eventually, he sees gold rising to an "absolutely extreme high" at the end of the Kondratiev Winter, but the road to the high needs to go through the Elliott Waves, bottoming out the gold price at c. US$890/oz. As a long-term investor, he's always been extremely interested in commodities because they are one of the best investment classes to study if one wants to determine whether the market is inflating or deflating. Commodities demonstrate bearish and bullish patterns that one can apply to their investment thesis.

When pushed, Zeberg admits that he could well be wrong about all of his projections, but he states it is about probabilities; there is no certainty available, regardless of the commentator you listen to. The one thesis that requires the "least excuses" is the bearish thesis for gold. Gold simply does not do well in a deflationary market.

Excitingly, Zeberg does buy into US$5,000-$10,000/oz gold! He just thinks there is going to be a swift decline first. Gold is still a great investment right now, but it could be an even better investment in the near future.

To hear more from Zeberg, be sure to check out www.thezebergreport.com for the latest macroeconomic trends. Tune in every Sunday for the live show.

What did you make of Henrik Zeberg's outlook for gold? Do you agree?

Company Website: https://www.thezebergreport.com/