2012: The Year Of Living Dangerously

We could be in for an economic shock the likes of which the Nation has not seen since the Great Depression.

Despite talk about the end of time, I fully expect the world will survive 2012; but it will be a bumpy ride this year. Expect the U.S. economy and the Nation’s standing in the world to further weaken. Expect more protests, both at home and abroad. And expect us to have to endure another four years with Barack Obama as President.

The United States faces myriad problems that will exacerbate an already sick economy giving birth to a second financial crisis in four years. Meanwhile, the Federal government and the Federal Reserve do not have the wherewithal to prevent a major economic meltdown.

We could be in for an economic shock the likes of which the Nation has not seen since the Great Depression. Only this time, the social upheaval and overall violence resulting from an economic crisis will be far worse than anything our grandparents experienced in the Dirty Thirties.

This is my third annual forecast column for Personal Liberty Digest™. Let’s review how well I did for 2010 and 2011.

In my Jan. 6, 2010 column, I wrote: “Gold continues to shine, although expected profit taking will happen along the way. Washington and other governments would love to keep a cap on the price of bullion, but right now they have much bigger fish to fry. My expectation is that the Midas metal will top $1,500 per ounce before year’s end and silver will rise from the $17 range to $25 per ounce.”

On the day my column came out, bullion was trading at $1,130. On Dec. 30, 2010, bullion closed within a few dollars of its high point for the year at $1,405 per ounce.

Also on the day my forecast column for 2010 was published, spot silver was $17.89 per ounce. On the last trading day of 2010, silver was trading at its high for the year: $30.63 per ounce.

On Jan. 5, I wrote my forecast column for this year. I predicted prices for gold would rise higher in 2011, despite coming off all-time highs.

A year ago, I wrote: “My expectation is that we have yet to see the spectacular blow-off for either gold or silver… with gold moving close to $2,000 per ounce and silver hitting $50 per ounce. Therefore there is more leverage in silver than in gold, but both are worth buying and holding.”

The day my prediction came out, gold was at $1,388 per ounce. In September 2011, gold hit $1,895 per ounce. Meanwhile, silver, which was trading at $29.21 when I wrote my forecast column, hit $48.70 in April.

Check my archives and you will see that I was also correct about my prediction for higher oil prices. I was wrong about both the U.S. stock and bond markets. I anticipated a severe correction that did not occur. I believe a severe correction is inevitable and would not be surprised to see the Dow Jones Industrial Average, which is now trading just under 12,000, to be below 8,500 within 12 months.

I expect both gold and silver will decline over the short-term before this correction has run its course. As a result, I would not buy either yet. Given the substantial commission on physical precious metals, I wouldn’t be selling them either.

I expect we will get further quantitative easing from the Federal Reserve going into the election. Look for gold to reach $2,500 per ounce and silver to hit $75 per ounce.

Silver is a more practical investment for ordinary investors than gold. Silver has more leverage than gold.

I think we will see inflation in 2012. Obama’s mission is to get re-elected. I don’t believe he cares what the final cost to America will be to see his ambition achieved.

The U.S. money supply has been growing at an annual rate of nearly 10 percent per year since the Crash of 2008. By 2013, I expect the money supply to be growing in excess of 15 percent per year.

Obama’s Ambitions And The Prospects Of War

I don’t make forecasts on the basis of what I want to happen but rather on how I think things will happen.

My hope is that Ron Paul wins the Republican nomination and the Presidency, but I don’t think he has a realistic chance. He is offering America some bitter medicine to cure our economic ills.

The other GOP contenders, especially Newt Gingrich, have serious character flaws. Meanwhile, Mitt Romney must overcome being a Mormon as well as his knack for changing his mind.

Recently, Romney gratefully accepted the endorsement of Republican elder and onetime Presidential nominee, former Senator Bob Dole.

However, in 2008, Romney didn’t think very much of Bob Dole’s endorsement– at least, not when it went to his competition, Senator John McCain. When Dole sent a letter of support to talk show host Rush Limbaugh, Romney said: “Well, it’s probably the last person I would have wanted to have write a letter for me.”

A weak field in the GOP ranks, along with the powers inherent for a sitting President, lead me to conclude that Obama will be re-elected in 2012. That will mean greater spending by the Federal government, more gridlock in Congress, and continued quantitative easing by the Federal Reserve.

To win re-election, Obama may even launch another war — this time against Iran or possibly North Korea and its leader, 20-something Kim Jong Un. Not much is known about Kim Jong Un. North Korean state media call him a “great successor.” Before dying, Kim Jong Il made his son a four-star general.

If President George W. Bush could sell a war against Iraq on threadbare evidence that Saddam Hussein had weapons of mass destruction, how hard will it be for Obama to rummage up a war against Iran or North Korea?

North Korea’s nuclear arsenal is estimated to consist of perhaps six operational nuclear warheads, and Iran may be on the verge of nuclear armament.

The re-election of Obama, bought with greater debt and a new war in the Mideast, will have devastating consequences over the long term. The inevitable result will be growing protests and more lawlessness across the United States and around the world.

Action to Take: Dedicate yourself to accumulating basic provisions and protection for you and your family. I wish I could suggest more carefree New Year resolutions.

I would be happy to write next year to point out how wrong I was and say that a true conservative will soon be sitting in the Oval Office and that America is starting to get back on her feet. But as the English Proverb suggests: “Hope for the best, but prepare for the worst.”

Yours in good times and in bad,

–John Myers
Editor, Myers Energy & Gold Report


Editor’s footnote: The Year of Living Dangerously is a novel made into a 1982 movie. It is set in Indonesia during the rule of the nation’s President and dictator, Sukarno. Described as the great puppet master, Sukarno stayed power by balancing opposing and increasingly antagonistic political forces inside Indonesia.

Personal Liberty

John Myers

is editor of Myers’ Energy and Gold Report. The son of C.V. Myers, the original publisher of Oilweek Magazine, John has worked with two of the world’s largest investment publishers, Phillips and Agora. He was the original editor for Outstanding Investments and has more than 20 years experience as an investment writer. John is a graduate of the University of Calgary. He has worked for Prudential Securities in Spokane, Wash., as a registered investment advisor. His office location in Calgary, Alberta, is just minutes away from the headquarters of some of the biggest players in today’s energy markets. This gives him personal access to everyone from oil CEOs to roughnecks, where he learns secrets from oil insiders he passes on to his subscribers. Plus, during his years in Spokane he cultivated a network of relationships with mining insiders in Idaho, Oregon and Washington.

Join the Discussion

Comment Policy: We encourage an open discussion with a wide range of viewpoints, even extreme ones, but we will not tolerate racism, profanity or slanderous comments toward the author(s) or comment participants. Make your case passionately, but civilly. Please don't stoop to name calling. We use filters for spam protection. If your comment does not appear, it is likely because it violates the above policy or contains links or language typical of spam. We reserve the right to remove comments at our discretion.