If are not keeping up with our ongoing series of forecasts, you can get up to speed here and read the Overall Prediction Page here.  Here are the rest of the posts in the series:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, 17) Will Silver Move Higher?, & 18) Why Buy Silver Now?, 19) Oil Prices to Explode Higher, 20) Bonds Will Fall, 21) US Dollar, 22) European Recession, 23) Sovereign Default in Europe, 24) China’s Slowing, & 25) US Recession.

What the media and government don’t like to mention is that the money printing they are doing (via the Fed) is highly inflationary.  Thus the cost of goods that you must buy throughout the year costs considerably more than they did the year before.  If the cost of goods rise by 4% across the country, and the economy grows by 2%…this is not growth.

This is recession.  This is most probably where the US will end the year.  We do see it as quite possible that with the breakdown of Europe, Japan, & China, the US sees numeric recession this year as well.  That’s still to be determined.

The entire world economy is incredibly linked today and if the rest of the world is suffering, the US will suffer as well.  It’s ironic and sad that the US is able to print money at such rates that the emerging economies of the world suffer massive inflation and the country that started it all escapes. But this effect is short term and the consequences do eventually come home.  The problems in many of these countries (cost of food, etc rising) brings economic unbalance which has to be resolved one way or another.  These problems do come back to hurt the US.  Meanwhile, the “first world” has all been pulling the same debt gimmicks as the US more or less and those times are coming to an end.

The US economy itself is extremely diverse.  In some areas, it’s fairly healthy.  In others, it’s very sick.  The pumping of Fed dollars has kept the banks propped up, but the real estate overhand still shadows over the economy keeping it from full recovery.  Again, this is not a problem with an easy resolution.  And the governments answers are woefully inadequate.  Basically, you can’t always have boom times.  If you cause economic booms by money printing, you must have subsequent busts to clean out the mess that always results.

Because the US government has spent the last couple decades avoiding busts at all costs by continually blowing up another bubble, the bust that must come now is severe.  If they’re EXTREMELY competent at managing the economy, perhaps that can look like an economy that hardly grows for a decade while the excess is worked off without too much drama.  If you’ve studied economics or human nature at all, you’re probably aware that that’s not the way things work and that in fact, a severe bust is far more likely.  The worst is probably still to come after 2012 ends, but we see this beginning this year.

This is the 25th post in a series.  You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here.  Here are the rest of the posts:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, 17) Will Silver Move Higher?, & 18) Why Buy Silver Now?, 19) Oil Prices to Explode Higher, 20) Bonds Will Fall, 21) US Dollar, 22) European Recession, 23) Sovereign Default in Europe, 24) China’s Slowing, & 25) US Recession.

China’s economy is largely based on sending cheap manufactured items to the US and Europe.  Both of these areas are not seeing the growth necessary to drive increased sales.  Thus, China’s suffering with the rest of the world.

Because China’s still in the emerging part of it’s growth cycle and generally sees very large growth rate, we’re not necessarily predicting a recession as the US and Europe are familiar with.  We’re looking for something more along the lines of 3-6% economic growth.  What needs to be understood though is that that is not enough growth to keep the people happy.

Millions of Chinese people are constantly migrating from the fields into the cities looking for jobs.  The communist party that controls the government has to deliver high growth and reasonable food prices in order to not get thrown out of office via pitchfork.

Our guess is that sort of change will come to China within the next few years.  For this year, we’re only predicting that China’s growth will continue to decelerate and be far from what the entire world hopes they will deliver to save the world economy.

This is the 24th post in a series.  You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here.  Here are the rest of the posts:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, 17) Will Silver Move Higher?, & 18) Why Buy Silver Now?, 19) Oil Prices to Explode Higher, 20) Bonds Will Fall, 21) US Dollar, 22) European Recession, 23) Sovereign Default in Europe, 24) China’s Slowing, & 25) US Recession.

So we’re thinking that the problems of Europe will come to a head in 2012 and cause a country to default.  And it’s likely that once one of them defaults, several of them will take this easier road out.  Ironically, it will probably go best for the one who makes this choice first, but no one wants to face the reality that this is the only real choice and by far the best choice for the people of these countries.

You see, if each country (whether Greece, Spain, or one of the others with a massive debt overhang) were to disengage from the Euro and readopt its own currency (such as the Greek Drachma), then the value of it’s currency would drop precipitously.  The government would declare by fiat that the debt it owes is in that currency and thus worth far less than it had been.  Salaries would go up because the new currencies would be worth less.  And everything would equalize for everyone.  The bond lenders would take a big loss, but there’s no way around that at this point.  They should have seen what a foolish bet lending money to these countries was in the first place.  And yes, the major banks are the major lenders, so that would hurt northern Europe, but they were the ones that allowed this problem to progress to where it is.  The northern European countries would probably bail out their own banks, but this would be better than this continual farse of bailout loan after bailout loan that only exacerbate the problems.

Greece, Spain, Portugal, & Italy will never be able to pay back their debts in currency worth what it is today.  France and Belgium probably also belong in this category.  Ireland probably does as well, but at least Ireland has a strong work ethic and a free market.  Ireland’s problems are because of the stupid decision by Irish government officials to submit to European authorities and bailout the banks in that country instead of allowing them to go under. (Spain’s about to go down this same road.)  All of these countries have major problems.  Germany can not bail them all out.

It’s difficult to predict the timing, but it appears to us that this has to come to a head this year.  There is the possibility that the Federal Reserve will decide to step in and bailout all of Europe.  If this happens, the US will blow up in unbelievable ways soon after because the US cannot afford to do this.  That much money printing would surely finally grab the world’s lending arms attention and cause problems at US Treasury auctions.

This is the 23rd post in a series.  You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here.  Here are the rest of the posts:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, 17) Will Silver Move Higher?, & 18) Why Buy Silver Now?, 19) Oil Prices to Explode Higher, 20) Bonds Will Fall, 21) US Dollar, 22) European Recession, 23) Sovereign Default in Europe, 24) China’s Slowing, & 25) US Recession.

Well, they’ve “saved” Greece and now Greece is back in trouble.  They’ve “saved” the European banks with their LTRO bailout and now the banks are in severe trouble again.

Spain is the headliner now because their problems are severe and unavoidable.  Also, Spain is much larger than Greece and not nearly so easy to “bail out”.

But let’s be clear.  The bailout of Greece was not for Greece.  Greece had a higher debt level after the bailout than they had before it.  How does that solve their debt problems?  The reality is the bailout was meant to help the northern European banks who would be hurt if Greece defaulted.  This direct transfer of cash which was supposedly for the Greek people made it nowhere near the Greek people.  As a matter of fact, the northern Europeans went after the Greek government’s holding of gold as collateral so that after the deal failed they would come out of it with the best money there is.

They also required Greece to put aside taxpayer money to guarantee the northern European bailout loans.  So think this through…. Greece has higher debt now than they did before the great rescue because the new loans were more than the amount of old loans which were written off.  So the debt is higher.

Also, the new loans were put in place to pay back old loans so they didn’t go to help the people of Greece at all.  Meanwhile, the Greek people must put away more of their money to guarantee loans so that means less of Greek tax revenue is available for the budgetary requirements of the Greek people.

Don’t get us wrong, there’s no question that Greece has gotten carried away with socialism and are trying to make a system effective where hardly anyone actually puts in real productive work anymore.  This is pretty common throughout Europe, particularly southern Europe where the biggest problems are.

So we’re not one of the ones who think that it’s all Goldman Sach’s and Germany’s fault and poor Greece is being used.  Greece is the main user over the last decade plus of Euro joining and the subsequent carrying on.  However, more recently, the rest of Europe has been using Greece for the benefit of the bankers in the handling of the problems this year.  And Greece is still in trouble.

Spain, Italy, & Portugal still have major problems and will see continued recession.  It will get uglier and uglier over there.  It’s still to be determined whether enough of Europe is willing to print till infinity to pay off all this debt and accept the resulting hyperinflation.  Or whether Europe will break up and allow the problem countries to go their own way.  But one of these things will have to happen because the debt is far too large and the recession will be far too deep.  Will go deeper into which way we think things will break on Monday.

This is the 22nd post in a series.  You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here.  Here are the rest of the posts:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, 17) Will Silver Move Higher?, & 18) Why Buy Silver Now?, 19) Oil Prices to Explode Higher, 20) Bonds Will Fall, 21) US Dollar, 22) European Recession, 23) Sovereign Default in Europe, 24) China’s Slowing, & 25) US Recession.

The reality is much worse than this with real inflation being around 10%.  Some areas of the economy are rising in price much faster than this as you’ve probably noticed.  The trick about valueing the US Dollar is deciding what to value it against.  It is commonly valued against only the few other biggest currencies in the world.  Currencies like, the Euro, the Japanese Yen, & the Brittish Pound.  The problem is that all of these countries (or region in the case of the Euro) have very similar problems to the US.

The USD has been in a tug of war with the Euro for the world’s least favored media currency.  All the USD has needed for a pick me up is for Europe to have a debt problem…and there are plenty of those to go around.

Meanwhile, the world is taking very serious steps away from the USD to transact it’s business in.  This is a very serious issue.  As soon as the world gets to the point where it doesn’t have to have the USD to transact business (and it could possibly happen before this time), it will leave the USD centric model permanently.  And the world is very quickly moving towards this.

China is quickly making arrangements with all major trading partners to do business in the Yuan.  It’s a very big deal that the 2nd and 3rd biggest economies in the world (China & Japan) have made a deal to deal directly with each other instead of using the USD.

Perhaps the stupidest economic move of our time was the US forcing the SWIFT system to cut off the Iranian Central Bank from world finance.  The US might see this simply as an attack against one country.  Many countries in the rest of the world which are wary of US hegemony sees it as a potential way in which the US will try to attack them next.  This only hurries their move away from the USD system.  It’s hard to see a path where this system doesn’t end at some point as so many of the up and coming world powers want nothing to do with the current corrupt system.

Of course, it would be a stretch to say the world will completely move away from this system in 2012.  The world is not ready to do so quite yet although it will be within only  a few short years.

In the meantime, the Fed is holding interest rates so low that cash can’t earn anything.  In fact, this is one of the reasons they’re keeping rates so low.  Also, Federal Debt continues to mushroom.  Anyone who makes an honest appraisal of the situation can see that holding dollars for the long term is a fool’s errand.  However, it’ still quite popular in the short term when people get scared of unforeseen economic events.  When people are scared of taking a big loss, they’ll choose to take a small one instead, which is often what holding USD cash means today.  Of course, if you expect everyone else to follow you into that short term trade, you might make a small quick profit in Treasuries.

For those of us holding cash this year, we’ll continue to see the value of our dollars drop as we hope for a better entry point into a sustainable appreciating asset.

This is the 21st post in a series.  You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here.  Here are the rest of the posts:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, 17) Will Silver Move Higher?, & 18) Why Buy Silver Now?, 19) Oil Prices to Explode Higher, 20) Bonds Will Fall, 21) US Dollar, 22) European Recession, 23) Sovereign Default in Europe, 24) China’s Slowing, & 25) US Recession.

With 10 year Treasury interest yields bouncing around just over 2%, there’s not alot of room for the bull to continue.  Yet, if we had made this prediction last year, we would have been dead wrong because bond investors saw one of the biggest gains of any sector last year.  When this market does finally turn, being on the right side of this tidal wave will be one of the most important financial moves you can make.

People that know how to profit from interest rates heading higher will make extreme profits.  Unfortunately, most people will be caught unaware of this monumental shift and will be hurt pretty badly by it.  Bond holders will get hit hardest.  It’s very difficult to say when this big shift will happen.

To say that 2012 is the year that interest rates (and therefore bond yields) will start heading higher is a throw of the dart as much as anything.  Mainstream taking financial heads will tell you that it will probably not happen as early as this year because first the economy has to fully recover, and then it has to look like it is overheating, and only then will the Fed raise interest rates.

Another such theory is that the Fed will only increase interest rates once inflation concerns threaten.  However, this ignores the fact that inflation has already surpassed what Ben Bernanke used to say was his target.  he now has new higher inflation targets.  Basically, you can’t believe what he says.  Inflation is rampant in most parts of the economy although it is dormant in the biggest sector (real estate) which brings down official CPI.

Both these theories have at their heart the idea that the Fed controls interest rates.  We believe that theory will be shown to not hold water at some point, and it’s quite possible the second half of 2012 could be the beginning of this.  The Fed only controls short term interest rates.  Longer term rates are set by the market.  The Fed does do alot to manipulate rates by being the largest buyer and seller in the market, however, if the market were to panic in a way that was too big for the Fed to control, rates could turn sharply higher beyond the control of the Fed.

There would be more sellers than buyers and the stampede would quickly frighten others to sell.  The only thing the Fed could do to stop this would be to announce another large QE project.  This would scare more bond holders and things could quickly get out of control.

All of this could happen much faster than most people realize, and we believe there’s a probability that we will see this in the next couple years.  Will it start this year?  It certainly could and it might, but our prediction doesn’t go that far.  We’re simply guessing that this is the year that rates start to turn up.

Of course, if all the focus stays on Europe’s problems or perhaps refocuses on Japan’s problems, we could easily be wrong in this 2012 prediction.  But it’s a certainty that rates won’t stay this low forever.  And when you do the math on the US debt and deficits, you quickly realize that their unwinding will produce devastating consequences for those unprepared (and extremely profitable ones for those who are ready.)

This is the 20th post in a series.  You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here.  Here are the rest of the posts:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, 17) Will Silver Move Higher?, & 18) Why Buy Silver Now?, & 19) Oil Prices to Explode Higher.

It seems increasingly clear that there will be war in Iran.  The US is engaging full scale war on Iran in every way other than actual combat. The US is using every possible financial means to bring Iran to its knees.  Yet Iran is not going to give up its nuclear aspirations.  Meanwhile, Israel is extremely concerned that if it waits too long to strike Iran, Iran will fulfill its promise to wipe Israel off the map just as Hitler tried to fulfill his crazy promise of eradicating the Jews.  So whether it’s the US or Israel who attacks Iran, or whether Iran decides that the financial warfare has gone far enough, Iran is very likely to shut down the Strait of Hormuz.

Something like a third of the world’s shipborne oil travels through this tiny strait.  The US, along with the French and others, have ships standing by to attempt to keep the strait open if Iran follows through with its threat to close the Strait.  If it was closed for even a little while, there would be a huge shock to the price of oil.  If it were to remain closed for some time, the price of oil would move incredibly high.  It’s all unknown, but based on the actions of the US and Iran up to this date, one of these items looks likely.

In the longer run, prices will probably move much higher.  There’s a couple reasons to believe this.  One, is the same reason all commodity prices are likely to keep moving higher…the unstoppable US printing press.  As the US debt piles up, the only way that it can be repaid is increasingly larger numbers of dollars.  Oil is a sound hedge against this governmental destruction of your assets.

The other reason is that the emerging economies of the world are waking up.  Most of the people of the world have been too poor to consume much oil.  That is changing in a large way.  Some peasants go from having a hand sewn thatch roof to having a roof that needs manufacturing (which requires oil).  Or they move from a bicycle to a motorbike.  Or up to a car or truck.  Or instead of subsisting on homegrown food, they can afford to buy food that is trucked in.  All these small steps to modern life require oil!

So while the “first world” such as the US, Europe, & Japan are not using anymore oil than we were a deacade ago.  Most of the world is using much more.  This trend will continue.

Meanwhile, most of the major oil producing countries are seeing prodcution declines.  Many of them are government controlled systems that are poor stewards of their resources.  They don’t poor the investment back into the sector like publicly traded independent companies do.  Thus, overall world production is stagnant.

There are some bright spots in production.  The Canadian oil sands have a lot of growth left in them.  Iraq will come online with several more million barrels a day over the next decade because Saddam Hussein was terrible at exploiting their resources.  Also, shale oil production techniques are a recent advancement.  This will allow the US to once again be a major player in oil production in the future.  These techniques will also surely be used elsewhere around the world.  Still, the easy oil is mostly tapped and it seems clear that demand will outpace supply, so the future is bright as an oil producer.

Now, let’s look at the downside scenario…. If we’re right and this is the “year of the Black Swan”, then we’ll see a major economic crises become obvious to all this year.  This will probably break out when the derivative mess that’s brewing becomes obvious to all.  If we see across the board market crashes as we saw in 2008, then the price of oil is very likely to fall as well.  This could mean it drops to a half or third of the current price conceivably.  It probably wouldn’t stay that low for too long, but market panics can do funny things to prices.

Of course, if this scare is primarily caused by the value of the US dollar plummeting, then the price of everything will go up in terms of US dollars.

So we see tremendous opportunity along with some severe risk.  Make sure you have a plan in place to protect yourself from the risk and to take full advantage of the opportunity!

This is the 19th post in a series.  You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here.  Here are the rest of the posts:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, 17) Will Silver Move Higher?, & 18) Why Buy Silver Now?

However, none of that really matters.  They’ve been doing this for decades and again, the price of silver has increased more than almost any other asset over the last 12 years.  This is clear evidence, that the bullion banks can control it for short periods of time by overwhelming the market with force.  But in the longer run, they don’t have as much money to throw away as the market itself would like to make on seeing the price rise.  So they sell millions of tons in very short periods and overwhelm all the buyers of that time, which leads to steep drops.

But then the market (which by the way, has far more demand for real physical silver than can be satisfied with real mine production every year), says “YES, I will buy more at this price.”  And the price rebounds ferociously.  It might have fallen faster and further than gold and might stay down longer after gold has rebounded, but it will most likely rebound stronger than gold when it does.

So it might be possible to wait and buy into silver at a cheaper price than it’s at today.  However, it might not be.  Here’s why…

If the great crash happens because the US Dollar is diving in value, people everywhere will be scrambling to put their money into something real.  Silver which is readily available today, quite simply won’t be available to you unless you have something to trade (like food) to someone who owns silver and is willing to part with it for what you have, because they certainly won’t want your green paper with dead presidents on it.  Silver prices will be shooting upwards and Dollar values downward.  So, you’ll be too late.

Now, I said that silver is available today, but this is a half truth.  It is in small quantities, if you’re trying to buy multi-millions worth, it’s not nearly as available as it appears and you’ll have to wait a months to receive it.  You took economics 101 in high school or college, right?  “Supply and Demand determines the price of a thing.”  Does that sound like a market which should see its price plummeting all the time?  Well of course, not but we’ve already discussed how the price is derived.

So US Dollar value destruction is one scenario that would shoot prices upward, is there another reason that you should make sure you own enough silver now even though prices could potentially drop?

Absolutely, we discussed the bullion bank manipulation of the “price” of silver.  It’s interesting that the Fed has been able to twist our thinking so much that we now think of silver or gold having a price rather than understanding that the US Dollar has a price based in silver (as the US Constitution clearly defined.)  But that’s how people think now instead of understanding what is truly valuable even though we’ve only been on this often-tried, never-worked-in-history, fiat money experiment for 40 years.  Isn’t it amazing how easily Man can be confused about what is real and what is not?

Sorry, I’m off track….The bullion bank price suppression scheme has been at work for a long time.  However, as was admitted by CPM at the trial in March 2010, they trade 100 times as much paper in these markets as actually exist in physical supply.  This leverage is far more severe than the leverage which has practically already (and will soon) brought the entire fiat banking system to its knees.

You see, for every piece of paper (or blip on a computer screen) held by a trader on the COMEX or LBMA that indicates ownership of real metal, 1% actually exists.  So if 2% of all those who hold the imaginary paper assets decide that they want to take their silver in physical form, the whole system blows up.  In a similar scenario, if the growing losses by JP Morgan Chase (the biggest short on the market) gets unmanageable, and they decide they have to unwind the position by becoming the largest buyer on the market, prices will explode and it will become clear to all that physical silver is truly precious and most paper silver is just an IOU from a bankrupt organization.

We don’t know when this day will come, but we do believe its arrival is a certainty and it’s certainly prudent to be prepared in advance.

We also wanted to share a couple interviews with Jim Sinclair which are both eye opening and insightful.  If you’re interested in this topic and haven’t heard them yet, you ought to listen!

March 8, 2012 King World News Interview

March 16, 2012 King World News Interview

This is the 18th post in a series.  You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here.  Here are the rest of the posts:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, 16) Gold, Should you Wait?, & 17) Will Silver Move Higher?

The turbulence is enough to convince most people that owning silver is a fool’s game.  Who would want to hold something that is always falling so fast and furious in value?  And yet, can you name any asset that has increased as much in price over the last decade?  This is the wild bull ride we are on in silver.  The insanity that comes along with manic price drops is enough to convince the bravest of souls that the 500% + gains achieved over the last decade aren’t worth it.  And more importantly, to constantly question whether the good times are gone.

The fundamental question you have to ask yourself is…Have the reasons that you believe silver is going much higher been sufficiently “fixed” or dealt with?

The answer is a resounding NO.

Silver has been real money for the vast majority of human history.  One of the reasons this is so is because the quantity of it is limited.  Thus, it is “precious”.

Green pieces of paper with dead US Presidents on them are multiplying themselves at a very rapid pace thanks to the combined efforts of presidents, Congress, & the Federal Reserve.  As long as the money supply keeps rising and the debt keeps rising thanks to a gargantuan deficit each year, you should feel safe and secure that the value of your silver in USD terms will rise.

Since the USD is the world reserve currency, the above facts are probably enough to make the value of silver in pretty much every currency in the world rise as well.  However, because Europe, Japan, & Britain are playing the same game as the US, they simply add more fuel to a very hot fire.  Prices will rise far higher than most people believe possible in the coming year.

We feel quite certain of that.  What’s much more dangerous to predict is that the price of silver will be higher by the end of 2012 than it was to begin.  Last year we predicted higher prices and we saw the price practically double over the course of the year, only to get kicked in the shins to end the year down 9%.  A month later, the price was up 20% from there.

Where will the price in USD be on December 31^st, 2012?  We really have no idea.

It is quite possible that a major crash in most every market will occur this year.  As a matter of fact, we believe this is a very large possibility.  If this were to happen, it is quite possible that the price of silver will nosedive along with everything else.  It wouldn’t be completely shocking to see the price fall in half from here.  Silver is like that.

However, you must also understand that the exchange traded price of silver represents a “paper” price of silver.  It has nothing to do with the supply and demand of actual silver.  The bullion banks push the price of this tiny market around at will by maintaining a position size that dwarfs the rest of the market.  This is all very illegal as even a member (Bart Chilton) of the governing body over the issues has stated, but it seems very clear that the western governments are involved and this case will never actually amount to anything.  We’ve covered the facts and proof of this in great detail over the last couple years.  If you’re interested, check out the Economic Update Videos that focuses on gold and silver.

Try as we might to avoid talking about this issue, we can’t seem to help ourselves and will get deeper into it on Monday as well as break down a couple potential outcomes coming and what it means to you and your family.

This is the 17th post in a series.  You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here.  Here are the rest of the posts:  3) Ben Bernanke’s Dollar Devaluation Plan, 4) The Coming US Dollar Devaluation, 5) Stock Market Volatility, & 6) Stocks to Fall in 2012, 7) The European Crises, & European Options, 9) European Prediction, 10) Recession in Japan, 11) Japanese Yen Crash,12) War with Iran, 13) Jewish Perspective on Iran, 14) Commodities to End 2012 Lower, 15) Where Will Gold Go Next?, & 16) Gold, Should you Wait?