Saturday, December 21, 2013

Ten Predictions for 2014

Some have dreamt of it, others have only imagined it. Now Saxo Bank, the online multi-asset trading specialist and investment advisor has released its ‘Outrageous Predictions’ for 2014. They fully admit that the probability of any of them coming to fruition is rather low. But, that hasn’t stopped them making them. Be outrageously provocative and it can be predicted that as sure as eggs are eggs the crystal ball will go cloudy on you. But, it makes for light-hearted reading along the rocky road of fortune-telling. The saving grace is that if any one of them does actually hit the truth on the nose, Saxo Bank will be saying ‘I told you so’. If they don’t come true, Saxo’s drivel will be forgotten in the mass of pages on the internet.
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London’s Gold Vaults are Empty – This is Why

Today gold slid under $1200 per ounce, dropping to a level not seen in three years. Judging by the price action one would think that gold is not only overflowing from precious metal vaults everywhere, but can be found thrown away on the street, where nobody even bothers to pick it up. One would be wrong. In fact, as Bloomberg’s Ken Goldman reports, “you could walk into a vault in London and they were packed to the rafter with gold, and the gold would trade from me to you to somebody else. You could walk into these vaults today and they are virtually empty. All that gold has been transferred out of London, 26 million ounces….” To find out where it has gone and why it is never coming back, watch the clip below (spoiler alert: listen for the line: “the Chinese don’t want US dollars anymore, they want gold“).

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Saxo Bank's 10 Outrageous Predictions For 2014

Although the probability of any one of the predictions coming true is low, they are deduced strategically by Saxo Bank analysts based on a feasible - if unlikely - series of market and political events. As Saxo's chief economist notes, "This isn't meant to be a pessimistic outlook. This is about critical events that could lead to change - hopefully for the better. After all, looking back through history, all changes, good or bad, are made after moments of crisis after a comprehensive failure of the old way of doing things. As things are now, global wealth and income distribution remain hugely lopsided which also has to mean that significant change is more likely than ever due to unsustainable imbalances. 2014 could and should be the year in which a mandate for change not only becomes necessary, but is also implemented."

These Outrageous Predictions are not Saxo Bank's official calls for 2014, but rather an exercise in feeling out the major risks to capital preservation, and intended to encourage investors to prepare for the worst case scenario before trading or investing...
Saxo Bank's Outrageous Predictions 2014
1. EU wealth tax heralds return of Soviet-style economy
Panicking at deflation and lack of growth, the EU Commission will impose wealth taxes for anyone with savings in excess of USD or EUR 100,000 in the name of removing inequality and to secure sufficient funds to create a "crisis buffer". It will be the final move towards a totalitarian European state and the low point for individual and property rights. The obvious trade is to buy hard assets and sell inflated intangible assets. (more)

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If you have children, you need to see these numbers

Sunset / Simon Black
According to a recent survey by the Pew Research Center, just 33% of Americans think their children will have a better life than they did. On the other hand, 62% believe their children will be worse off.
They’re likely to be right.  The typical American family has seen its real income (adjusted for inflation) fall for 5 consecutive years now, and it earns less in real terms that it did in 1989.
According to the Census Bureau, median household income fell in 2012, and it languishes 8.3% below the pre-crisis peak in 2007.
The Brookings Institution, meanwhile, calculates that real incomes for working-age men in the US have fallen by 19 per cent since 1970.
(Of course, if you’re fortunate enough to be a member of the super-rich who, thanks in large part to central bankers driving up asset prices, saw their real incomes rocket by 20% in 2012.)
In Europe things look even more dire.  Just 28% of Germans think their children will be better off than they were.  In the UK it’s 17%, in Italy 14%, and in France just 9%.
In Britain, research by the Financial Times shows that those born in 1985 are the first cohort to suffer a living standard worse than those born 10 years before them.
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The Next Great Bubble Bursts in 2014

The greatest confluence of down-cycles since the 1930s is just ahead.

Harry Dent of HS Dent Investment Management explains why he predicts a market crash in the third quarter of the year and that the U.S. is headed towards bankruptcy. Stock Market.. an aging Bull Market? Real Estate Party Over? Invest In Gold? Europe Crash Impact? The Government Has To Fail... Survive and Prosper in 2013 with Harry Dent.
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LBMA Chairman Tells Producers Gold To Plunge $400 In 2014 

On the heels of some wild trading action this week, today London metals trader Andrew Maguire shocked King World News when he told KWN that in a private closed-door meeting with producers, ScotiaMocatta’s Simon Weeks, who is Chairman of the LBMA, tried to frighten producers into forward selling by telling them gold was going to plunge ‘another $400 in 2014.’  Below is what Maguire had to say in the fascinating interview.
Magurie:  “This tapering announcement this week will only accelerate China’s move to internationalize their currency with a gold-backed yuan — something they are aggressively doing now (by purchasing gold)….
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Junior Mining Stocks that Will Let You Sleep at Night: Ralph Aldis

The Gold Report

The best time to buy gold is when the market hates it, especially when it comes to junior explorers with market caps under $1 billion, asserts Ralph Aldis, senior mining analyst with U.S. Global Investors. In this interview with The Gold Report, Aldis shares his main modeling themes and companies that fit the bill. He also explains the win-win-win advantages of flow-through stock issuance, a technique allowed by some noteworthy Canadian provinces.
The Gold Report: At the New Orleans investment conference, U.S. Global Investors CEO Frank Holmes reminded investors that gold is not a means to get rich quick, but should act as a diversifier in a portfolio, a form of insurance. Do you have to remind investors of that?
Ralph Aldis: We do. We always stress that no more than 10% of a portfolio should be exposed to precious metals. Given gold’s poor performance in the last two or more years, the trend has been to chase the market and the S&P 500. This is exactly when investors should be using gold plays to diversify and provide a bit of insurance. If they made good money in the market, they could take 5% or 10% off the table and deploy it in gold plays.
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