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how my predictions from last year have fared
secondrepublic
Posts: 2,619 ✭✭✭
Last December on the "big thread" I posted a bunch of economic predictions for the end of the year LINK:
--The economy will slip into negative growth at least one quarter and potentially two quarters (i.e., a recession). The unemployment rate will rise to around 5.5%. World economic growth will also slow down measurably.
--The dollar will strengthen to around 1.25 dollars per euro and around 1.8 dollars per UK pound.
--Gold will decline to $550 an ounce and silver to $10.
--Oil will decline to $65 a barrel.
--Stock markets will decline with the Dow slipping back to around 11,000.
--Housing prices will continue to decline in certain areas (Massachusetts, California, Washington DC, Las Vegas, Phoenix, Florida, Michigan) but will remain stable in other areas (most of the Midwest including Chicago, most of the South, and the Pacific Northwest).
All in all, not too shabby, and clearly against the predominant wisdom in late 2007 that we'd see an inflationary blowout of the US dollar and commodities.
So where do we go from here?
My best guess is that we won't see price increases on commodities for most of 2009... but we do face a distinct possibility (30%?) that the mountains of new debt the government is taking on will really weaken the dollar and help PMs, maybe even starting some time in 2009. Once you start running $1 trillion plus government deficits, as they are planning in Washington, it will eventually catch up with you. I am going long silver and gold, even at the current prices, in the belief that inflation is going to be returning... maybe in 2010, maybe even a little later. That's enough time to accumulate some more at fairly reasonable prices.
One thing I do NOT see is gold or silver falling down to $400 / $5, respectively, even in the short term. I would love for that to happen, but I just don't see it. The writing is on the wall for all-time budget-busting and money printing in Washington.
--The economy will slip into negative growth at least one quarter and potentially two quarters (i.e., a recession). The unemployment rate will rise to around 5.5%. World economic growth will also slow down measurably.
--The dollar will strengthen to around 1.25 dollars per euro and around 1.8 dollars per UK pound.
--Gold will decline to $550 an ounce and silver to $10.
--Oil will decline to $65 a barrel.
--Stock markets will decline with the Dow slipping back to around 11,000.
--Housing prices will continue to decline in certain areas (Massachusetts, California, Washington DC, Las Vegas, Phoenix, Florida, Michigan) but will remain stable in other areas (most of the Midwest including Chicago, most of the South, and the Pacific Northwest).
All in all, not too shabby, and clearly against the predominant wisdom in late 2007 that we'd see an inflationary blowout of the US dollar and commodities.
So where do we go from here?
My best guess is that we won't see price increases on commodities for most of 2009... but we do face a distinct possibility (30%?) that the mountains of new debt the government is taking on will really weaken the dollar and help PMs, maybe even starting some time in 2009. Once you start running $1 trillion plus government deficits, as they are planning in Washington, it will eventually catch up with you. I am going long silver and gold, even at the current prices, in the belief that inflation is going to be returning... maybe in 2010, maybe even a little later. That's enough time to accumulate some more at fairly reasonable prices.
One thing I do NOT see is gold or silver falling down to $400 / $5, respectively, even in the short term. I would love for that to happen, but I just don't see it. The writing is on the wall for all-time budget-busting and money printing in Washington.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
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When I saw oil at $140 I would have lost money on the bet of $60 oil.
My prediction for 2009 is that it will be worse than 2008. That's all I can do. Everything else is a guess. No one knows for sure. I do know something though. I have not bought equities for a long time. And I plan on not buying any until I can figure out what Nancy & Co. are going to do with our new social-capitalist market.
Ren
<< <i>I don't have any doubt that we're going to see a lot of socialism from the next administration and Congress... nationalized health care and new financial regulations are just the tip of the iceberg. >>
I don't believe the American people will just roll over and put up with that.
Wait till they learn the there will be no health care for anyone over 55. Save for the ruling class, that is.
Taking away their IRAs and 401Ks will be the last straw.
These are the makings of a civil war. Liberty is far from dead.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Many members on this forum that now it cannot fit in my signature. Please ask for entire list.
<< <i>
<< <i>I don't have any doubt that we're going to see a lot of socialism from the next administration and Congress... nationalized health care and new financial regulations are just the tip of the iceberg. >>
I don't believe the American people will just roll over and put up with that.
Wait till they learn the there will be no health care for anyone over 55. Save for the ruling class, that is.
Taking away their IRAs and 401Ks will be the last straw.
These are the makings of a civil war. Liberty is far from dead. >>
DH, you are making a huge assumption that the sheeple even know what socialism is. Look at the Dems. I think the hardcore D's are so entrenched that they don't recognize their own -isms.
We have government schooled citizens that have been dumbed down and re-engineered, I mean, re-educated with revisionist history. The sheeple have been beat down by courts overturning their votes. The citizen is numb and feels that he can't have an affect anymore. That, he, is insignificant. Wake up, drive, work, drive, eat, sleep, day in day out. I fear that many have given up. They will complain but will accept and sing to the Dear Leader. Those who didn't give up and voted for hope actually have their arms open for the change.
Not me!
<< <i>
<< <i>
<< <i>I don't have any doubt that we're going to see a lot of socialism from the next administration and Congress... nationalized health care and new financial regulations are just the tip of the iceberg. >>
I don't believe the American people will just roll over and put up with that.
Wait till they learn the there will be no health care for anyone over 55. Save for the ruling class, that is.
Taking away their IRAs and 401Ks will be the last straw.
These are the makings of a civil war. Liberty is far from dead. >>
DH, you are making a huge assumption that the sheeple even know what socialism is. Look at the Dems. I think the hardcore D's are so entrenched that they don't recognize their own -isms.
We have government schooled citizens that have been dumbed down and re-engineered, I mean, re-educated with revisionist history. The sheeple have been beat down by courts overturning their votes. The citizen is numb and feels that he can't have an affect anymore. That, he, is insignificant. Wake up, drive, work, drive, eat, sleep, day in day out. I fear that many have given up. They will complain but will accept and sing to the Dear Leader. Those who didn't give up and voted for hope actually have their arms open for the change.
Not me! >>
Perhaps my outlook comes from living in a state that is one of the last bastions of freedom.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i> Wait till they learn the there will be no health care for anyone over 55. Save for the ruling class, that is.
Taking away their IRAs and 401Ks will be the last straw. >>
They are planning to give healthcare to everyone... as in most other countries that tried that system it will be uniformly junky (I have some first hand experience with it living a year in London... no thanks). They'll call you "selfish" and "ask" you to "share"... and will promise people the moon about how good it will be, how much money it will save, you name it. And they will make it impossible to opt out.
On the 401ks, they will tell people they are "protecting" them from "market risks." They'll guarantee people a 3% return on government debt [the riskiest asset of all] plus some free money for those who don't save. A lot of people who lost 40% recently will go for it.
These will likely both pass... they have the votes.
<< <i>secondrepublic, what is your prediction for silver and gold for 2009. Thank you >>
I don't think gold and silver are going to do much of anything in 2009... the environment is still fundamentally deflationary, wealth is shrinking, credit is being destroyed and little new credit is being created. But the seeds of a much more serious inflation are being planted now by the Fed.... that will appear down the road, it may even take a few years (though I would guess 2010 it will appear). I am buying PMs actively now; to give you some background, I was not buying any until this summer.
I think we have a good time window to pick some up before we see price increases due to inflation. Fundamentally I think PMs are hedge against inflation; they don't seem to perform all that well in a deflationary environment. It's no coincidence that we saw PMs make their biggest moves up during the inflation of the 1970s, and NOT during the "deflation" or recessionary periods we've seen since then (1982, 1991, 2001, and today).
I don't think gold and silver are going to do much of anything in 2009... the environment is still fundamentally deflationary, wealth is shrinking, credit is being destroyed and little new credit is being created. But the seeds of a much more serious inflation are being planted now by the Fed.... that will appear down the road, it may even take a few years (though I would guess 2010 it will appear). I am buying PMs actively now; to give you some background, I was not buying any until this summer.
Same here, I was a seller right up to May and June. I have just recently been buying. If 2009 will be flat for PM's that good as far as cost averaging into 2010...when the sheit hits the fan.
Ren
Gibbons, "The Fall of The Roman Empire".
Camelot
To wit: the contemplated auto bail out will go to solidify the health and pension burdens in one fashoin or another. Far better to let them declare bankrupcy and reorganize without the union-negotiated obligations. But then...we'll have additional hundered of thousands without health care and retirement.
No one talks much about the elephant in the room: the inflated COSTS side engineered by predatory law suits, lobbying phamaceutical companies, administrative-heavy HMOs and defensive medicine.
Here's a warning parable for coin collectors...