What a year 2013 was for the resource sector! I think the best way to categorize the abysmal performance of the TSX Venture exchange generally would be as “intensely horrible”. Meanwhile, the S&P 500, the Dow Jones Industrial Average, and NASDAQ (especially) all enjoyed a year that could easily be described as “best possible scenario”.
How is it that the resource-centric TSX Venture could contrast so sharply with our neighbours to the south? Are things really that much better there? Is the state of their economy really so much more fundamentally sound than ours?
Lets see…Canada: energy self-sufficient, highest global mineral wealth per capita, highest standard of living on average, strongest banking system, consistently vibrant real estate sector, no quantitative easing (better known as “fabricating money and credit out of thin air”).
Meanwhile, the United States: Perennial generator of asset bubbles through reckless and persistent quantitative easing (better known as “fabricating money and credit out of thin air”), improving energy self-sufficiency, but still deficient by about 80% of daily requirements, among the most fragile, bloated, unstable and most expensively bailed-out banking systems in the world, natural resource asset base best categorized as “spent”, third world ratio of natural resources per capita, corrupt and dysfunctional political system…
What’s wrong with this picture?
I see…the major difference between these two countries is one is responsibly managing its resources and living within its means, while the other one counterfeits money aided and abetted by its corrupt and pseudo-democratically elected government. One is aggressive and understands the nature of competition, wherein the only crime is losing, while the other one smugly rests on its banking reputation laurels while their economy is systematically pilfered through the perpetual destabilization caused by the perpetual fabrication of its neighbour’s dollars based on nothing at all.
Okay okay. So now that I’ve been tumbled off of my soapbox by Google (who refuses to direct traffic to my heretical and clearly subversive diatribe), here are my predictions for 2014:
1. Gold and silver will be pressured incrementally downward.
Despite the desperation and plaintive nature inherent in the predictions of those who’s livelihoods are irrevocably tied to the value of precious metals, I think the willingness of the U.S. financial sector (and I’m referring to banks, Treasury Department, Federal Reserve Bank, etc) to blatantly manipulate the price of physical gold downward through the offices of its dis-regulated and inadequately policed futures market will continue to trump the physical demand emanating from Asia.
I also believe, however, that the more the price is thus driven downward, the greater the compression building for an immense explosion to the upside beyond $2,000 an ounce for gold at some point toward the end of the third quarter of 2014.
2. The United States will amp up QE beyond $85 billion a month after the continued tapering of the easing is seen to undermine the irrational exuberance that drove markets to new and dizzying record highs in 2013.
3. China’s debt issues will continue to grow while its growth will continue to contract, rendering that country’s ability to carry the global recovery temporary. However, Th ECB, the Fed, and the Bank of Japan will together catalyze fake global economic growth based on the fabrication of capital and credit out of thin air.
4. The European Debt Crisis will smoulder buy not ignite, as the realization that the ECB’s willingness to fabricate money out of thin air ad infinitum is equivalent to free money for the rich, and no money for the poor. Despite ersatz economic numbers indicative of growth, violence and crime will continue to rise in Spain, Portugal, France, Italy, Ireland and Greece. In particular, nationalist sentiment will find expression in acts of violence against immigrants, especially those of colour.
5. Crop failures due to drought, flood and other extreme and abnormal weather events will see food prices incrementally inching higher, while disease in certain fruit and vegetable crops will drive the prices of items like citrus fruit, sugar, and tomatoes to astronomic levels. The continuing destruction of bee populations will begin to manifest itself in strange and unforseen ways, that collectively will render this problem an international disaster of unprecedented pervasiveness. Watch for new, synthetic solutions to this problem to temporarily, at least, avert disaster. These problems will be blamed for the rise in food prices, which will handily mask the growth of a near-hyperinflationary price explosion for basic staples as a result of global fabrication of capital and credit from thin air.
6. Stock markets generally will continue to set new records. In countries where no capital fabrication from thin air is the default mechanism for the creation of demand, markets will fair poorly. In nations where capital fabrication is rampant, markets will thrive.
7. Prices of agricultural minerals such as potash and nitrogen will continue falling, while phosphate prices will remains stable or even rise slightly as supplies tighten up as a result of diminishing productivity in Africa.
8. Energy prices will continue to diverge between Europe (Brent) and North America (WTI) as the rampant growth in domestic production from fracking and directional drilling technologies continues to push prices downward. Resistance to pipeline expansion – especially in the case of the Keystone XL, which will again be turned down by Obama on the pretext of environmental concern, while really satisfying the anti-competition lobby of incumbent U.S. energy associations – means there will be increasing incidents of rail mishaps. Ultimately, Canada will either get smart and subsidize its own refining complex, or else it will build pipeline capacity to ports and get bitumen and LNG to markets via shipping. But North American energy prices will definitely continue downward, while in Europe, the opposite will be the case.
9. The volatility of Bitcoin will see it increasingly shunned as a monetary unit of trade globally, and its finite producibility will ultimately be its undoing, as that will be recognized as the principle driver of volatility. A currency with such wild price fluctuations can never accomplish widespread use as the difficulty in daily valuation renders it impractical. However, look for new competing digital currencies sponsored by major technology companies in partnership with government, as the U.S. and the ECB work behind the scenes to nip the threat of independent digital currencies in the bud as much as possible.
10. The mining sector will see another year of abject misery, as China’s artificial prosperity is revealed as the result of fabrication of capital out of thin air, now metastasizing as local government-level debt. Copper, zinc, iron ore, coal and steel prices will suffer as result, further undermining the ability of emerging companies to raise capital. While this is the outlook for 2014, however, this will also be a contributing factor to the establishment of a new boom in exploration, likely beginning toward the end of 2015, as diminished exploration and development expenditure continues to tighten supply globally. In Canada, the mining companies that don’t transform into tech companies will start to fall of the board in droves, but they will be replaced by other sector start-ups as the Canadian government is jolted into action by the economic deterioration promulgated by its inaction during 2013 and 2014 that leads to the destruction of the emerging resource sector.
11. In Canada, the opposition to the establishment of LNG and bitumen export infrastructure on the BC coastline may result in a change of government if BC Premier Christy Clark continues to pursue such development on behalf of energy interests. 2014 could be a catastrophic year for the Conservative Party if Harper’s government continues to exclude media while plagued by scandal, undermining his commitment to “transparent and accountable government”.
There. Now print this up, pin it up on a wall somewhere, and we’ll go through this list at the end of 2014.
