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Trader Tracks Predictions 2013-2016: Part Two

Wednesday April 10, 2013 10:01

We normally post our annual predictions forecast each year in late December and again in the first quarter of the New Year. Considering current newsworthy events, our Part Two is being posted today in December 2012. We wrote our Part One, which was previously listed on Kitco last month. Our reasoning for three prediction reporting events has to do with the out-of-control malaise in Europe, recent economic news from Asia and most of all, politically driven economics within the United States.

In America, the major market moving events are the so-called Fiscal Cliff, the debt crisis, and the unresolved, unaddressed violent attack in Benghazi surrounded by alleged lying and intrigue.

In Europe, the crashing credit experience (now into its sixth year in Greece) has not been resolved despite news to the contrary last week. The unanswered predicament here is the future of the Euro Currency and Euro-land consortium of member nations. (We like to refer to this consortium as the United States of Europe.)

In China, they have been through a period of hard capitalistic growth over the past two-three decades. This was brought about by radical change within the central Communist Party working to implement a hybrid of capitalism and communism. It worked for years but now they have lost their customers and must change their business plan. Reversion back to communism will derail that nation for decades. War drums are heard in China as their new navy is expanding in the South China Sea. They say they own it and will stop and detain anyone within it. This is not going to work well at all. Challenges to this idea are just ahead in 2013 by neighbors and the USA.

In Japan, the debt to GDP ratio exceeds 200% and the national economy sits on a fulcrum of razor edge balance. Buyers of JGB bonds are vanishing and there is not enough credit to go around.

In South America, their economies have been primarily driven by agriculture, mining, and energy. All of those markets have performed greatly for several nations in the Southern Hemisphere. Now, as these growth patterns mature, new and serious problems occur.

In the Middle East, the Arab Spring has Sprung and is spreading rapidly. Iran is the primary culprit selling and donating weapons to be used against Israel and USA interests. This is fostering more violence in the Middle East and that fact has not been addressed by the current USA administration.

Prediction: The Fiscal Cliff may happen with a Kick The Can Extension in early January 2013 when things go ugly. If the President, Senate and House leadership (our so-called leaders) continue on their current path, both Democrats and Republicans will resolve nothing by January 1, 2013. 
Option Two could be a tax increase on those earning $250,000 or more annually followed by a hidden group of stealth taxes to come later in 2013. Initially, those wage earners with incomes under $250,000 will be “saved” and told no new taxes. Later they get hit with a tax landslide. Option One or Two won’t happen in 2012. The “Leadership” will be on Christmas vacation.

Prediction: The Benghazi events could conspire to take down the Obama Presidency through impeachment. An Impeachment Proceedings cannot win in our view, but the combination of Benghazi alleged untruths and the national/international debt crisis will ruin the administrations current power. We think the President resigns in disgrace, similar to the Nixon event on the threat of impeachment and other unaddressed major American problems like the debts that have now reached the emergency status.

Prediction: American energy independence conceived partially from the regional Bakken wells, in Southern Canada, Eastern Montana and Northwestern North Dakota will be short lived. There is an abundance of gas and oil being pumped from those new wells right now. However, the depletion rate (the rate of usage) is faster than normal. As fast as this idea rises to its zenith, it will flare out, diminish and fall back to poor production delivery levels. This will be a major disappointment.

This problem will be made worse as the Keystone Pipeline is not approved nor built. The current USA energy policy of favoring green ideas will fail badly as they already have in wind, solar and related others in that greenie energy sector.

Coal has been suppressed and smashed in price by EPA rules and cheap natural gas. It will take some time for this industry to regain its financial and productive footing. But since it shall be the last and mandatory choice when natural gas supplies dwindle, coal comes back again.

While some new auction bidding for Gulf of Mexico oil and gas leases has been approved and held, those sources will be too small to have a serious effect for American energy independence. There is plenty of energy available in Alaska but politics has smothered leasing and drilling progress for years as the old Alaskan pipeline slows down to a dribble compared to its former production.

Over the past 20 years or so, USA refineries have been shutting down on EPA questions and were collectively very old, creaky and in bad condition. Note all the fires, explosions and deaths over the past few years. No new ones are being built as it costs $6 billion for one substantial refinery. Worse yet, refinery operators can’t make any money…why build a new one in this profitless environment? One cannot justify the cost or time investment.

America is now importing about 35% of its refined gasoline for motor vehicles delivered from foreign tankers to our shores. Considering the amount of refined gasoline we cannot produce and must import; this is a dangerous position for the United States: a new and scary vulnerability.

Prediction: Permanent climate change is nonsense. A typical climate cycle is ten years. With a decade of disruptive weather and storms in the USA the climate change proponents have been crawling out of the woodwork. This current year’s long bad weather event has been recorded numerous times in America. It is one cycle, pure and simple. We have proven data that early indicators of the next ice age began in 1998 and will gradually build to a climax over years.  Historically, the kind of weather we see today is a prelude to the next ice age and all the signals are in place. Climate change extremists push their agenda to obtain government handouts and make money on those types of stocks. Look at the related failure lists over the past 3-4 years if you think we’re kidding.

Prediction: The USA bond markets are moving to an implosive failure. It has started first with municipal bonds and next it spreads to junk bonds where reckless cowboy investors parked cash for high returns on high risks. Mr. Bernanke must buy back roughly 60% of his new paper at current auctions; parking it on the bond purgatory shelf in the Federal Reserve. Those bonds are marked as “sold” and they are not.

Bernanke is at the end of the road. Foreign investors are still buying his fiat paper but are doing so in lessening amounts. Recent buying has been a fleeing position from European paper. This cannot last too much longer.

We have been through several bubbles since the year 2000. (1) The super low Greenspan rates that encouraged unqualified homebuyers to jump into the market. (2) Derivative abuse by the billions, instigated by global banks to earn fees on smoke and mirrors. (3) Federal debt existing beyond any reasonable level, with no national budget approval for the last three years. (4) Bond and currency printing at outrageous rates of increase with no asset backing. (5) Stock trading and manipulation at grandiose levels despite economic conditions. (This event is purely trader-driven and is destined to implode in late 2013.) (6) A destructive real estate industry crash caused by credit buyer and lender abuse.

With a smashed national budget, a new and forthcoming world war that the American military cannot afford could be the final straw in credit land.

Prediction: The next big seizure of assets will be the mandatory conversion of pension assets to USA government paper. The estimate is $8 trillion, which is about half of the current reported USA national debt. This happened in Argentina in the year 2000 and the victims lost everything they had including savings, pensions, liquid wealth, and real estate. That nation is broke and going there again courtesy of Mrs. Kirchner’s public policy.

The USA will follow on the same path courtesy of House Minority Speaker, Nancy Pelosi.

Lack of responsible leadership in Washington D.C. has driven the United States to bankruptcy. We are insolvent. We reside in the land of the walking-credit-dead and exist on plastic and the no-other-choice-will of foreigners buying our paper. The paper game is about done as the smart ones are moving to hard assets of numerous varieties.

Do not expect any leadership from Washington but rather, plan for the worst and hope for the best. Most Americans know something is wrong but with the news offering a different Pollyannaish story they march forward like lemmings over a cliff to their ultimate economic death.

Prediction: USA inflation now at +11.3% will be rising to reach +15% by May and a lot higher in fall 2013. The severe pressures on Obama will contribute to his resignation.

Prediction: There will be a Santa Claus rally beginning December 3 and completing on December 15th, or so. Stocks in the first half of 2013 can rally with the normal corrections, presuming the president can continue to hold his office. However, by May 2013 we should see a markets’ haircut of 11-12% or slightly higher.

In the fall of 2013, we forecast a stock market crash of -38 to -50% from the 2013 highs. The incidence of a World War or impeachment proceedings could make the selling much worse.

Europe is in much worse shape than America.

Prediction: The new credit pact fought over on Greece for the past two years is ready to collapse despite it being only one week old. Germany passed approval of the agreement last week but Finland and the Netherlands must also vote and approve. Worse yet, the various factions within the agreement, after studying what was signed, are infuriated and are already talking repudiation. Nobody got what was wanted and everyone felt they were treated unfairly. If this agreement lasts until fall as expected as of last week, we would be surprised.

Prediction: If Greece exits the Euro-land consortium and the Euro currency, we say the whole Euro-land-idea-event collapses in onto itself. We did predict this in 2003 early on in the formation of this Euro-land effort. Our thoughts were: How can so many nations with widely varying cultural differences, economic status and languages become one and equal? Answer: They can’t.

We were right and the handwriting is on the wall. The collapse will be lead by Germany when they start trading D-Marks in parallel with the Euro currency. Euro-land will dissolve. The bigger question is what will the old/now new currencies be worth post Euro currency demise? We say not much at all. The Greek Drachma would be worth nothing. Portugal, Spain and Italy are all heading for major pain as well as the UK and a few more. The wounded German economy will hang on to survive as will Finland, the Netherlands and Iceland. The other members will be unmercifully hammered.

Asia has a mixed bag of problems and opportunities.

Prediction: China temporarily lost its economic footing but new elections and powerful political operators from the old Mao regime are now in charge. The grand China experiment is over and is now on the decline. The Chinese export machine must now turn inward and pursue organic growth. The exporting has fallen down drastically as sales to Europe and the USA hit the dumpster. Expect Chinese seizure of foreign assets of all kinds within China. This will include hard assets, factories, stocks, cash, trading, infrastructure, businesses, and worst of all intellectual property. China is now busy trying to buy Greek assets on major discounts.

We said this would happen about 3-4 years ago when foreign investors who were All-IN (thinking they found investor nirvana) began to get cut off at the credit knees. Holders of major installations and property will lose most of it in the forthcoming seizure credit-smashing implosion. We think this was the 20-30 year plan all along. The suckers will lose a pile.

United Nations Abuse of the USA and the West

Prediction: The United Nations is a communist third world front. It’s been the staging platform for the One-Worlders. After the next big war, the UN is defunct…gone…zero. “The Times of India reported last week that the USA and Israel were isolated and humiliated on the world stage on Thursday after the international community overwhelmingly voted to upgrade Palestine to a non-member observer state in the United Nations.” Prediction: Donald Trump will be converting the newly vacant UN New York headquarters building into condominiums within 2-4 years.

One-Worlder proponent Brzezinski complained about the rise of resistance to the UN and its affiliates. “Brzezinski: "Populist Resistance" is Derailing the New World Order ... Rise in "populist activism" a threat to "external control" ... During a recent speech in Poland, former US National Security Advisor Zbigniew Brzezinski warned fellow elitists that a worldwide "resistance" movement to "external control" driven by "populist activism" is threatening to derail the move towards a new world order.” −InfoWars The Daily Bell 12-2-12 Our view says he is correct.

We would agree with Mr. Brzezinski as the Sheeple, after being battered and destroyed by bankers and politicians, are going on the offense. We would not want to be in the One-Worlder camp with the bankers as the list is public and we know what history says will happen next. It might take a few years but the ending is always the same.

The U.K and France are both in very serious credit and economic trouble. One new report from London referred to the nation’s credit situation as a 60 Billion Pound Black Hole.

Middle East is on fire from one end to the other.

Prediction: Egypt, Syria, Lebanon, Yemen and other surrounding neighbors along with some North African nations rise-up in a major war against the west. Iran and Egypt will be the leaders and they might even overrun Saudi Arabia, stealing all of their oil and gas assets. The United States will defend the Saudi’s to protect energy supplies but Turkey may side with the others against the USA despite being a member of NATO.

South America has been on growth roll but is stalled on politics.

Prediction: After the passing of Hugo Chavez next year, the next leader will be another dictator following in the footsteps of Chavez. Castro could be gone next year too but his brother, despite being a softer communist than Fido, will continue to operate Cuba as his personal dictator fiefdom. There are hopes a new leader would emerge in Cuba freeing the people and opening the doors to prosperity. It will come but not for at least another five years.

Argentina is headed for collapse again along with less severe but serious problems in Chile, Peru, Bolivia and others. Uruguay and Panama are probably the freest with the others in various lesser situations of comfort and freedom for their citizens. Mexico has been doing much better within their economy, but the escalation of crime in four large states and certain tourist mecca’s has created new and serious concerns.

Prediction: Gold and silver markets will improve in 2013. Gold should touch $1,923 and then $2,000 in the first half of the year. In the second half, we could see prices at $2,150 to $2,250 for highs.

Silver was beaten down but has been rising faster than gold of late. We are near $33 now with $35 resistance. In the first half of 2013 silver could touch $44.48 and perhaps $48.50. In the second part of the year if things go well and we expect they will, silver could finally break $50, rising to $56 and then $59 dollars. Purchases of gold coins and bars have slowed but are still rising. On the other hand, silver buying has been off the charts during the last few months. Since silver is more affordable we expect the ratio of silver buying to gold will continue to drastically increase. This will put hard pressure on silver prices as most of the new buying is for investment not for commercial usage.

It is obvious to us that hard assets are the answer. It all starts with physical gold and silver.

Somebody please tell us when the global bond markets crash for good and we’ll tell you when this can all get better and we can start over again, maybe with a partially backed fiat gold currency.

By Roger Wiegand
Editor Trader Tracks Newsletter
The Jay & Rog Blog at webeatthestreet.com

Roger Wiegand is the writer and editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and long term traditional stock shares, futures and commodities trading with specifics for individual trades. Stay tuned for more of Traderrog’s insights and predictions via his exciting new daily audio subscription.  Coming soon! Details at www.wavelengthpublishing.com

Roger also is a regular contributor to The Korelin Economics Report (www.kereport.com) the highest rated Internet radio program listened to throughout the world. It specializes in politics and hard assets. He is also a regular guest on the Weekend Edition of The Korelin Economics Report, which airs on radio stations across the U.S. on Saturdays and Sundays.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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