Hey sometimes this market commentary thing is really easy.  I hope everyone enjoyed their holidays and we can get back to the very serious business of kicking the financial burden farther down the road until my daughter’s grandchildren are indebted.  As a first post for the New Year I want to get a few things out of the way.  I don’t like normally making predictions because they are usually nothing more than a permanent record of one’s ignorance.  But, with the so-called fiscal cliff averted I can safely say that 2013’s going to be a mess.  Gold — and its proxy Brent Crude — is already telling us where we are headed.

So here it goes:

1. Gold will run well past $2000 per ounce this year.  $2100 is achievable and, in the case of a geopolitical crisis, $2500
2. Brent Crude will continue to trade highly correlated to Gold and the ratio will remain 15 +/- 1 barrel per ounce.  Brent may not follow Gold on spike highs but it will, in general continue to be priced in terms of gold as the U.S. Petrodollar system continues its slow-motion collapse.
3. The Fed will continue to support the long end of the maturity curve for U.S. Treasuries and as long as they do not provoke China that support will be enough to keep the bond market from bursting until 2014.
4. The U.S. Dollar is being consciously trashed by the Fed to get domestic inflation for the first time since Lehman Bros. imploded.  Unemployment will not improve and the Fed is engineering 70’s-style stagflation with a high probability of success.
5. I will not be converted to the high faith of Keynesian Economics.