Financial, Economic and Social Mood Update (August 2, 2013) The Dow Jones 30 Industrial Average made a new intraday record high on August 1, 2013 (15,650.69) and the S&P 500 Index did so as well (1,707.85). This makes the financial markets in the USA even more dangerous. Markets in Europe, Asia, Africa and Latin America have already turned sharply down for the most part. Two markets which we should monitor closely are that for gold bullion and the US Dollar. Gold is heading down along with most equity and debt markets, whereas the US Dollar will head upward until the global credit bubble collapses to the ground – a necessary deflation of grossly overextended mostly US Dollar-denominated credit. The most difficult key to decipher is that of market timing. Gold’s maximum downside target heading into the middle of 2014 is US $742.44 per oz. Crude oil (both WTI and Brent) may fall to just $50 per barrel by year end 2013. The WTI benchmark stands for “West Texas Intermediate” and Brent crude is traded on the London exchange. Any difference in price refers not to the “quality” of crude oil (sweet, sour, slop, etc.) but to transportation costs of getting the refined product to the wholesale – retail market. Due to the boom thanks to better technology (fracking, deep vertical and horizontal drilling, etc.), 25 percent of all oil rigs on earth are now located in the US State of Texas. Gold and crude oil are perhaps the most important commodities – even more important than national currencies. The European Union (EU) bailout has touched 8 member countries thus far: Greece, Spain, Portugal, Ireland, Romania, Hungary, Cyprus and Latvia (ranked in order of total cost). The important change for the future is that henceforth taxpayer funds will not be able to insure all bank deposits. The worst case to date is Cyprus, where depositors with more than 100,000 Euros in the bank (roughly equal to US $132,000) have lost 47.5 percent of their savings – turned into worthless bank stock. But all depositors are affected – people are severely limited as to how much money than can withdraw from their accounts. Once the global markets collapse I believe that more than 90 percent of investor capital will be lost – the same sad story of Cyprus will be repeated throughout Europe, North America and Japan. When will this happen? My guess is as soon as immediately and as late as 2016. The economies with the most potential over the coming 75 years include the 30 hottest economies of the former 2nd and 3rd world – Mainland China, India, Russia, Mexico, South Korea, Indonesia, Iran, Saudi Arabia, Taiwan, Thailand, Egypt, Pakistan, Colombia, Malaysia, Nigeria, the Philippines, Hong Kong, the Ukraine, Peru, Singapore, Vietnam, Chile, Bangladesh, Algeria, the UAE, Israel, Iraq, Kazakhstan, Qatar and Morocco (listed in order by size of total PPP GDP). Note – 2nd world refers to formerly communist countries and 3rd world refers to formerly developing (poor) countries. 1st world refers to formerly developed (rich) countries. Please visit our new website at financialeconomicupdate
Posted on: Sat, 03 Aug 2013 05:36:33 +0000
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