NEW YORK (TheStreet ) -- Permabear David Tice believes the S&P 500 will sink to 400 while gold prices will skyrocket to $2,500 an ounce. David Tice, Federated's chief portfolio strategist for bear markets, launched the Prudent Bear Fund(BEARX Quote) in 1995 to serve as a "net-short" hedge to the U.S. stock market. Tice has given up some short-term gains in favor of his bearish long-term strategy. S&P 400, Gold $2,500 In 2008, the Prudent Bear Fund was up 20% in a year in which the Dow Jones plummeted 33%. But in 2009, the fund lost 18% shorting stocks as broader equities rallied. Currently, the fund is down 18.54% year to date, but Tice, no longer portfolio manager but still a bear champion after 20 years, believes his pessimistic and patient strategy will pay off. Tice says that the S&P will decline to 400, which is a shocking number, but Tice has been right before. Back in 2007 after the Dow topped 13,000, Tice predicted that the index would plummet at least 50% from the current levels. In March 2009, the Dow fell to an intraday low of 6,469.95. I sat down with David Tice recently. Here is some of what he had to say. TheStreet: When will the S&P hit 400? Tice: Probably 18 months or so. I think it's always hard to put a time and a price together, obviously. We've always been too early in our projections. We think that this is a massive secular bear market. We've had a nice rally since March. However, we think investors' expectations will be dashed.

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