Economic predictions are a crap shoot at anytime, but especially during times when central bank intervention is running at all-time highs. The markets are more managed and manipulated now than at any point in history. The Federal Reserve is literally propping up the entire system via nearly $1 Trillion in bond purchases per year, artificially low interest rates, an active plunge-protection team, gold market intervention, economic data manipulation and clandestine operations we have yet to understand.
So anyone trying to make economic or political predictions with any accuracy is naive, delusional or possibly both. Yet, everyone seems to enjoy these predictions, so I have decided to partake. The following are my predictions for 2014:
1) Stock valuations will continue pushing higher in 2014
The stock market bubble will continue inflating before it finally pops and a major correction ensues around the summer of 2014. Investors should continue riding the trend higher and profiting from the FED-induced bubble, while maintaining sensible trailing stop orders.
2) Higher taxes and health care expenses will hurt consumer spending in 2014
This will continue to squeeze the middle class and harm the economic recovery, as consumer spending dries up. We have already seen signs of this with low initial retail sales during the holiday season.
3) The FED will not end QE in 2014
The Federal Reserve cannot cut QE by any significant amount without crashing the markets. Therefore, I predict they will not make any major cuts to their quantitative easing program without replacing it with equally or more potent stimulus in another form. We will see a new program from Yellen designed to increase the velocity of money and get the banks lending. This will lead to higher inflation in 2014 and into 2015.
Yet, the era of super low interest rates is likely over. We will see interest rates climb slowly higher in 2014, capping the recent advance in the housing market.
4) Gold and silver will push towards previous highs by the end of 2014
Precious metals will find a bottom during the first quarter of 2014 and rebound strongly into the second half of the year. Gold will advance back towards $2,000 and silver towards $50 before year end, with increased volatility as price discovery moves away the COMEX. Many miners will go under due to the depressed prices of the past year and lack of financing, while best-in-breed mining and royalty stocks will easily double from the current oversold levels.
5) Russia and China will continue growing economically, politically and militarily These two nations, together with their BRICS counterparts, will continue encroaching on the role of the U.S. as global superpower. This trend will accelerate with the backlash from the NSA spying scandal, as leaders around the world have a growing distrust of the United States government. This will make it harder for the U.S. to find military allies or get cooperation for UN resolutions. This will also generate significant economic consequences for the United States, as foreign nations seek to limit their business dealingd with the United States or U.S.-based companies.
6) 3D printing technology will make major ripples in worldwide manufacturing
The manufacturing landscape will be forever changed with the evolution of 3D printing technology. Consumer acceptance will increase as prices drop and we will start to see more people purchasing consumer-grade 3D printers for the home. This consumer adoption will help leading companies in this sector meet their lofty growth forecasts. Nanotechnology, robotics, graphene technology, genomics and intelligent sensor technology will continue to accelerate and drive innovation in 2014.
7) The importance of independent media will continue to grow
As this happens, traditional media outlets will become even more marginalized. With the spread of information and decentralization of media power, people will become more aware of the real happenings in the world and less susceptible to mainstream media spin. Social media and other online platforms will continue to ferment revolution, challenge the status quo, and question the lies of the governments and large corporations that have been colluding to exploit their people.
8) Bitcoin will continue increasing in popularity and value,
Amazon (NASDAQ:AMZN) or another major retailer will announce acceptance of the virtual currency. Bitcoin will continue to have wild price swings, increasing in value to $5,000 or higher during 2014.
Those are my best guesses for 2014. While there appears to be plenty of dark clouds on the horizon, I am also hopeful and inspired by many of the changes that we are seeing. Technology is enabling increased information dissemination, education, political networking, medical advances and significant wins in the decentralization of power. We now have a free-market currency to compete with central bank notes and the ability to print weapons for self defense.
There have also been a number of localized political wins, including the legalization of marijuana in a few states, labeling of GMO foods in Connecticut, public education and outcry against an invasion of Syria, several municipalities nullifying provisions of the NDAA and other signs of an awakening of the citizenry.
No matter what happens, I wish you happiness and prosperity in the new year!