In 2012, the Economy will…Yesterday, we began a series on predicting what will happen in the economy and markets in 2012. We stated that in today’s post, we would give you some bullet point predictions and then follow up with a series of posts to round out the information so that you understand how firmly, or not, we believe each guess and Why.
Some of these predictions will be pretty basic. We’ll guess things like…Which direction will the stock market move over the course of 2012? Other predictions will be of much larger things. These are what we’re calling “Black Swan” events. These are unlikely, and we do NOT believe that all of these things will happen.
Yet we do have reason to believe that there’s a fairly strong chance that at least some of these Black Swan events could happen. And the economic ramifications would be far greater to each of us than knowing how many iPads Apple sold last quarter.
We have no particular reason to believe that most of these events will happen in the year 2012. One or more of them certainly could (some will and some won’t). But these are all events that it would be good for you to think through and ask yourself what ramifications the event would have and if you’re prepared for each. Seek the Lord for guidance on how you should prepare yourself for this season in all ways (we happen to focus on the two main areas of your spiritual and financial life here.)
Caveats to come, let’s get straight to the predictions for markets in the coming year…
1) Stock Markets will again be extremely volatile
2) The US stock market will end in the year down (this is a bold guess, out on a limb)
3) Most commodities will be lower, but will also be volatile
4) Gold will be significantly higher in USD terms (Part 2: Should you Wait?)
5) Silver will have even larger gains, but with far more volatility (riskier bet than gold) (Pt 2: Why to Buy Now)
6) Oil will hit incredible highs during 2012 (see Iran prediction), although could end much lower based on the economy
7) US Bond investors will see losses
8) USD Cash will see losses (in real inflation adjusted terms, see Bernanke piece)
9) Europe will have severe recession
10) Sovereign Default in Europe (although US could bail out & become the bullseye?)
12) Japan will have to finally face the problem of their massive debt
13) China will see much slower growth than they need
14) The US will have real recession (although depending on money printing, they might get a positive GDP number.)
Now let’s predict the big events which will define the early 2010’s. I believe economic events are absolutely coming to a head and thus we’ll primarily see what we’ll see in 2012 & 2013. So this is more of a 2-3 year prediction than a one year guess. Also, as I’ve said, I DO NOT believe that all these things will happen. These are all things that I think have a realistic chance of happening and thus should be considered as you plan your asset allocation.
So here are the Black Swan Predictions…
1) The USD is massively devalued (either by choice or because the world no longer wants the USD)… Pt 1 & Pt 2.
2) Full Scale Currency Wars– (will certainly include massive money printing everywhere)
4) Hyperinflationary Melt Up (could follow Bernanke’s decision in #1 above?)
5) Barack Obama beats Mitt Romney in 2012 Election
6) War with Iran Pt 1, & Pt 2.
7) Massive & Disruptive Act(s) of God (or Natural Disasters according to the new PC term…Could it be time for the big one in California?)
8) Fed announces Nominal GDP Targeting (inflation + GDP growth)
9) Derivative Implosion that takes down most of the banking system, Pt 1 & Pt 2.
10) Euro Area collapses or it becomes something totally different (Defaults, etc) (Pt 3)
11) US Stock Market crashes below March 2009 lows
12) Governments attack Gold (silver?) to devastate the value that many come to rely on.
13) Governments conspiring to massively change world currencies
14) The sons of God are filled with God’s Glory as His latter house (Haggai 2:1-9)
Well, that should keep me busy for a while! As said previously, we have a nuanced position on each of these, so we wouldn’t run off and make any drastic moves based on what’s written here. But now that we have established the position, we can spend some time on each prediction as we move forward.
Since it’s already written, we’ll probably address the #1 Black Swan first and share with you on Friday Ben Bernanke’s not so secret plan to destroy the value of your US Dollars!
This is the second post in a series. You should read the initial thoughts on these forecasts here. You can also watch the most recent series of Economic Update videos at: 1) European Debt Crises, 2) European Debt Crises 2, 3) MF Global, 4) Gold & Silver Pt 1, 5) Gold & Silver Pt 2, 6) Gold & Silver Pt 3, 7) World Economic Update., 
World Economic Update 2, 9) The Chinese Economy, 10) Inflation or Deflation Concerns?, 11) Inflation Concerns Pt 2, 12) US Economic Update, & 13) US Economic Update 2.