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Tuesday, January 1, 2013

Predictions for 2013, and beyond

In the last year, my focus on the pulse of the global financial disaster has waned.
There are many reasons, some personal (work, family), some because my disposition is shifting.
I have a longer term view of what is happening than I did a few years ago.  I see all this turmoil as part of what is required to reset the financial system into a new model, one more technology driven and open.  Less pointy hat wearing mean with secret sauce to make the world go round.

How this plays out will be very interesting in the next four years.  I think the party is over from 2008 to 2012, and its time to get down and dirty.  I have high hopes that the entire system will remain in tact, but not better for wear by 2017.  By 2017, that is when I have grave concerns of the system stability.

With this backdrop I have a hard time making a predictions for 2013, for I see any of this happening over the next few years.  But making a 4 year prediction is no fun for anyone.  So I'll try my best for 2013 predictions.  I reserve the right to carry some into 2014.

1) Currency wars will continue to escalate.  Everyone is all in for currency debasement, with one exception, China.  They are of course FOR currency debasement, when it suits them.  If China believes they can withstand a rising currency, they will, for their advancement of global financial leadership.  Europe has shown to not have the stomach to hold the line, they too, will print.

2) Gold and Gold miners will do WAAY better than 2012.  2012 wasn't fantastic year for gold or gold miners.  I expect 2013 will be the start of the spiral up.   Gold will hit 1900 an ounce in 2013, may end lower, but will not cross below 1500 an ounce.  I wouldn't be surprised if the low for 2013 for gold will be in January.

3) CRB index bottomed in 2012, and will not break the 2012 low in 2013.  CRB will end HIGHER than it entered in 2012.  As for it's high and low, eh, its part of the process that I described in 2008 The Big Picture.

4) Europe, this will be toughest call.  Status quote may be maintained.  It will all depend on the will of the people under 40 years old in those countries under stress to make change happen.  Greece, Spain, Portugal, and other countries under duress may lead to leaving the Euro.  Bottom line is Europe WANTS these distressed countries to remain, and keep the debts in tact and raise more debts.  These citizens must decide to live under debt slavery passed down from the generations, or restart.  I'll go with one country gets either out or some strange modifications to Euro-membership rules.

5) in 2012 I made a prediction that the market would end lower, its a miss.  I am modifying the position.  If the US stock market was prices RELATIVE to CRB index, it will end lower in 2013, 2014, 2015, and 2016.  When I say end lower, I really mean trend lower. December 31st is not a magical day, so the exact position to 1 year before is kinda random on the pulse of the market.  But I'll go with lower relative to cost of resources.

6) OK, this is one hell of a call to make, I am making the call that the US 30 year treasury bond rate that has trended lower since 1986 will BOTTOM in 2013.  It may or may not break out of the range.   The setup is breaking up in 2013 or setup for 2014 to beak up.  The key element here is final US 30 year interest rate in 2013 as a low period 37 years after it trended downward.

7) US dollar will NOT go higher than it did in 2012.  If it does, it will be a 'spike' on panic for less than a week.  In general, the US dollar has seen its uplift since 2008, time for it to swing lower.  We WILL BREAK the USD low set in 2011, but may not be materially lower. Again, setup for 2014.

8) China will have a major scare here and there, but will not go materially lower in the markets than what was set in December 2012.  May dip 'for a month' lower, but china markets will end higher than today.
Overall China reform will get under way in 2013.

9) No major reform of US financial markets.  This includes continued fantasy accounting in place since 2009, no significant laws to match Glass-Steagall act dismantled in 2000 by Clinton.  No significant prosecutions of financial wrong doing.  More appeasement and lack of law. (some may read this as a gimme )

10) A major world event will happen in 2013.  Major on the magnitude of a bomb in Israel, a country like Iran, North Korea, etc having a revolution.  2013 will see a spike up in stability issues, leading into 2014-2017.  Sorry I can't be more specific, but I don't have my fortune telling cards handy.

Items 9 and 10 may seem hokey, feel free to disregard and hold me to the first eight.  I tried to be as specific as possible.

Karl of the Market Ticker has his predictions.

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