(Kitco News) - The "everything bubble" could finally burst in 2024, warned Harry Dent, founder of HS Dent, who forecasts a meltdown in all assets except one.
Bubbles are dangerous because the economy has been overstimulated, and once assets start to sell off, the move down will happen fast, Dent told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News.
"We won't know until the second half of this year whether we'll be able to get through this. And the problem is that things could be happening very fast by then," he said. "Bubbles crash because they go to such extremes by nature - when people are just investing in things because they're going up."
Dent went over his forecasts for 2023 and why his timing was off. For the reason this mega crash has been delayed, watch the video above.
"The normal course is we have a recession once every decade. We have a boom for seven to eight years, and then we slowly go into recession for two to three years. That's how our economy stays healthy," he explained. "This is what we've been preventing since 2008. We're not allowing failure because they're scared failure will cause the whole castle to come down. This is way more global. There's almost nothing that hasn't bubbled."
Dent cautioned that once the selloff begins, the stock market could drop around 60% from recent highs. "That would be the middle wave down," he said, stating that we saw the first wave in 2022. "Every major crash in history has had three waves down."
He added that the last wave would follow after that, but the biggest damage is coming in the second wave.
People will start panicking when the Nasdaq drops below this level, Dent pointed out. Watch the video above to get Dent's technical analysis and the specific level he is watching.
What's Bitcoin telling markets?
Bitcoin is likely to be the leading indicator — if it keeps falling, it will be an alarm for other assets, including real estate and gold, Dent noted.
"Bitcoin is the lead dog in this new emerging industry, which is much like Amazon and the online retailers in the first tech bubble in the late 90s and early 2000s," he said. "I want to see Bitcoin starting to fail here. If Bitcoin breaks down below $40,000, that's a sign that we're probably going into another wave down."
Watch the video above on why Bitcoin is the leading signal and how far down it can fall in this crash.
Dent also pointed to another key signal that would confirm that the massive crash had begun. Watch the video above for insights.
Why is gold at risk of a selloff?
Gold is also at risk of a selloff in this everything bubble.
"In 2008, gold held up in the early stages of 2008 and only crashed in the second two quarters, and then it crashed about 45 percent briefly and then went back up again," he noted. "Gold did not see the worst crash back then, but it did crash and went running to Mommy."
Dent sees the same cycle repeating this time around. But before that happens, gold could reach new record highs of $2,200-2,300 an ounce.
For what asset will act as a safe haven during the next massive correction, watch the video above.
U.S. elections: surprises ahead?
Goldman Sachs' client survey released at the beginning of this year ranked U.S. elections as the second top risk to markets and the global economy this year, preceded only by geopolitics.
Meanwhile, JPMorgan's 'Ten Surprises' for 2024 included President Joe Biden, who is 81 years old, withdrawing from the presidential race, citing health reasons.
Dent, who correctly called former U.S. President Donald Trump winning the 2016 election, projected that any Democratic candidate would have a hard time winning this year's election because of how bad the economy will get.
"A challenging economy kills the incumbent. So, if we even have a very slow economy in 2024, Biden is dead. If I were advising Biden, I would say, 'step out gracefully while you can'," he said. "In a weak economy, the Democrats' only chance is to have a new dynamic candidate."
Watch the video above on what happens if Biden is not the Democratic nominee.
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