2012 Forecast

1) Continuation of global stock market collapse. As readers may recall from my http://whatisthatwhistlingsound.blogspot.com/2010/12/2011-forecast.html, global markets had a valuation of about $51 trillion. Currently the valuation is under $46 trillion. It is my assertion that we will see the markets drop below $40 trillion by the end of 2012.

 2) A spike in gold bullion prices is possible, but only after the air has been taken out of the derivatives markets. Due to the problems of central bank and bullion bank shenanigans we may even see sideways to lower bullion prices in much of 2012 as the authorities strive to maintain the status quo fractional reserve fiat currency system. My year end gold target is $1950.

3) Bond market yields among peripheral countries in Europe continue to rise. Spain, Italy and Portugal look particularly vulnerable. Greece is a lost cause. French yield will rise substantially.

4) At least one country leaves the Euro in 2012. Greece is the prime candidate. Several other countries are also candidates including Belgium, Ireland, Spain, Slovenia, Portugal and Italy. A full Eurozone breakup is likely by 2013.

5) Cash flows to US bonds becomes significant, driving low yields down even further as the risk off trade moves into full swing due to Europe’s sovereign debt crisis.

6) US 10 year Treasury Note yields fall to 1.75% from the current 2% level as the risk off move deepens.

7) The S&P 500 falls as low as 1050 by year end despite a QE3 type attempt by Ben Bernanke to restart a stagnant American economy.

8) As the European bond market stumbles, money flows out of commodities with crude oil (Brent) dropping below $80 and copper also falling to $2.75. Forecasting crude prices in notoriously difficult as political tensions in the Middle East can quickly increase prices to nosebleed levels. This forecast assumes Iran and the United States avoid a shooting match.

9) The US dollar index rises significantly reaching our target of 88.

10) The Canadian dollar drops against its US counterpart and heads toward 91 cents.

11) The bull-run in the Canadian housing market ends and the real estate bubble finally pops, thanks in part due to a slower economy and higher down-payment requirements.

12) More American municipalities file for bankruptcy. While a state bankruptcy is possible in 2012, we will likely see the first state bankruptcies in 2013.

13) American banks take serious capital hits from the European crisis and the continuing problems in the domestic residential and commercial loan markets.

14) The high US dollar negatively impacts exports as they become too expensive for Europe and emerging markets.

15) Deflation grips the US as GDP grows slows to a crawl, prompting consumers to save even more.

16) Inflation in China slows causing a pause in further interest rate increases and then a decrease in interest rates in a vain attempt to prevent a hard landing in China. China’s real estate bubble also deflates substantially.

17) Globalization begins to unravel as trade drops off significantly.

18) Hot money flows out of the stock markets and bond markets to US bonds as a “safe haven” move. The giant move into gold as Exter's inverse liquidity pyramid suggests probably does not happen until 2013 or even later.

19) Democracy comes under siege on a large scale for the first time since the collapse of communism. Civil liberties in many countries are reduced. Russia and southern European states appear particularly vulnerable.

20) The Japanese bond market experiences its first wave of difficulty in selling bonds.  Yields slowly rise for the first time in many years.


  1. Montanans Launch Recall of Senators Who Approved NDAA Military Detention. Merry Christmas, US Senate


    Montanans Launch Recall of Senators Who Approved NDAA Military Detention. Merry Christmas, US Senate - Salem-News.Com

    Montana is one of nine states with provisions that say that the right of recall extends to recalling members of its federal congressional delegation, pursuant to Montana Code 2-16-603, on the grounds of physical or mental lack of fitness, incompetence, violation of oath of office, official misconduct, or conviction of certain felony offenses.

    Section 2 of Montana Code 2-16-603 reads:

    "(2) A public officer holding an elective office may be recalled by the qualified electors entitled to vote for the elective officer's successor."

  2. That is an excellent find Bill.

    Let the recalls begin & may there be many more!!

  3. Here is a thought on the recalling senators for misconduct:

    "Some cause happiness wherever they go; other whenever they go."

    Oscar Wilde


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