If you think 2014 was relatively calm and peaceful in the markets, fasten your seatbelts. 2015 is going to be anything but calm!
Last week, I gave you some insight into what gold and silver will do this year. They will bottom! And I also promised that I’d give you more forecasts for the New Year. So let’s get right to them.
First, a bit more on gold and silver. The most likely times for them to bottom are this month, June and October. A bottom will be signaled by breaking at least the $1,000 level in gold during one of the above timing targets.
For silver, a bottom will be signaled by a breach of the $14 level during one of the above timing targets. So watch gold and silver closely, and of course, I’ll keep you as informed as possible.
Now, to other major forecasts I have for this year:
FIRST, the dollar will continue to gather strength. Even though the dollar is destined to ultimately lose its singular reserve status — in a financial crisis, it’s still the reserve currency by default.
That means when markets and economic systems go into turmoil, the dollar gets a shot in the arm as the rest of the world goes into “risk-off” mode, selling assets and parking their money in cash.
And with the back wall of the financial hurricane now starting to hit again — in Europe — and the war cycles continuing to ramp ever higher — the dollar has more upside to it, before it resumes its long-term bear market.
|The dollar is destined to move even higher in 2015.|
Last year, the dollar staged one of its strongest rallies ever, a rally I nailed. There will be some short-term pullbacks this year, but overall, the dollar is destined to move even higher in 2015.
Why? It’s simple: First, Europe is sure to go down the drain in 2015. Second, the continued ramping up of geopolitical tensions as forecast by the war cycles. Rising geopolitical tensions benefit the dollar more than any other currency.
So for the hyperinflations out there, don’t expect it in 2015. In fact, expect the opposite: The strong winds of disinflation that a strong dollar always brings with it.
SECOND, the sovereign bond market is headed for disaster. This one is a no-brainier, though it’s been slow to take form.
But the fact of the matter is this: The governments of Japan, the U.S. and Europe are all bankrupt. There is simply no way they will ever be able to make good on their outstanding bills, let alone their promises of Social Security, health care, pension guarantees and more.
They will not be able to inflate the debts away, as so many expect, either. Not with the dollar gathering strength.
As a result, no matter how hard central banks will work at keeping interest rates low, the sovereign bond markets of Japan, Europe and the U.S. will soon face votes of “no confidence” from their investors and creditors …
And the values of their sovereign debt instruments are destined to slip and slide lower.
For the U.S., over the next few years, I expect that the 30-year Treasury Bond will lose as much as 33 percent of its value for anyone crazy enough to hold those debt instruments.
So other than for trading purposes, do NOT invest in the sovereign debt of Europe, Japan or the U.S.
THIRD, the euro’s decline will turn into a collapse. The euro has already begun its descent, plunging more than 14.2 percent in the past seven months.
And as I pen this column, the euro is tanking anew, right out of the gate in this New Year.
As I’ve written about many times in the past, before the euro even got off the ground more than a decade ago, Europe’s experiment with a single currency was doomed from the get-go, for a variety of reasons.
But all you have to do is read between the lines to see what’s happening in Europe right now:
First, deflation has a tight grip on Europe. Latest figures show inflation running at 0.4 percent in the euro region, its lowest levels since the 2009 crisis. That’s despite massive European Central Bank money printing. And it’s sure to continue and worsen because …
Second, unemployment is stubbornly high, with youth unemployment reaching 65 percent in many parts of Europe. Most importantly …
Third, Europe’s leaders are out of their minds. They are raising taxes, engaging in confiscatory themes, chasing the rich out of Europe and unknowingly unleashing powder kegs of social and political protest that are sure to tear the union apart.
And as we have seen in just the last few days, new protests are erupting in Greece. The embattled country, beaten down badly by joining the euro region, is now about to pull out of it.
If Greece pulls out, as I expect it will, then the domino effect will hit next. Movements to pull out of the euro will rise in Portugal, Spain, Italy and even France.
In short, 2015 will be the beginning of the end for the euro currency.
FOURTH, after a pullback, the Dow will explode higher to at least 31,000 by 2016. You know my longer-term forecast for the Dow Industrials and other major U.S. averages: Substantially higher, nearly doubling by 2016.
That forecast has been on track now for years, and there seems to be little to derail it.
The reasons are simple, though hardly understood by most analysts and even less by investors:
First, U.S equities are not overvalued, if you understand what is going on. I explain this in detail in the December issue of my Real Wealth Report for members. In a nutshell, a dollar of earnings today is not what it was 10 years ago.
The second, and perhaps most important reason most pundits don’t understand the Dow is that U.S. equities are becoming, yes indeed, a safe haven.
I am well aware that many think I am nuts for making this forecast. But I stand by this forecast for it’s based on historical precedent.
All you have to do is understand a portion of the Great Depression that almost no one ever tells you about. I’m talking about the 1932 to 1937 period when virtually all of Europe went bankrupt — just like it’s about to do again — and European capital fled into U.S. equities like there was no tomorrow.
The same thing is now underway. Only this time, it’s not just the government of Europe that is broke. The governments of Japan and the United States are also broke.
That means an even more massive shift of capital away from sovereign bond markets — and into U.S. equities, the deepest and most liquid stock markets in the world.
Am I resoundingly bullish on equity markets in the U.S.? Yes! But not until we see one more pullback.
There is going to be tons of money to make in 2015, in gold and silver, in the dollar, in shorting the euro, and by backing up the truck on select natural resource stocks, blue chip multinational companies and more, at the right time.
So stay tuned. I promise I will do my utmost to make 2015 your most profitable year ever!
Best wishes for a healthy, wealthy and wise New Year,