Saturday, September 10, 2011

2011 - Economic Predictions

NOTE : OK, I know it's September, and the year is almost over, but I noticed this post in "Draft" status. I wanted to get back to it and add a few more items when I started it in January, but didn't. You will just have to trust me that I have not fiddled with any of the numbers, as I post it now without any editing. Pity I didn't post this back then, as my call on Gold and Silver so far is pretty spot on.

Well, hot on the heels of my 2010 wrap up, I thought I'd try my hand for the year ahead. Hopefully I'll do better with the accuracy than last years effort. My defence is that, of course, this is not easy stuff to get right and at least I'm giving it a go!

So, without much more to say in terms of introduction, let's get into it!

1. Gold and Silver will wobble, but will continue to do well. 
As I write, gold is close to all time highs at $1420, and silver is $30.90 in US dollar terms. By the end of 2011, I predict $1800+ gold and $40+ silver in US dollars. $2K gold is not unlikely. Keep in mind thought that nothing goes straight up, and there may be some big swings in there somewhere. I think gold might come back to $1250, and silver to $24, or even more dramatically to $18. If it does, whatever you do, buy some! Gold and Silver will keep setting new highs in the year, and silver in particular may break out in spectacular fashion. Think $50+. If it does, it may also crash back down a way too after a time.

2. Trouble with treasuries will come.
I predicted it for 2010 and missed because QE and more QE2 helped keep the circus going. However, I don't believe the world will watch this show for much longer. They really can't afford to raise rates more than a percent or so without bringing so much pain to the US economy that it would instantly implode. I don't think they will make it much past 6 months into 2011 before TSHTF, and it may even be more like 3. However, the Fed has shown an amazing capacity to hide the sausage with the market and the terms of QE2 were sufficiently vague that they can ramp it up or extend it as needed.

3. Geopolitics... will just hold in 2011.
I got this wrong in 2010, and I might get this wrong in 2011 too, but I am thinking that this game might just last another year. The country that's hogging a lot of news space is China, and they have a country with mind boggling numbers. Can they keep control? I think they will until 2012, when they won't. Other troublesome places? Spain.. as the country that's Too Big to Bail in the EU and will probably go supernova in 2011, but somehow it will be papered over, and the can kicked once more just a little further down the road. Again, it's 2012 when all these chickens will come home to roost. North Korea? Maybe, but I don't think so.

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