Saturday, January 02, 2010

2010 Predictions from the Canadian Silver Bug

I’ve been trying to ignore the predictions by other writers so I had best get these published before I surf anymore today.

I’ll try to keep it as brief as I can this year but you can always look at my five year predictions if you really want detail

Gold will continue to show weakness into January but I do not expect it will drop below $1000 (U.S. at least until they issue new dollars with less zeros sometime late next decade.) For 2010 I think we will hit at least $1400.

Silver (which I keep overestimating each year) will hit $24+, expect the slow run on the comex to bring silver stocks levels close to the 100 million ounces , and that much closer to industrial panic. I don't know that stock level will bring that panic but I suspect we we will find out in the coming year or three.

US dollar index will break down below the 70 level on the US dollar index as it becomes obvious that new debt cannot be borrowed just printed.

250 U.S. banks will fail this year. Despite claims that failures were slowing in the later part of the year I think an average of 5 a week for the year is more than reasonable considering the FDIC list of "At Risk Banks" is still growing and we've been shown that their estimates are opptomistic. As long as the at risk cataegory grows failures will grow, and will probably remian high for 2 years after the "At Risk" list starts to shrink. Creative accounting and wishful thinking will not save these banks and I believe we will see the year start with a flurrry of failures to make up for the lack of working fridays in Dec.

At least 10 major U.S. cities and at least 100 towns and smaller cities will default, declare bankruptcy and gut services and union contracts.

At 7 least U.S. State will default on payments but technically I don’t think they are allowed to declare bankruptcy. State pension’s plans will be gone or gutted, services and transfers to lower levels of government gone, state employees will get fired in droves.

As unemployment increases and benefits run out food stamp enrolment will pass 43 million heading for my 5 year goal of 60 million, $ value of food stamps will not be increased even as food inflation makes the program less helpful.

U.S. unemployment will hit 20% on the broaded based calculation the Bureau of Labour staticist use called the U6 currently it falls around 17%, the calculations that claim only 10.2 (the U3) are full of shit and do not represent the millions who've lost benefits, have given up looking or are underemployed, even MSM is now admitting the U6 number on occasion

Oil back to $100/barrel with a few regional shortages spiking it much higher due to weather or maintenance based plant failure. N Gas prices will drastically diverge between NA price vs European price. Europe's prices will rise much faster than ours will because they will have a tighter supply.

Housing will continue to hurt in the U.S. as housing stocks remain high. At some point the tens of thousands of houses being held off the market by Banks in order to buoy the prices will have to be sold or torn down. If they are sold a further glut of houses will nuke some regional markets in Florida, Nevada, Colorado and California by an additional 20% causing more zero equity dilemmas for home owners.

If they start to destroy houses (which they might be forced to do because of squatters or as they become derelict because of lack of maintenance) expect outrage and civil unrest and rightly so by the homeless. Leaving somebody in the house at even half rent gives banks some cash flow, keeps people off the street, protects children and protects the asset by maintaining it. Good depression bankers new this, bad depression age bankers lost a lot of money on homes they left to rot. It's not socialistic or charity to let people live in a house at an affordable rent rather than raze your own asset, it's sound business.

Full nationalization of Freddie and Fannie and AIG will return to the teet of government for yet another life line just as GMAC did this week.

Full fledge monetization of U.S. debt. Between the roll over of old debt and covering new deficits the U.S. needs to sell in the neighborhood of 3 trillion in treasuries this year to unsuspecting foreigners.. face it folks there are not that many unsuspecting foreigners left.

Sovereign debt. There will be more problems like Greece and Dubai World this year. As I've stated a number of times Spain, Portugal, Italy, Greece, the Baltic states, Ireland, Hungary, Ukraine and many others are financial basket cases. Some are deeply in debt and in danger of further credit down grades, Others had their own housing booms but have yet to pay the piper for the fall as banks (many nationalized) have refused to sell their excess stock at market price. The varied levels of debt, corruption, economic model, fiscal need are making the entire EU structure unstable. While full dissolution is unlikely at this point I can see the Baltic States not making their final qualifications needed to adopt the Euro and I could see someone like Greece, Spain or Portugal reverting to their old domestic currencies.

The U.S. and U.K. both deserve a staggering credit downgrade but don't hold your breath. A downgrade , especially of the scale required would explode the derivatives market and make recent disasters look insignificant. What needs to be done won't and the fraudulent system will be maintained until a U.S. default or massive dollar devaluation.

While I don't think we will actually have famine in North America there are going to be some major changes coming to the world markets and the rash of crop failures is going to bring much higher prices in the west and regional food shortages around the world. Just last week there was a convincing piece about bogus U.S. crop predictions and the chances of supply issues with corn and soy, you can read my post on it here

The end result; I expect much higher food prices by this summer, increased farm failures and livestock culling as feed costs and probable regional droughts ravage the small farmer. Third world export restrictions and local famine will increase. As per my other prediction, Foodstamps will not increase in value and hunger and poverty will increase in the U.S.

Home gardening and home livestock will continue to grow whether to save money or as part of a larger relocalization movement. Illegal livestock will pop up in all major cities, in most cases no one will care if its done cleanly and besides the by law officer will be swamped or out of work. In my own town I expect to start a Transition Towns movement this year to promote localization,

Increased radical action and perhaps domestic terrorism by anti globalist and climate change groups. They feel politics has failed them and desperation feeds desperate action. A few notable environmentalists may be jailed for incitement.

For Canada I expect flat or a slight increase in unemployment

Housing will begin to soften again, there is no real glut in most cities but the prices are not affordable and if food prices and/or interest increase people will lose their homes, or stop upgrading.

Our interest rates will stay low mimicking the U.S. lest our dollar go to 1.20. That said I don't think the BoC can talk the Canadian dollar down below parity for much longer.

Easy money might spark Canadian inflation but the only fix would cripple exports, so expect the BoC to ignore or cook the stats.

I did end up seeing a couple of sets of predictions and I think for Americans the National Inflation Association has a pretty good list including some interesting political predictions.

I probably missed some important things I wanted to cover in my haste so I'll post an addendum eventually. If you see something glaring I did not comment on just ask in the comments, I'll just make something up on the spot ;)
There are no SHTF variants on the predictions this year but the shit is still coming I just can't guess when things will go boom. The key is the dollar and if it breaks much lower than my 70 USD it will be in free fall and all the commodity prices will soar well beyond my predictions.

I am however certain enough that real bad times are coming that I've added a preparedness store to my sidebar


TED said...

I don't buy your prediction on housing. There can't be that many houses foreclosed yet unlisted nor would houses be torn down rather than sold.

CHR said...

Predictions on the housing market seem spot on, to me. The vacancy rate will continue to climb as the Jingle mail rolls in to the mortgage holders, now that Christmas is over. Houses can't be kept on the shelf for very long before they start to deteriorate; many will have to be torn down and it's an interesting call about this sparking unrest.

Something will set off the tinderbox* and it could well be something like that.


I like most of your predictions and still feel that the SHTF moment should go back into next year's prediction for 2011.


Preparedness site.

Sigh. How was it that I just knew this was going to be US based? Given the cost to deliver to Canada (exchange, shipping, brokerage, duties, taxes and postal fees), I guess we can't afford to plan to survive!

Anybody got a good ~Canadian~ organization?


* Tinderbox: the US society which is stuffed full of guns / ammo and is getting ready for the 4th of July, part II. And those won't be firecrackers you'll be hearing!

CSB/GAB said...


these guys are in Richmond hill Ontario, and you can arrange day time pick ups or delivery.. Their selection is not as good but they are local. If they had an associate program I would have added them to my side bar as well.

I just made an order with them for mylar bags to store rice/beans/wheat/barley etc in .

The Mad Scientist said...

Apmex, one of the most reliable dealers in the world, who I have bought from personally a few times now ships to Canada.
$1500 CAD minimum.
Very reasonable S and H.

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That naturally translates to higher prices because it squeezes the supply of the particular commodity. And it does so at a time when demand continues to escalate from populations in China, India and Latin America. And higher prices equal inflation.
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On the global front, gold eased in Europe as the euro strengthened against the dollar along with rising stocks, reflecting sharper appetite for high risk assets other than bullion.

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Unknown said...

Your predictions were very accurate.
Silver had a breakout year (thank-you Eric Sprott & Max Keiser).
The Canadian housing bubble hasn't burst yet, but it will before the end of 2011. With commodity prices rising, the food companies have sacrificed profit to remain competitive. They can't do it anymore and we are now seeing increased prices at the grocery store. Please post again. You have your finger on the pulse of the world!

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