Category Archives: Financial markets

Forecast 2023 — Get Out of the Way if You Can’t Lend a Hand, by James Howard Kunstler

James Howard Kunstler surveys the economy, finance, Covid, Ukraine, Russia, China, and the Deep State. You won’t be surprised to learn that he doesn’t see a whole lot of cause for optimism. From Kunstler at kunstler.com:

“The powerful are panicking, and so they should. Their secrets are leaking.” —Miranda Devine

“It’s all just snake oil. We want to save the planet, and the life upon it, but we’re not willing to pay the price and bear the consequences. So we make up a narrative that feels good and run with it.” — Raul Ilargi Meijer

“2023 could be a pivotal year for the USA if the pervasive lying can be exposed, digested, and believed. All that exposure has to happen amidst continuing boondoggles toward the Great Reset agenda.” – Truman Verdun

“More borrowing only ever makes sense if you are expecting a larger economy in the future.  All economic expansion is based on energy.  Countries with energy can expand, those without cannot.” —  Chris Martenson

“To be an enemy to America can be dangerous, but to be a friend is fatal.” — Henry Kissinger

It’s hard to contemplate 2023 without spiraling into nausea, tachycardia, and cold sweat. But it is an inescapable duty here to lay out the probabilities ahead. I’ve been doing this forecast thing for some years now, and, of course, I am often wrong, so take some solace in that and relax. Maybe the new year will be all unicorns, rainbows, talking gerbils, and candied violets.

2022 sure was a cold shower. The long emergency I talk so much about finally got up to cruising speed, with the ectoplasmic “Joe Biden” revving our country into economic, political, and cultural collapse — a hat-trick of calamity — and he did it more swiftly and directly than any emperor managed in late-day Rome, with policies and actions 180-degrees contra to America’s public interest — cheered on by a thinking class that had obviously lost its consensual mind.

Was the governing strategy simply to do the opposite of what the loathed and detested Mr. Trump would do? Could it be that simple or that automatic? The thinking class’s eyes have a zombified glaze these days. It’s obvious, you might agree, that “Joe Biden” is not in charge of anything, really. He’s an animatronic figure programmed to read a teleprompter and not much else. Half the time, he can’t even find his way off-stage after doing that one trick. The claque pulling his strings just may be the crew you see around him (you know, WYSIWYG): Susan Rice, Ron Klain, Jake Sullivan, Antony Blinken, Victoria Nuland, and company. Ms. Rice has kept herself completely hidden backstage at the White House for two years. Nobody ever hears about her or sees her. Weird, a little bit, for the Director of the Domestic Policy Council.


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Gold in 2023, by Alasdair Macleod

What will be the fates of real money (gold) and fake monies (currencies) in 2023? From the Internet’s best economist, Alasdair Macleod, at goldmoney.com:

his article is in two parts. In Part 1 it looks at how prospects for gold should be viewed from a monetary and economic perspective, pointing out that it is gold whose purchasing power is stable, and that of fiat currencies which is not. Consequently, analysts who see gold as an investment producing a return in national currencies have made a fundamental error which will not be repeated in this article.

Part 2 covers geopolitical issues, including the failure of US policies to contain Russia and China, and the consequences for the dollar. By analysing recent developments, including how Russia has secured its own currency, the Gulf Cooperation Council’s political migration from a fossil fuel denying western alliance to a rapidly industrialising Asia, and China’s plans to replace the petrodollar with a petro-yuan crystalising, we can see that the dollar’s hegemonic role will rapidly become redundant. With about $30 trillion tied up in dollars and dollar-denominated financial assets, foreigners are bound to become substantial sellers — even panicking at times.

The implications are very far reaching. This article limits its scope to big picture developments in prospect for 2023 but can be regarded as a basis for further debate.

Part 1 — The monetary perspective

Whether to forecast values for gold or fiat currencies

This is the time of year when precious metal analysts review the year past and make predictions for the year ahead. Their common approach is of investment analysis — overwhelmingly their readership is of investors seeking to make profits in their base currencies. But this approach misleads everyone, analysts included, into thinking that precious metals, particularly gold, is an investment when it is in fact money.

Most of these analysts have been educated to think gold is not money by schools and universities which have curriculums which promote macroeconomics, particularly Keynesianism. If their studies had not been corrupted in this way and they had been taught the legal distinction between money and credit instead, perhaps their approach to analysing gold would have been different. But as it is, these analysts now think that cash notes issued by a central bank is money when very clearly it has counterparty risk, minimal though that usually is, and it is accounted for on a central bank balance sheet as a liability. Under any definition, these are the characteristics of credit and matching debt obligations. Nor do the macroeconomists have an explanation for why it is that central banks continue to hoard massive quantities of gold bullion in their reserves. Furthermore, some governments even accumulate gold bullion in other accounts in addition to their central banks’ official reserves.

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Doug Casey’s #1 Speculation for 2023

Doug Casey likes gold and uranium. From Casey at internationalman.com:

Doug Casey #1 Speculation

International Man: Will 2023 be the year of central bank digital currencies (CBDCs)? Or will this terrible idea be consigned to the dustbin of history?

Doug Casey: CBDCs are a disastrous idea. But that’s never stopped “the elite” in the past. First, they did zero interest rates and negative interest rates, which I thought was metaphysically impossible. But they did it. Then they went to massive “quantitative easing,” a dishonest euphemism for money printing.

The next thing is going to be Central Bank Digital Currencies (CBDCs), which will give them unprecedented control over the finances of the average person.

On the one hand, it should be cause for a revolution because it will actually turn people into serfs. But on the other hand, the average American has almost no understanding of economics. He has little grip on what’s going on and believes propaganda.

We’re going to get CBDCs in 2023, and this is one of the scariest things on the horizon.

International Man: Will 2023 be the year uranium really takes off?

Doug Casey: Let’s recall the last uranium boom, which we were fortunate enough to catch back in 2001 to 2007. Uranium ran from $10 a pound up to $140 a pound. And that was in the days when the Russians and the Americans still had large nuclear weapon stockpiles, from which they recaptured lots of U-235 for use in reactors. That’s gone.

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Will 2023 Be “Just an Average Recession in an Average Year” or Will It Be Transformational? By Charles Hugh Smith

SLL has a hunch 2023 will be transformational. From Charles Hugh Smith at oftwominds.com:

It shouldn’t surprise us if 2023 turns out to be atypical and disruptively transformational in ways few believe possible.

It seems expectations about 2023 cleave neatly into two camps: the dominant mainstream view is that 2023 will be economically difficult due to a mild recession, but this will be nothing more than a run-of-the-mill recession.

Inflation will likely moderate but remain higher than recent averages. Everything else–politics, social issues, entertainment, fashion, social media, etc.–will continue on whatever path it is currently on.

In other words, 2023 will be much like any other year.

The implicit assumption in the mainstream view is that historical cycles are figments of fevered imaginations. The flow of human history is entirely contingent and follows no pattern or cycle.

The much smaller “outlier” camp sees the potential for a disruptive transformational year.

Those of us who conclude cycles are based on the ebb-and-flow dynamics of credit, energy and human nature and are therefore not just real but consequential despite their predictive imprecision see 2023 as a potential pivot in cycles which entered a new phase in the 2020-2021 time frame.

This cyclical shift isn’t a result of Covid or the response to Covid. It’s the result of diminishing returns and the exhaustion of the dynamics which powered the previous era: hyper-financialization, hyper-globalization and low-cost, abundant energy.

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2022: The Year that Imploded … Bigly, by David Haggith

2022 was not kind to most asset prices. From David Haggith at thegreatrecession.info:

2022: The Year that Imploded … Bigly

Falling housing prices may cause Housing Market Crash 2.0.

This was the year where it seemed everything imploded. For the economy, it started with two quarters of receding GDP that everyone refused to call a recession. Whether you stand with the crowd on that or not, it was certainly not a good change and was certainly a collapse of the economy toward a smaller state based on production. But that was just where it all began. What follows is an amazing overview of a world in a state of collapse.

The stock market’s north-pole polar-bear plunge

Right from the start, 2022 became the year the stock market imploded with all major indices down and down … and down some more all year long. So far, this is the year Santa’s sleigh didn’t soar into some kind of end-of year rally. Instead, the Grinch stole the sleigh and just went down the hills and through the snow like sleds are supposed to go.

The Grinchy Dow started bounding down the mountainside at the top of year in an endless series of leaps off bluffs and is currently down 11% for the year. At its lowest point of the year, it fell 22% into a full bear market that it remains mired in.

The S&P also started going downhill at the top of the year; but it ran down in front of the Grinch like his dog, trying to keep the Dow from hitting him in the butt, to where the S&P is currently down 20% from its all-time high. At its lowest point it fell 25% from its peak.

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Insider-Outers, by Bill Bonner and Joel Bowman

A number of long-term trends are reversing, and most of those reversals are not to the good. From Bill Bonner and Joel Bowman at bonnerprivateresearch.com:

(Source: Getty Images)

Bill Bonner, reckoning today from Youghal, Ireland…

Today is the first day of winter. The sun, now barely clearing the roof of our garage, at midday, can begin to rise again. One season gives way to another.  Darkness (it gets dark here at 4 in the afternoon) gives way to light. Things change.

In Japan, the deciders have finally decided to let savers earn a little interest.  Bloomberg:

Global Era of Negative Yields Is Ending as Japan Note Tops Zero

Japan’s two-year yield rose above zero for the first time since 2015, bringing the global era of negative yields closer to an end.

The rate added as much as two basis points to 0.01% on Wednesday, according to Japan Bond Trading Co. data, as the country’s debt extended declines after the central bank doubled its cap on 10-year yields on Tuesday. All other benchmark tenors have yields above zero and Bloomberg’s gauge of global negative-yielding debt only contains short-term Japanese bonds.

And in the US, higher interest rates are beginning to sting. Bloomberg again:

US Housing Starts, Permits Fall on Slide in Single-Family Homes

New US home construction continued to decline in November and permits plunged as high borrowing costs paired with widespread inflation eroded housing affordability and demand.

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Doug Casey’s Top 4 Predictions for 2023

Doug Casey doesn’t see things getting any better next year. From Casey at internationalman.com:

Doug Casey predictions

International Man: What important trends do you see unfolding in 2023?

Doug Casey: Perhaps the biggest turning point in recent modern history will turn out to be 2020. Governments and their minions found novel ways to gain huge amounts of control. These things were well underway before 2020, but since Covid, they’ve all gone hyperbolic. That trend will accelerate this year—albeit with some much-delayed pushback.

Four areas stand out.

First, a relatively inconsequential flu, followed by a vaccine hysteria, got far more voluntary compliance to all manner of extreme measures than most anyone could have imagined. The powers that be found that the public is vastly more likely to do as they’re told if the rationale is health rather than politics, ideology, economics, or the like. So we can count on many replays of this tune, including mandatory vaccine passports and lockdowns.

Second, the drumbeat against the newly-minted enemy element, carbon, has reached manic levels. A substantial part of the population, and a large majority of youth, have been convinced that Global Warming will destroy the planet unless we go Green, stop using fossil fuels, and attempt to run an industrial civilization on windmills and sunshine. It stands a chance of destroying civilization.

Third, central banks are racing to impose CBDCs, while governments run multi-trillion dollar deficits and bailouts, doubling and tripling debt levels with little discussion. This is unprecedented.

Fourth, the widespread acceptance of Wokism, racial quotas, aggressive LBGT++ promotion, ESG, and DIE. There are serious discussions of race reparation payments and a Guaranteed Annual Income. It’s part of an accelerated general collapse of traditional moral values.

What’s happening will, I think, be seen as a turning point greater than either WW1 or WW2. And there’s an excellent chance we’re looking at something akin to WW3 in the bargain. I don’t doubt that the era before 2020 will soon be referred to as the “Before Times,” a phrase that’s been used in dystopian science fiction. And the future could resemble dystopian sci-fi.

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U.S. Double-Speak Will Not Stop Gold’s Imminent Surge, by Egon von Greyerz

You can’t fool all the markets all of the time. From Egon von Greyerz at goldswitzerland.com:

Propaganda, lies and censorship are all part of desperate governments actions as the economy disintegrates.

We are today seeing both news and history being rewritten to suit the woke trends that permeate society at every level, be it covid, the number of genders, the Ukraine war or government finances.

I have in many articles covered the explosion of money printing and debt which is an obvious sign that the global financial system is approaching collapse and default . The consequences will be  far reaching to every corner of the globe and all parts of society.

See my recent article “In The End The Dollar Goes To  Zero And The US Defaults” which outlines the probable course of events in 2023 and afterwards.

Later on in this article, I will look at the consequences in relation to markets and what ordinary people (investors?) can do to prepare themselves.

ORWELL PREDICTED THE FALSIFICATION OF HISTORY 73 YEARS AGO

Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered. And the process is continuing day by day and minute by minute. History has stopped. Nothing exists except an endless present in which the Party is always right.George Orwell, 1984

Let’s just look at government finances. As we are entering the end of an era with deficits and debts running out of control, the truth becomes an inconvenience to governments and must therefore be suppressed or rewritten.

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Rising rates lead to financial accidents, by Alasdair Macleod

The world has never been more primed for a financial accident. From Alasdair Macleod at goldmoney.com:

A recent Bank for International Settlements paper warning of unappreciated risks in foreign exchange markets echoes my earlier warning in an article for Goldmoney published over a month ago describing derivative risks in FX markets.[i]

In this article I also show evidence that banks in both the US and Eurozone are reducing the deposit side of their balance sheets by turning away big deposits which are ending up in central bank reverse repos, parking unwanted liquidity out of public circulation. The great unwind is well under way.

Credit contraction is not only driving a bear market in financial assets, but the exposure to malinvestments by rising interest rates is having negative consequences for the non-financial economy as well. Private equity, which has thrived on cheap finance used to leverage targeted businesses, is showing signs of unwinding with two major Blackrock funds suspending redemptions.

As we approach the season for year-end window dressing, we must hope that the volatility in thin markets that often accompanies it does not destabilise global financial markets. 

Inflation and stagnation

Make no mistake: interest rates have bottomed at the zero bound and can go no lower. The forty-year trend of declining interest rates has ended, with an initial rally, which six weeks ago had halved the value of the 30-year US Treasury bond. The suddenness of this change probably needed a pause, and that is what we have today. Since October, there has been a spectacular recovery in bond prices with this UST bond yield dropping ¾% to 3.5%.

Fears of price inflation have been replaced in large measure by fear of recession. Having dismissed monetarism, bizarrely for a Keynesian led establishment analysts and commentators are now frequently citing the slowing of monetary growth as evidence of a looming recession. Perhaps this means that the failure of their economic models has them grasping at straws, rather than being evidence of a conversion to monetarism. But what is definitely not in the Keynesians’ playbook is a combination of inflation and recession, commonly attributed to an unexplained phenomenon of stagflation.

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The Petrodollar’s Long Goodbye, by Vijay Prashad

The dollar’s reserve currency status has allowed the U.S. the privilege of paying for goods and service with debt instruments it can create at will. The rest of the world is tired of this unfair arrangement. From Vijay Prashad at consortiumnews.com:

As part of their concern about “currency power,” many countries in the Global South are eager to develop non-dollar trade and investment systems, writes Vijay Prashad.

Xi Jinping and King Salman bin Abdulaziz Al Saud, Dec. 9. (CCTV/Wikimedia Commons)

On Dec. 9, China’s President Xi Jinping met with the leaders of the Gulf Cooperation Council (GCC) in Riyadh, Saudi Arabia, to discuss deepening ties between the Gulf countries and China.

At the top of the agenda was increased trade between China and the GCC, with the former pledging to “import crude oil in a consistent manner and in large quantities from the GCC” as well to increase imports of natural gas.

In 1993, China became a net importer of oil, surpassing the United States as the largest importer of crude oil by 2017. Half of that oil comes from the Arabian Peninsula, and more than a quarter of Saudi Arabia’s oil exports go to China. Despite being a major importer of oil, China has reduced its carbon emissions.

A few days before he arrived in Riyadh, Xi published an article in al-Riyadh that announced greater strategic and commercial partnerships with the region, including “cooperation in high-tech sectors including 5G communications, new energy, space, and digital economy.”

Saudi Arabia and China signed commercial deals worth $30 billion, including in areas that would strengthen the Belt and Road Initiative (BRI). Xi’s visit to Riyadh is one of his few overseas trips since the Covid-19 pandemic.

His first was to Central Asia for the summit of the Shanghai Cooperation Organisation (SCO) in September, where the nine member states (which represent 40 percent of the world’s population) agreed to increase trade with each other using their local currencies.

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