2019: Mayhem, Misallocation and the Mockery of True Price Discovery

Au Report

Source: Michael Ballanger for Streetwise Reports 12/31/2018

Sector expert Michael Ballanger looks back on markets in 2018 and provides his New Year’s outlooks for gold, silver, uranium and more.

A Brief Word on Forecasts
Each year between December 25 and January 1, every blogger, analyst, newsletter guru, or market historian like me issues their “forecast” for the upcoming year, and what I find a worthy exercise is to go back and read what we all wrote in the same manner that, as a youth, I used to track the meteorological forecasts of the famous CBC weatherman, Percy Saltzman.

The one thing that has struck me over the years is that forecasting markets is rarely much different than the trackman’s picks at Woodbine Race Track or the Vegas line on football games or Percy’s chalkboard alchemy deciphering rain clouds. Even when forecasts of economic or financial events are correct, particularly in the years following the 2008 Great Financial Bailout, the outcomes have been skewed at best and bizarre at worst. To watch as trillions of dollars, pounds, euros and yen were magically created out of thin air while the two monetary metals were prevented from levitating through government edict is a clear and present danger to the art of prognostication.

So take this missive with a large grain of salt and try to find amusement or value in it, but as the graphic below clearly indicates, forecasting markets is an inexact and difficult science.

Eleven bogus market crash calls over six years

Stock Market Outlook: As we close out the final few trading sessions of 2018, I want you all to observe what I was looking at this time last year when I wrote my 2018 Forecast entitled “2018: The Year of Living Dangerously,” in which I gave these closing remarks:

“With the Internet now a massive source of investment knowledge, opinion and deception, you will soon be reading voluminous tomes of ‘Get rich quick!’ e-mails designed to liberate you from your hard-earned savings and critical investment capital. The quote I inserted above is really all one needs to know about asset prices in the years ahead. The Fed will have a new chairman in 2018 and the critical question is ‘Will the punchbowl be drained in 2018?’ For the past nine years, there has been an injection tube feeding the financial punchbowl with all manner of fiscal and monetary stimuli, which has kept all bank collateral (real estate, stocks, bonds) afloat despite massive debt and swamping entitlements obligations. The Fed has stated that this tube is now shut off as the tightening cycle has begun.

“However, if inflation rears its ugly head and it causes civil discontent, the tube will not only be removed, the plug at the bottom of the bowl will be removed and the contents allowed to drain. Food prices, rents and healthcare will be the barometer by which policy pitchforks and …read more

Source:: The Gold Report