Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17
7 Signs You Should Add Gold To Your Portfolio Now - 19th Jun 17
US Bonds and Related Market Indicators - 19th Jun 17
Wireless Wars: The Billion Dollar Tech Boom No One Is Talking About - 19th Jun 17
Amey Playing Cat and Mouse Game with Sheffield Residents and Tree Campaigners - 19th Jun 17
Positive Stock Market Expectations, But Will Uptrend Continue? - 19th Jun 17
Gold Proprietary Cycle Indicator Remains Down - 19th Jun 17
Stock Market Higher Highs Still Likely - 18th Jun 17
The US Government Clamps Down on Ability of Americans To Purchase Bitcoin - 18th Jun 17
NDX/NAZ Continue downward pressure on the US Stock Market - 18th Jun 17
Return of the Gold Bear? - 18th Jun 17
Are Sheffield's High Rise Tower Blocks Safe? Grenfell Cladding Fire Disaster! - 18th Jun 17
Globalist Takeover Of The Internet Moves Into Overdrive - 17th Jun 17
Crazy Charging Stocks Bull Market Random Thoughts - 17th Jun 17
Reflation, Deflation and Gold - 17th Jun 17
Here’s The Case For An Upside Risk In The Global Economy - 17th Jun 17
Gold Bullish on Fed Interest Rate Hike - 16th Jun 17
Drones Upending Business Models and Reshaping Industry Landscapes - 16th Jun 17
Grenfell Tower Cladding Fire Disaster, 4,000 Ticking Time Bombs, Sheffield Council Flats Panic! - 16th Jun 17
Heating Oil Bottom Is In.(probably) - 16th Jun 17
Here’s the Investing Reason Active Funds Can’t Beat Passive Funds—and It Worries Me a Lot - 16th Jun 17
Is There Gold “Hype” and is Gold an Emotional Trade? - 16th Jun 17
The War On Cash Is Now Becoming The War On Cryptocurrency - 15th Jun 17
The US Dollar Bull Case - 15th Jun 17
The Pros and Cons of Bitcoin and Blockchain - 15th Jun 17
The Retail Sector Downfall We Saw Coming - 15th Jun 17
Charts That Explain Why The US Rule Oil Prices Not OPEC - 15th Jun 17
How to Find the Best Auto Loan - 15th Jun 17
Ultra-low Stock Market Volatility #ThisTimeIsDifferent - 14th Jun 17
DOLLAR has recently damaged GOLD and SILVER- viewed in MRI 3D charts - 14th Jun 17
US Dollar Acceleration Phase is Dead Ahead! - 14th Jun 17
Hit or Pass? An Overview of 2017’s Best Ranked Stocks - 14th Jun 17
Rise Gold to Recommence Work at Idaho Maryland Mine After 60 Years - 14th Jun 17
Stock Market Tech Shakeout! - 14th Jun 17
The #1 Gold Stock of 2017 - 14th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

Themes for 2013 - Fiscal Cliff Follies, Gold Momentum, Economic Muddling Through

Stock-Markets / Financial Markets 2013 Dec 31, 2012 - 06:06 AM GMT

By: Andy_Sutton

Stock-Markets

With the hoax of the Mayan ‘End of the World’ fantasy and the week of extreme materialistic consumerism behind us, we can now return our focus to the events of the day and what might come to pass as we enter 2013. Certainly, there are several issues at the forefront right now, but many of the biggest issues are being buried. As we transition from 2012 to 2013, let’s take a look at what are likely to be the main themes of 2013.


1) The Fiscal Cliff Follies Show

Let’s get something straight right from the beginning; the whole idea of a fiscal cliff is a joke. It is a two-bit made-for-TV movie straight out of Hollywood. This country went over the real fiscal cliff decades ago when we blew our strategic advantages after World War II on ‘great society’ largesse. We capitulated totally in favor of greed and put into motion a sequence of events that sealed our doom before this writer was even born. For all intents and purposes the real cliff was breached when the US was taken off the gold standard because of excessive and continuous imbalances with regards to trade and the current account. The debt cycle began.


What we have today is a creation of considerable deliberation (which is intended to appear as ineptitude) designed to further erode our economic base, freedoms, and perpetuate the crisis into the next stage rather than end it. Bernanke and the rest of the MIT econ PhDs, Geithner and the rest of the globalist banking syndicate’s puppets, and most of the lynchpin leadership in Congress all understand that a solution is not possible given the rules they’ve imposed on themselves for the purposes of the debt ceiling / cliff negotiations.

Like it or not, America is following the precise trajectory of Europe, which is still in massive turmoil by the way. Just because the alphabet news networks stop covering a story doesn’t mean it has gone away. I realize that we are conditioned to place emphasis on whatever the media tells us to, but really, Europe is still in extremis. America is right on her heels. Sure, the acronyms of the programs and ‘fixes’ change, but the song remains the same: more debt to solve the problem of too much debt. The problem is that now it is easy to justify more debt to the masses saying that the economy will collapse if the government stops playing the part of the world’s biggest consumer. And sadly, that is quite true at this point. However, does that mean we should just continue blindly into the abyss? Many seem to think so, including quite a few states that see increases in estate taxes as a possible means to either expand their spending or at least stem the tide of red ink.

The bottom line is probably obvious to most; whatever comes of this round of the Fiscal Cliff Follies Show, it is by no means the end. There will be a sequel, and another, and another. Why? Because it is politically expedient. The ‘gimme gang’ has spoken much more loudly than the ‘don’t take it from me gang’. Another reason is the old adage that there is nothing more permanent than a temporary government program. The recent FOMC decision to peg interest rates to the headline unemployment rate is also interesting to say the least. It gives the Fed justification to further throttle the economy if another 2 million or so workers leave the workforce or if another million temporary, below subsistence level jobs are created, or some combination of the two. Look at it this way, the USEconomy is barely keeping its head above water now, despite massive deficit spending, ZIRP, and unprecedented monetization. What will happen when interest rates go up? Yes, there is a light at the end of the tunnel; and in this case it is a freight train.

2) Gold Gains Momentum as the Money of Choice

I will not posit that 2013 will be the year that the dollar loses its supremacy; that has already happened. Sure, it is still used in most global transactions, but that doesn’t confer supremacy status. Gold is the money of choice; it always has been and always will be. The syndicate certainly would love to have all the gold for itself, but despite a 12-year record of crushing traditional assets, precious few Americans have even bothered to pay attention. While it is difficult to ascertain the exact proportions of individuals who participate in the gold market, it is safe to state that it is likely less than 10%. Consider the anecdotal support for this statement. First, Americans have precious little savings as a group. Second, most of that savings is in pension plans and 401(k) type arrangements, which typically don’t allow the investor to have exposure to metals. A good case in point is the Thrift Savings Program that federal employees participate in. There are several fund options, none of which give the employee a chance to purchase precious metals, even in proxy form. Thirdly, virtually every individual, reader of this column, or client I have talked to that does buy precious metals reports that there are generally only sellers in the local coin shops around America. Buyers are few and far between, at least at the retail level. It is ridiculously easy to sell your family jewels and precious metals for cash and many Americans have chosen to avail themselves of this option to buy food, pay the mortgage or cover other expenses.

Keep in mind that the media will continue to bash gold (and silver) and JP/HSBC will continue to run up massive short positions to keep prices contained. Investors who understand these dynamics will continue to do what they’ve been doing and that is to take the metal away from the syndicate by taking possession instead of playing around with futures contracts and ETFs such as GLD and SLV, which are merely vehicles used by the syndicate for the purposes of price suppression.

Whether or not 2013 is the year we see $2,000 gold (or higher) is hard to say. I have never been big on providing timelines because most of the time they end up being inaccurate, as many analysts have already learned. There are too many variables and hidden agendas at work. There was a rather popular analyst who predicted the dollar would lose its reverse currency status last year. That didn’t happen – at least not in the manner this fellow described in countless videos, and now he’s lost quite a bit of credibility. But the idea itself that the dollar is toast is very valid. Stay away from specific timelines; in the grand scheme of things it really doesn’t matter if these things happen now or three years from now. The point is they WILL happen.

Many other countries are anticipating this eventuality as well. China, for instance, is re-casting many of its exchange-sized bars into smaller, 1kg bars, with the obvious benefit of creating fungibility for at least a partially gold-backed monetary system. This recasting also has the side benefit of allowing the Chinese to QC all of their gold holdings; don’t forget that one of the biggest stories never to appear on the evening news is the fact that there are a significant amount of counterfeit gold bars in existence. These bars are ‘salted’ with tungsten, so they measure out in terms of size and weight. Add to this that the Chinese and Russians have already hammered out the details of several trade deals whereby their respective currencies would be used for settlement as opposed to the USDollar. There are many other instances of this, however, with the Russians and the Chinese being the world’s two largest consumer groups, this agreement carries with it quite a bit of weight.

3) 2013: Another Year of Muddling Along

2013 is very likely to be another year of muddling along, from an economic perspective. Don’t expect a massive spurt of jobs creation; at least not the kind of jobs we need. GDP growth in ‘officialspeak’ will probably be around 2% to maybe 2.5% unless they really start cooking the books. Obviously this assumes that there is a deal to avert the sequestration aspect of federal spending that is due to be ordered come 1/2/2013 unless a backroom deal is concocted beforehand. Sequestration would require the furloughing of many federal employees considered to be non-essential. I wonder if the Congress falls into that group?

I’ve written many times before regarding the attack on aggregate demand that has been ongoing for the last half dozen years. It is not just apparent in the United States either, but appears to be a global reality. The policies that have created this environment will be continued in 2013. A bigger proportion of consumer spending will originate from new debt, and if our government wants to continue the spending binge, it is going to need to raise taxes or risk going into an overt monetization that would spell impending doom for the USDollar. Ironically, a bevy of new taxes are set to hit on 1/1/13 regardless of what happens with the Fiscal Cliff Follies Show, including an investment tax and a variety of obligations for employers in order to comply with the new (but not improved) socialized healthcare mandates. All of these things will be a drag on the real economy. Anything Congress comes up with in terms of new taxes (or expiration of current reduced tax rates) as a ‘solution’ to the current fiscal crisis will only exacerbate the drag on legitimate economic activity. This drag on the economy is evidenced by the velocity of circulation metric, which measures how fast money moves through the economy. Money is moving slower and slower and in fact M2 velocity of circulation has never been lower than it is currently; and the data series dates back to 1959.

However, despite all the negatives, there are many positives, the first being that there has never been a time, at least in recent history, when more people were seeking to become aware of what is going on. This is particularly true among the younger folks. I guess at least a few of them got the memo that they are on the hook for all of this and are taking it seriously. Awareness is bad news for the establishment and its plans, especially when people begin to realize that they in fact do have some say in what happens next economically. Since most folks are big on New Year’s resolutions, let’s resolve together to make a full frontal assault on the red ink on our personal and family balance sheets in 2013 and beyond. Right now it is cool to be in debt as long as we have all the right status symbols. Let’s make it cool not to be slaves to debt, but rather servants of liberty.

By Andy Sutton
http://www.my2centsonline.com

Andy Sutton holds a MBA with Honors in Economics from Moravian College and is a member of Omicron Delta Epsilon International Honor Society in Economics. His firm, Sutton & Associates, LLC currently provides financial planning services to a growing book of clients using a conservative approach aimed at accumulating high quality, income producing assets while providing protection against a falling dollar. For more information visit www.suttonfinance.net

Andy Sutton Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife