Before we explore 2011 predictions, it’s worthwhile to go back and review the highlights from last year’s predictions:
1. Silver was trading for $17.17 on January 1, 2010. I predicted Silver would end the year over $25. This was over a 45% increase I was predicting. Once Silver reached $25, I predicted in September that Silver would exceed $30 by year end. On December 31, Silver closed at $30.93.
2. Gold was trading at $1,121.50 on January 1, 2010. I predicted Gold would exceed $1,500 during the year. The yearly high for gold was $1,423. While I missed my prediction, I was spot on as far as Gold continued its price rise. I think we will see my 2010 prediction of $1,500 very soon in 2011.
3. I predicted a rise in interest rates which we are witnessing right now. It started later than I thought, but the FED has vowed to keep interest rates low. I believe my prediction on interest rates was accurate.
4. I predicted another 200 banks would be bankrupted and taken over by the US government. The final count ended at 211 banks. Not bad for an amateur!
5. I predicted the unemployment rate would go up in 2010 in spite of government publishing shadow statistics. In January 2010, they reported 9.5% while the year ended at 9.7%.
6. I predicted the collapse of Commercial Real Estate which would require STIMULUS II.
7. I predicted that foreign buyers of US Treasuries would evaporate and the Fed will have to monetize more Treasuries in 2010 via QE2. I reasoned other countries will not be able to afford to bail the US anymore because of the tremendous and irrational spending on the part of this administration.
Now it’s appropriate to stare into my 2011 crystal ball and see what appears:
1. I predict Gold will finish the year at $1,700 for another 21.4% increase and a 12th consecutive year of increases.
2. While Silver finished 2010 with over 75% increase, I predict another huge year with Silver climbing to over $40 per oz. This would lower the gold to silver ratio down to 42.5 to 1.
3. Interest rates will continue to climb, especially the longer term rates, such as the 10 year and 30 year.
4. The US dollar will start to collapse again. The dollar index will drop from 80.0 to under 70.0.
5. The true Inflation rate will start to rise as measured in food and energy prices which are the two components the government has removed from their calculation.
6. China will continue its robust growth at 8%-10%. This will result in continued pressure on all commodities, including energy, metals and agriculture.
7. There will be another collapse in the housing market as banks initiate sleeping foreclosures. Rising interest rates will hurt the sale of new homes, and higher ARM rates will force many additional foreclosures.
8. Another 150 Banks will go bankrupt.
9. Oh Yes, I almost forgot. CFB Champion – Auburn; Super Bowl Champion Atlanta; CBB Champion – Duke; NBA Champion Miami Heat; World Series Champion Phillies. (You’re smart if you fade me).