Our 2012 Predictions
FutureMoneyTrends.com is focused on the macro-economics picture, our goal is to invest our time knowing about future trends. By looking at demographics, spending habits, technology, natural resources, and the global economy, we believe that we can accurately predict the future. Timing, however, is usually in a range and specifics are increasingly difficult as central planners are always getting in the way of the natural forces of an economy.
In fact, we have argued for years that the people who call our economy a free market are either uneducated about economics or purposely trying to attack any chances we may have in the future of ever having a free market. Now when we say uneducated about economics, PLEASE don’t think that we are referring to people who lack a degree in economics, it is just the opposite, to understand that we DON’T have a free market is to simply look at the everyday actions of our central bank and federal government. Once you see how manipulated our economy is, it only requires common sense to understand that we don’t have anything even close to a free market, which is the biggest problem with our college professors who teach a progressive style of Keynesian economics. Once you accept this as economics, it limits your ability to use common sense and see what is actually going on in the world around you.
Once indoctrinated in Keynesian economics, plunder becomes good will, manipulation becomes stability, and the distribution of wealth becomes what’s best for all.
So, knowing that all of our predictions can be over ridden by a single central planner, please note that we have done our best to not only predict the result of natural economic forces, but how our ‘august’central planners in both the banking world and federal government will react to those forces.
Remember, just because we are predicting it, doesn’t mean we like it, it just is what it is. We have broken our predictions into 4 categories: the markets, political, economic, and the big wild card.
Bank of America (BAC) is likely the next Lehman Brothers. As our good friend Any Hoffman of Miles Franklin recently put it,”SAY GOODBYE BANK OF AMERICA.” Jim Cramer on Jan. 6, 2011, gave his top 10 reasons to buy BAC, we knew then that it was truly over for them. Jim Cramer of course told his viewers to buy the dip on Bear Sterns and that it was just silly to even think about selling them. A few days later, Bear Sterns filed for bankruptcy.
Now in short, BAC practically under gun point from the Treasury Department took over Merrill Lynch, they also were happy to take over the ultimate piece of trash, sub-prime Countrywide Mortgage. As BAC suffers from a relentless housing collapse that has put some borrowers in foreclosure for over 2 years, the largest mortgage holder in the U.S. doesn’t have a chance. Especially if rates were to ever rise, which we actually don’t see happening in 2012, but just in case anyone had some hope for BAC, there really isn’t a reason.
When you look at the selling pressure, it is clear that someone is doing everything they can to keep this monster from collapsing, but we believe 2012 will be BAC’s last full year in business.
We should note that our chief strategist is one of the few men in the world that is on record for calling the collapse of Countrywide Mortgage, Lehman Brothers, AIG, and Washington Mutual.
GOLD will be the investment of the year. Between the Euro crisis, U.S. debt ceiling, new quantitative easing (printing money), municipal defaults, and inevitable downgrades for all government debt, gold is going to be a HUGE winner.FutureMoneyTrends.com is predicting extreme volatility for the yellow metal, with a range as low as $1,250 and a potential high of $2,850, maybe even $3,000 gold. The reason for the downside volatility is because once again, the gold markets are heavily manipulated, in fact, the gold market is without a doubt the most manipulated market in the history of mankind. There is a reason central banks are HUGE buyers of gold, more than doubling their purchases from 2010 to 2011, gold in this decade will be restored as money. The 40 year fiat currency experiment is going to end terribly (perhaps in 2012), however, we are not going to even attempt to put a date on this.
Our staff purchases physical gold for savings and wealth protection, and mining shares for profit.
Mining shares will bottom in 2012. For the past 12 years, mining shares have for the most part been ignored in the gold bull market. Not even coming close to keeping up in pace with the physical metals that many of them have not only proven they have in the ground, but are currently producing. If you look at most mining shares, they are down at least 30% in the past 6 months. A recent report shows that as a sector, they are priced as if gold was at $400 per ounce.
FutureMoneyTrends.com believes that the biggest gains will ultimately come from the companies that are currently in the exploration phase, yet ran by good management, and are in mining friendly regions like Mexico. It’s no secret that we are extremely bullish about the Sonora Resources (SURE), they have a joint venture with First Majestic, their CEO already helped build a billion dollar silver company, and of course they are moving their projects forward with new drilling, 43-101 reports, and plans for near term production.
FutureMoneyTrends.com staff plans to purchase thousands if not millions of mining shares in the first quarter of 2012.
Major Dollar rally in the first half of 2012. Now we don’t think it will hold for the year, but between the Euro and global tensions in the middle east, it is very possible that the dollar index is around 90 by the summer of 2012.
A Euro crisis would be the PERFECT time for the FED to announce more QE, as the markets would have no choice but to ignore the inflation since the dollar would be seen as a safe haven. However, this would be one of those rare times where gold and the dollar rally together. We don’t see a dollar rally holding up though as in the last half of 2012, the U.S. debt crisis will be front and center.
The Dow and the S&P both close lower for the year. Even though historically they close positive on election years, we believe when it is all said and done, the markets will be lower than where they close on December 31, 2011. The average investor is being stomped out of the market, the blue chips have been taken over by high frequency trading and other computers taking fast profits.
The experiment of the 401k that began in the 1980’s simply doesn’t have the generational support of buying that will be needed for the next 11 years as the market remains in a bear market. Once the baby boomers became official day traders, they went through the tech crash, 9/11, and of course 2008. The S&P is about where it was in 1998, the generation that is graduating now is going to see high unemployment, and with the federal government involved in all aspects of business now, it is doubtful most investors will have a positive experience investing in large companies.
This is one of the reasons FutureMoneyTrends.com staff has almost no exposure to companies listed on the NYSE.
Why do we make political predictions? Because even though the two wings of the big government party are ultimately going to give us the same things on the issues that matter, gridlock and blank checks have proven to greatly effect the markets.
If Ron Paul is not the Republican nominee, President Obama will win the 2012 Presidential election with less than 45% of the vote. Due to the growing libertarian movement, which we consider ourselves part of, it will be impossible for any Keynesian republican candidate to win. As our favorite guy Ron Paul is waking up millions of people to what is the core disease of our economy and way of life, there simply is no going back for those that are awakened.
FutureMoneyTrends.com finds it highly unlikely that Ron Paul supporters (including ourselves) could ever support any candidate that will simply continue the borrow, spend, tax, and manipulate policies. We have simply peaked in Government, the debt is heading to $20 trillion, and if the choice is between a big government democrat and a big government republican, then core constitutional supporters, Ron Paul voters, and other free market advocates will simply stay home or vote for a 3rd party.
One thing this election will lack is the ‘yes we can’ euphoria we saw in 2008, if we are right and Obama wins, he will win with less than 45% of the vote, probably somewhere between 39-45% of the popular vote. With the rest going to the republican and 3rd party candidates. No doubt, Obama will win by default, no pun intended.
The republican party will gain control of the Senate in the November 2012 election. Without a doubt, this will be one of our most confident predictions we can make this year, we are 99.99% certain that this will happen. Out of the 33 seats that are up for election, 22 are democrat, and 6 democrats are retiring.
The current count is 53/47, we believe the new republican majority will have at least a 51/49 edge. The states that will absolutely change hands from democrat to republican are Montana, Nebraska, North Dakota, and Virginia. It is possible though that Florida, Ohio, and New Mexico also change hands bringing the new republican majority count to 54/46.
Ron Paul will be on your 2012 presidential ballet, but more than likely not as a republican. In the past week, every right wing radio talk show host has come out against Ron Paul, a full blown smear campaign is already in the works. The governor of Iowa has even stated that if Ron Paul wins the caucus, it doesn’t count.FutureMoneyTrends.com believes that after either winning Iowa or coming in a close 2nd, Ron Paul will be forced to eventually leave the republican party. If the hate for the only constitutional advocate is this high before the voting has begun, we can only imagine what will happen once Paul has a victory in Iowa and comes in a close second in New Hampshire.
IF Ron Paul is the Republican nominee, there will be so much momentum that the walls of the establishment will come tumbling down. The second American Revolution and restoration of our constitution will be unstoppable. However, if Ron Paul is forced to run as a third party, we believe his message will help the cause of liberty, but he will not be able to win the election. This is why the establishment is doing everything they can to stop Ron Paul in Iowa.
The federal reserve (FED) will begin a new round of quantitative easing in the first half of 2012. This is pure and simple, the federal government is SUCKING so much capital out of the global economy that there simply isn’t enough real lenders, the FED will have to once again step in and start printing to purchase U.S. treasuries.
The U.S. will see at least 1 major city file for bankruptcy, if we had to bet on it, we would put Detroit, Michigan, on the top of our list. Detroit is the perfect example of everything that is wrong with our current economic environment with fat pensions and high pay for their public sector and destructive laws for the private sector. Even though the state has guaranteed Detroit bonds and taken over the public school system, Detroit (union mecca) is destined to fail with its unfunded pension obligations that will go even deeper into the red as more jobs are lost due to the U.S. depression.
The U.S. will enter an official double dip depression in the final quarter of 2012, after the November elections. The demographics are ugly for the U.S., they look just like Japan going into the 1990’s. We should note that Japan has been in and out of a depression for the past 21 years. FutureMoneyTrends.com believes that the effects of government spending in our economy has peaked, especially since it is now politically impossible to call for another massive stimulus bill.
The natural forces of the baby boomer generation peaking in spending and the bursting of the credit bubble will cause significant deflationary forces into our overall economy. Now we do believe that any deflation will be met by central planner inflation early in the decade, later in the decade we will have to deal with peak resources. We have already shown that there is a good case for peak oil, what we haven’t talked about much is that many other commodities have also shown to be peaking in production, or at the very least being much more expensive to produce.
Our economy right now is extremely dysfunctional and manipulated. The fact that Ben Bernanke has more to do with the current price of the Dow Jones than earnings do, should let you know exactly where we are in our economic cycle.
Wild Card Category
The reaction of a WAR with Iran. IF the U.S. bombs Iran, oil will be at $120 the first day, and will near $200 by the end of the first week of the war. Without getting into the politics, we are going to leave this prediction with just our oil calls, too many roads to go down when discussing why or why not the U.S. may indeed want a war with Iran.