For the past week, you’ve told us what you see ahead in 2013 for stocks, oil and gold. And in your emails, you have also stressed how anxious you are to make higher yields in this low interest-rate environment.
Now it’s OUR turn to return the favor — by arming you with the forecasts my team of top analysts have just issued for the year ahead.
No one can predict the future with precision. But I sincerely hope you heed these forecasts, especially given the fact that our analysts have been very correct about recent events — the election, the fiscal cliff, their immediate consequences and more.
For example, when nearly everyone else was telling you that the presidential race would be the “tightest in history,” we told you Obama would win. He did.
We said Democrats would still control the Senate and Republicans would retain control of the House. They did.
We said that on the day after the election, the majority of investors would be extremely disappointed with the outcome and that the stock market would tank. That’s exactly what happened, too.
We said that after the elections, the fiscal cliff would explode again into the headlines, invading every debate in Washington. It has.
Last week, with 2013 speeding toward us — a year that many say will be the single most crucial watershed year in American history — we issued 11 NEW forecasts in a landmark online conference. Below is an abridged transcript.
America’s Date with Destiny
Abridged Transcript of Online Conference with Charles Goyette,
Larry Edelson Martin D. Weiss, Mike Larson, and Nilus Mattive
Martin Weiss: Joining me today are …
Charles Goyette, editor of our Freedom and Prosperity Letter, New York Times bestselling author of The Dollar Meltdown and Red and Blue and Broke All Over …
Mike Larson, the highly acclaimed editor of our Safe Money Report, the ONE man I know who accurately warned about the great housing bust, credit crisis and Great Recession of 2007-2009 …
Larry Edelson, editor of our Real Wealth Report, recently nominated as a top analyst by CNBC Asia, and one of the very first analysts to forecast the superboom in gold, oil and other commodities that began in 2001. Plus …
Nilus Mattive, the editor of Income Superstars and author of The Standard & Poor’s Guide for the New Investor; the man who recommended dividend stocks which have given his subscribers the chance to produce total returns of 94% … 108% … 117% … and up to 161%.
Nilus, lots of investors are afraid of big tax hikes on dividends with the fiscal cliff. So they’re selling dividend stocks. What do you think about that?
Nilus Mattive: This is precisely the kind of thing that has helped us make even more money in dividend stocks in recent years.
Martin: OK. Be sure to tell us more about that before the end of this session. But first, I want to begin with you, Charles. Many people said the election would change the course of the nation. But you were not among them, were you?
Charles Goyette: Absolutely not! Our forecast, which we broadcast to every one of your readers, was that Obama would win and that nothing would change. In fact, no matter who is in the White House, America is still more than $16 trillion in debt, and those debts are still piling up at the rate of more than $1 trillion per year.
The U.S. economy is still sputtering and the Federal Reserve is still printing unlimited amounts of paper dollars as far as the eye can see.
So nothing has changed … except for one thing: Time! The clock has continued to tick away and the fiscal cliff is now dramatically closer — only weeks away!
Martin: How do you see this unfolding and what are the likely consequences?
Charles: We see two possible scenarios: Scenario A is the “fake deal” scenario. Washington does what it does best — deception. They come up with something that they call “a compromise,” even maybe a “grand solution.” Meanwhile, all the really critical issues of spending and taxes are again put on hold, postponed for another day.
Martin: Is this the more likely scenario in your view?
Charles: Yes. And that’s my first forecast:
At first, Washington may try to deceive the public with a fake, cosmetic deal that utterly fails to address the real fiscal cliff.
And don’t be surprised if it produces a brief relief rally in the markets,
even some initial euphoria could be expected.
Martin: You mean we just go back to business as usual and the fiscal cliff goes away? It sounds too easy to be true.
Charles: It IS too easy to be true.
First, because it’s an insult to the intelligence of thousands of analysts and millions of investors all over the world. These people are not stupid. They open the package with all the fancy wrapping and they look inside. They see nothing — no substance, no real agreement — nothing except still another attempt to kick the can down the road.
Second, it’s a slap in the face to the rating agencies. The last time around, the rating agencies said, point blank, that they’d let Washington kick the can down the road only once. But this would be the second time they do it in this cycle.
Martin: The first time they kicked the can down the road was after the great debt ceiling debate of 2011.
Charles: Right. And they kicked it to yearend 2012 — to now. So NOW was supposed to be the date of responsibility. Now was supposed to be the final, final day of reckoning. If Washington blows it away again, ratings downgrades will be swift and severe. Bond markets will fall. Interest rates will surge!
Martin: What about Scenario B?
Charles: In Scenario B, gridlock prevails and Washington blows the yearend deadline entirely. Our government simply fails to act. In the end, Republicans and Democrats prove that they are more married to their ideology than committed to our country’s future.
Even as the ship of state sails off the fiscal cliff, both play a fatal game of “chicken” with the U.S. economy … the stock market … and with your money.
Nothing gets done. All or nearly all of the automatic spending cuts and tax hikes go into effect on January 1. America plunges off the fiscal cliff and back into recession.
Martin: What about a Scenario C? By some miracle, the Democrats and Republicans set aside their egos. They abandon their respective ideologies and end the political demagoguery that so sickens the American people. They get serious about solving America’s fiscal catastrophe. They work out a middle-of-the-road plan that includes spending cuts and tax increases.
Charles: That’s possible, but it leads us the next forecast.
Even if Washington does cut a so-called “major deficit deal,” our nation’s debt will continue to grow by leaps and bounds!
Why? Because when they say, “cut spending,” what they really mean is cutting the increases in spending that are in the pipeline.
Because when they say “cut deficits,” what they really mean is to cut deficit projections, mostly in far-out, future years.
Because the people who got us into this mess are not capable of getting us out of this mess. Any solution that comes out of Washington will increase government spending.
Martin: How will we know?
Charles: We’ll know because any deal they cut will still require a big increase in the debt ceiling.
Martin: Still, many people on the Street seem to think that any kind of deal would be nirvana — that it would spark a big rally in the market. Mike, what do you think about that theory?
Mike Larson: Maybe for a short while. But stop and think about it for a moment.
To the degree that they DO make any kind of serious dent in the deficit, we’ll still be looking at big spending cuts and tax hikes.
Martin: Please explain what that does to the economy?
Mike: First, set aside the fiscal cliff for a second and look at this: Company after company has recently disappointed on earnings, revenue, or both. Not only that, they have also forecast lousy future results.
I’m talking about a “Who’s Who” of corporate America — everyone from IBM to Caterpillar to 3M to FedEx. We just came off a quarter where corporate earnings fell from a year ago by more than 2% — that was the worst performance in three years.
Now, add in the impact of the fiscal cliff and you see a mediocre business picture turning into a horrible business outlook.
The undeniable truth is there is simply no way we can cut the deficit without massive pain. And yet, this is precisely the kind of financial housekeeping we must have if we are ever to emerge from this economic malaise.
Martin: What are the odds this will happen — that they will actually reach a meaningful deal to cut the deficit?
Mike: Very small, unless something shocking happens.
Martin: Such as …
Mike: That answer is in this forecast …
It will take a collapse in the financial markets
to SHOCK Washington into any major action!
Unless you get a market collapse, unless politicians are utterly forced to do something, they will continue to dicker around and try to kick the can down the road.
Martin: This has happened before.
Mike: Absolutely! It happened in late September of 2008. That’s when Washington couldn’t agree on a bank bailout package and the law actually was voted down in the house. The market suffered its worst point decline in all history for a single day. But after the market crashed, they suddenly came together and passed it into law.
Charles: As the late Senator Everett Dirkson once said, “When I feel the heat, I see the light.” And when the market speaks, they will definitely feel the heat!
Martin: OK. In Scenario A, we get a fake deal — kicking the can down the road. In Scenario B, they blow the deadline. And in Scenario C, if the market gives them shock therapy, then they finally come to their senses and reach a bargain. But in any scenario, the nation’s debts continue to grow rapidly and the economy is hit hard.
Mike: Which leads me to this forecast …
We will see a giant roller-coaster, first bringing deflation
in most assets, followed by massive asset inflation.
It’s a cycle we’ve seen twice already in just the last dozen years — the tech bubble, then the tech wreck … the housing bubble, then the housing bust.
And with each bust, we saw a major deflation of asset values, followed by massive asset inflation.
Now, we are going to see another, similar cycle … but the bubble that’s about to pop is none other than the government bubble — governments all over the world forced to retrench whether they like it or not. Whether they do it voluntarily or in response to market shocks, whether they do it with cowardice or courage, the result is the same.
Martin: Some people think the Fed can overcome everything — the Fed can keep everything afloat — by just printing more money. Is that possible?
Mike: Let me answer that question with this forecast:
Bernanke is going to TRY to sustain the economy
with more money printing. But he is going to fail!
Bernanke himself has said that the Fed couldn’t even begin to print enough money to avert disaster if Congress fails to act. And look at these facts:
* The Fed’s first round of money printing — QE1 — drove the Dow Jones Industrial Average up 2,377 points over a span of about 16 months.
* QE2 was good for just 1,199 points and only about 8 months of rally. The interesting thing there is, all of that went up in smoke within a couple of weeks, thanks to the debt ceiling debacle!
* Then, just a couple of months ago, Bernanke really thought he was firing the biggest bazooka of all by launching QE-Infinity — saying he was going to print money forever. But guess how long that rally lasted! Just one day!
Charles: Money printing is like taking heroin. The first time a fellow takes it, he gets a powerful rush. But each time thereafter, the addict has to take more and more to get the same high. And the longer you keep it up, the more painful withdrawal becomes.
Martin: Larry, here’s the scenario and the 64 thousand — I mean 64 trillion — dollar question: At some point soon, Bernanke sees he’s running into the law of diminishing returns. He sees that his money printing is simply not working anymore.
So he’s at a fork in the road: He can continue doing the same thing. He can give up and stop. Or he can print even more! What should he do?
Larry Edelson: What should he do or what will he do?
Martin: Tell us both.
Larry: He should give it up, of course. But what he will do is another matter entirely. Again, like the rest of Washington, until something shocking happens, until he is forced to stop, he won’t stop, which brings me to this forecast:
Bernanke will not only continue printing money,
he will actually accelerate the printing presses.
Martin: Larry, we have warned that this will have serious consequences — for inflation, the dollar, the bond market. But why have these consequences not yet exploded into the forefront. How has Bernanke gotten away with printing so much money with impunity?
Larry: I don’t agree that there have been no consequences. But I agree that we have barely begun to see the real impact — because most of the trillions that the Fed has already printed is still sitting on bank balance sheets.
And most of that money is actually being parked back with the Fed, where the Fed is paying banks interest. It’s dead money, going nowhere — it’s not circulating in the economy.
Here’s the key: In 2013, Bernanke can start to change that by paying zero interest, or even by charging banks interest to park that money with the Fed. Next ..
The printed money will drive prices sharply higher
and absolutely decimate the U.S. dollar.
There’s no question in my mind that the dollar will then resume its long-term bear market, which will ultimately cause it to lose its reserve status.
And there’s also no question in my mind that, once the velocity of money picks up and trillions of dollars are flooding the economy, we’ll finally see the next leg up in commodities, which will be the biggest one yet.
Martin: What happens then, Mike?
Mike: That’s when you’ll see my next prediction come true …
Bond prices will collapse as interest rates shoot higher.
As a result we will get still another shock to the economy!
This is the only kind of shock that could ultimately shake some sense into the Fed — maybe even force the Fed to slow down the money printing.
Martin: This is very rare. But I know it’s possible because I was there when it happened once — back in 1980. It was during the Carter Administration, and everyone said Carter is absolutely incapable of dealing with its deficits and with inflation.
And they were right … until the markets, especially bond markets, collapsed. Then everything changed. Then, Carter had no choice. And he did what no Democrat has ever done before. He slammed the economy hard — just to tame the inflation.
Mike: And just remember this: For generations, Americans have counted on the government for handouts, bailouts and easy money, especially in the last few years. What happens when the government is forced to switch its regime to tough love!? It’s a bombshell. It’s the same kind of shock we’ve seen recently in Spain and Greece and elsewhere in Europe.
Charles: No matter what, this is quite literally the end game for Washington. For the U.S. economy, for the dollar, for the stock market.
Martin: What does this mean for gold?
Charles: Gold always sets up shop at the crossroads of history, and when we reach those crossroads in the year ahead, it will be evident to everybody. When you’re talking about the end game — de-facto state bankruptcy … the intentional destruction of the currency … the collapse of the economy … class warfare … social unrest … you’re talking about the perfect storm for gold.
Larry: All this money printing and euphoria are like a pent-up pressure cooker for gold.
When that money begins flowing into the economy, THAT’S when it will drive hard asset prices through the ceiling. Gold, silver and oil prices will double, then double again.
But listen carefully to my warning: We could still see a big setback first — for all the reasons we’ve talked about here today — the sinking global economy and the impact of budget cuts all over the world.
Martin: So you also see the same roller coaster that Mike talked about. First a big setback. Then a big bull market.
Larry: I do. Bonds are a bubble begging to get popped. Today’s low interest rates are an aberration. The markets hate these kinds of imbalances and always correct them.
So I agree with Mike. I’m first looking for a major correction in stocks and commodities, including gold to some degree. That’s going to shock a lot of people. And that’s when Washington will panic. That’s when they’ll do everything in their power to force banks to ramp up lending in order to fight the crisis.
At some point, a lot of that money will flow back into stocks, of course. As investors see prices plunge, many will pick up some screaming bargains. But a huge amount of it will also flow into mankind’s most time-honored hedges against inflation and uncertainty — gold and silver.
Martin: Care to put some numbers on that forecast?
Gold is going to $5,000 —
almost a triple from today’s prices.
Silver should surge to well over
$150 an ounce — more than a four-fold gain!
Oil prices should reach nearly $200 per barrel,
more than a double from current levels!
But remember! Although you should always have a solid core position, it’s not yet time to load up on gold.
And it’s not yet time to buy other commodities either. It’s vital that you first wait for the setback and for my next major buy signal. That’s how to play the giant roller coaster of asset deflation and asset inflation that Mike and I talked about.
Martin: How much of a core position in gold are you recommending?
Larry: I recommend at least 5% to 10% of your liquid cash — that’s a minimum. But first, use what little time we have left to get your house in order; free up as much cash as you can.
Second, wait for my buy signal to buy more gold and jump back in to commodities.
In the long run, what will matter the most is that you have the peace of mind … the inflation protection … and the profits that I think will flow to gold investors in the months and years ahead.
Martin: Mike, Larry recommends a big cash position. Do you agree?
Mike: Of course! It is the number one step everyone must take to prepare for this first big roll of the roller coaster — asset deflation.
Martin: But most people can’t sell all their assets that could be deflating.
Mike: Nor do they have to. Instead, they can buy some select investments that are great deflation hedges, such as inverse ETFs.
Inverse ETFs help protect you against losses from deflation allowing you to continue investing very selectively in the highest quality assets that are most likely to outperform in good times or bad.
Martin: OK. Let’s talk about some of those high quality assets. Nilus, throughout all this, you’ve been mostly silent. And throughout this whole process, many of our listeners have been asking: “What do I do for more income?” They’re sick of near-zero yields.
Nilus: I look back on the last dozen or so years, and I see two massive bear markets in stocks.
But I also see huge buying opportunities in the one kind of investment that has offered very high yields with relative safety: Solid dividend paying stocks.
So yes, we have big fiscal troubles. And yes, we could see a massive roller coaster in 2013. But it’s a two-way roller coaster. It goes down, but it goes UP, just like the big bears and bulls of the last 12 years.
The key is, you can use the market corrections, regardless of how big or small, to continually grow your income.
Martin: OK. So let’s say this team is right and we do get a major setback in stocks. Where do our viewers invest — and why?
Nilus: During and after market declines, investors flock to more conservative companies, especially the ones in less cyclical parts of the market. For example, tobacco companies, beverage makers, consumer products companies and utilities. The kind of companies that produce things that people have to buy no matter what.
And they tend to really focus on the very best blue chip names that pay solid dividends — the companies that pay you even when the overall stock market is declining.
Even right now, many of these companies are paying double, triple, four times as much as you’d get from 10-year Treasuries.
Look at one of my long-standing recommendations, for example: Altria. Its current yield is about 5.7%, compared to a 10-year Treasury yield of 1.6%.
One more important point: We typically see new money rush into conservative dividend stocks during times of crisis — especially when the crisis is hitting government-backed investments. So I think you could see big gains in share prices on top of the income they have reliably paid through good times and bad, for decades.
This is exactly what happened with Altria, the stock I just mentioned.
I first recommended it back in 2007. And in this particular case, my timing was NOT good. And yet, today, that position is showing an open total return — including dividends and appreciation — of 93%.
Martin: You recommended it at a bad time and now it’s almost doubled?
Nilus: Right. And later, when this stock suffered a setback — just like the decline we’re starting to see now — I recommended investors buy MORE, and on that follow-up recommendation, we’re looking at an open total return of 161%!
I have recommended others, too. Like the chocolate maker, Hershey. We’re already sitting on a 117% total return from that position — in just two years’ time.
All of these stocks are great examples of solid dividend payers that tend to do well no matter what’s happening in the world.
Martin: Yes, Nilus.
And everyone, the conclusions from these 11 forecasts is clear: 2013 is going to be a wild ride, perhaps the wildest any of us has ever seen.
We have the specter of the fiscal cliff … of a major correction in the stock market … of the bursting of the largest bond bubble in history … of a rapidly deteriorating dollar and soaring gold, silver, oil and food prices.
We have the prospect of asset deflation creating huge buying opportunities, followed by asset inflation bringing huge profit opportunities!
At a time like this, my personal mission is to do everything in my power help you preserve and grow your money in the tumultuous year ahead to see you through the violent convulsions we see ahead in the economy … in the stock market … and in gold.
So we are organizing two special events for you:
The first is our private seminar right here in Palm Beach Gardens on January 17-18 exclusively for our VIP members. To register or for more information, call our conference hotline toll-free at 1-877-925-7766.
The second is our special center at the Orlando Money Show on January 30 — February 2 focused on the tremendous money-making power of our Weiss Ratings. Go to this page to register.
Good luck and God bless!