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

2009: Quickie post mortem on predictions

I don’t know if I’m too depressed or too eager but I keep expecting the SHTF each and every year I make these predictions. This year it did not hit the fan so to speak but neither did we find ourselves in a real recovery like the rat bastards in Washington and Ottawa like to tell us we were. The economy continues collapse like a smoldering bonfire just waiting for a red neck with a can of gas to blow it up real good!

I really blew it this year on my predictions for silver and energy, for energy it makes sense as demand fell faster than supply did but I still cannot understand how, with gold going well over $1100 that silver could not hit a mere $20, a number that it took out last year. Silver still has heavy investment demand, silver is still being destroyed, and silver is still being heavily withdrawn from the Comex depositories closing the year down to about 112 million ounces. That said silver’s industrial demand is off and the level and concentration of silver shorts remains criminally high but that should not have kept it from reaching $20 and closing the silver/gold ratio.

If anything silver has gained more potential and volatility as this disparity in prices and ratio continues. Some day it will blow up, we just need to be more patient and continue to accumulate while bargain prices continue. Robert Kiyosaki of Rich Dad fame jumped on the silver wagon this year but typically got it wrong when told people to buy ETFs. Goof! Anyone who knows the real potential of silver knows that it’s the fraud and leverage involved in paper products that allows the prices to be manipulated. Had he really understood the silver story he would have told people to go buy a roll of rounds or a honkin big bar. Still he raised silver’s profile and perhaps some of his simpleton readers will do some additional research.

On the dollar index I was damn close to my prediction until the Dec rally hoofed me in the head.

On the positive side I did hit my highs on gold; I predicted at least $1100 and ending the year above $1050. Yeah for me, that looks pretty accurate. As well I hit my goal for bank failures of about 80 and then blew by it I think ending up at about 140.

Other general predictions fulfilled this year

CPI returning to the positive later in the year

No housing recovery

Increasing unemployment all year

Commercial real-estate would begin to hurt

Obama would prove to be little different than his predecessors, spending money he does not have and warmongering. Anyone who thinks the president runs the country is nuts; he may(but not necessarily) decide who to attack but he’s simply a low paid lackey who doed the banks bidding. If you expect him to hold the guilty responsible for last years fiasco you may as well start digging his grave now because they won't let it happen

Over all I had the trends right just not the scale.

I’ll post up a couple of interesting articles I’ve found as well as my own 2010 predictions in the next day or two.

Happy New Year.

More Chaos Ahead

It’s seems quite obvious that we are about to see something quite drastic happen. Chartists will tell you that gold is way over bought yet you have to wonder if the charts mean anything when the system starts breaking down and we start having massive failures throughout the economy, and those failures are out there.

The example of Dubai World should not be a shock to anyone, you can’t build up $60 billion of debt in a construction spree and expect to go unscathed in this depression; the bigger question is how many other Dubai Worlds are out there? My guess would be several to many!

What about the growing number of countries that could have their own crisis moments?

Japan has done everything but hand out printing presses to the public, yet deflation continues to pop up. To make things worse they have an insane level of government debt and the ability to sustain this debt and further stimulus is hampered by a drastically declined savings rate. I think Japan made a big mistake by not allowing deflation to take place naturally over the last 2 decades. The fact that they have a shrinking population should have allowed flat or slightly negative growth without the need to force growth through stimulus spending.

Greece has debt issues that could force the EU to bail it out or if they won’t it might force them to kick it out, or allow it to leave gracefully. The Baltic States look unlikely to qualify for Euro adoption as they struggle with massive GDP drops, debt and the need to maintain a stable peg to the Euro, while Spain, Portugal and Italy all face debt issues of their own.

The Fitch rating agency suggests the UK could have its debt downgraded next year and the UK has one hell of a lot of debt.

Even oil rich Russia has issues with large debts owed by both state and private enterprises such as Aluminum producer Rusal (which has defaulted on debt) and Gazprom, while both the Ukrainian state energy company and railroads require debt restructuring.

Can China maintain the growth it needs to keep all the peasants leaving rural areas busy and content?

There certainly has been a lot of growth in China but at what cost and how well planned was it. Monetary inflation is at high levels, the artificially weak Yuan is souring relations with the west as more and more jobs bleed to China. China has growing industrial capacity without markets for it. How exposed are Chinese banks should a recovery not allow them to utilize surplus plant and population?

China has been a wonder story of growth but lets face it, these guys are total novices in when it comes to running a market economy and since the experts screw up regularly its only a matter of time before something blows up in China’s face.

Bringing it back to the metals it’s no wonder that gold continues to move up so quickly (even when over bought) as no chart can tell you that the assumptions used to decipher it are no longer relevant and by what’s happening in rest of the economy taking these assumptions as valid and immutable is reckless at best.

An important item that does not seem to be getting any press right now is the rapid declines in the Comex silver stocks. I got out of the habit of checking these for a few months but when I came back I was surprised to find stock levels below 116 million ounces and even more shocked to see it fall to about 111.5 million ounces in just a few weeks. I don’t know what the magic number is but sooner or later industrial users are going to panic and the price won’t jump a buck or two but by $10 or more.

All I can say for sure is there will be more chaos ahead.


Friends of the Canadian Silver Bug might wish to help him out by voting for him in the 2009 Canadian Blog Awards. I'm nominated in the Professional life category and you many vote here, ranking as few or as many of the blogs as you see fit

Good news for India, Good news for Gold Bugs

Today it was announced that the Indian Central Bank purchased 200 tonnes of IMF gold for about $6.7 Billion between the dates of Oct 19 and Oct 30th, at market prices. This is a great piece of bullish news for the metals community

Why good news for India?

This is good for India because it shows they are serious about rebalancing their reserves away from crap like U.S. dollars. Its good news for India in that they got in to get their share before China gobbled it all up. Having one country monopolize gold ownership is exactly the model that the U.S. used to abuse the world with its reserve currency. If we are to ever achieve sound money again many countries need to hold large amounts of bullion to back their currency with, If only Canada had enough sense and balls to step up and buy the other half of the 403.3 tonnes the IMF is authorized to sell

Why should gold bugs care?

This sale gives a big psychological boost to the market as it not only validates the current price as a fair one but it also shows that the Indian Central Bank thinks it can appreciate further from this point. The sale was direct to a CB showing that the IMF was more interested in getting top dollar for their assets than attempting to flood the market and discredit the current price; this could have been disastrous for the spot price if it was simply dumped on the market.

We should be happy that China did not get first dibs on the gold and take it all. Disbursement rather than consolidation is good for the market. We also have the added satisfaction that the IMF has that much less bullion to manipulate the market with later.

All in all this is a good thing for the market! Gold jumped over $20 today on the news, and that it great grabbed a languishing silver by the short hairs and pulled it up too is an additional bonus.

Healthy silver

I've talked before about the power of silver as an anti-microbial agent and here is another example of it's continued growth in medicine as Advanced Medical Solutions releases a new wound dressing containing silver to the European market.

Silver micro threads or nano particles have now been incorporated into hospital curtains, surgical scrubs, Silver sulphadiazine creams for burn victims and now this new line of dressing materials which all help to control infections even those cause by MSRA.

In the old days people claimed a silver coin in a container of milk would keep it from spoiling as quickly, other references said that putting a silver coin into a wound to stop it from turning to rot; apparently they were on to something.

Silver's anti-microbial properties are now medically proven and some studies even suggest that the addition of nano silver to older ineffective antibiotics can make them usable again.

I don't believe however that the internal use of homemade or Internet purchased Colloidal silver products in a preventive regime is wise simply because long term exposure has not been studied and there are no standards for concentration, particle size or dose when using these products. I'd not chance self medicating with colloidal silver unless it was an emergency and there was no other choice. I don't think it would hurt to use it as a wash for sores or as a non caustic disinfectant.

While medical uses are not going to gobble up millions of ounces overnight, silver does prove again it is one of the most useful of metals as it constantly finds new uses and ever growing markets.

Silver Bugs are destined to have a shiny future.