1. The US Dollar continues its rise against most currencies as investors seek out safety. As bad as the US looks economically, Japan, Russia, parts of the euro zone, and England look even worse.
2. Gold and silver chop around in trading ranges while the best precious metals may continue to be platinum and palladium, as they are far scarcer than gold and silver and have diverse uses industrially as well as for jewelry.
3. The US stock market flat lines for the year except for the occasional event driven market sell off.
4. Most emerging market stocks likewise flat line as valuations are full and growth is unimpressive.
5. US interest rates remain unchanged as the Federal Reserve does not raise interest rates due to the weak economy, and, the yield curve flattens as deflationary pressures as well as geopolitical tension trigger inflows into longer dated US Treasures.
6. Crude oil rises to over $100 per barrel on increasing instability in Iran and Saudi Arabia.
7. No military action is taken against Iran, and, they declare they have developed an atomic bomb. Although in reality they may have simply purchased one from Pakistan or North Korea.
8. The threat of nuclear terrorism renews interest in living outside of large urban areas, further depressing housing prices in the larger metropolitan areas.
9. Official US unemployment rises to 12% as small businesses continue to fail. This causes tax inflows into local, state and the Federal government to continue to decline. States such as California require a Federal bailout and some cities default on their municipal bonds.
10. Spreads between US Treasurys and high yield bonds widen considerably as US interest rates decline and a heightened risk of default is re-priced into junk bonds.
Disclosure: Portfolio currently all US Dollars, ownership of physical gold, silver, and platinum
