As we begin a new year, I think we all take a few moments to go over what happened in 2022 and what our expectations may be for 2023. I believe that many are trying to convince themselves that 2023 will prove to be far better than 2022 for the “markets”. I have heard many who feel like if they wait, they can make back the losses suffered in 2022. This type of thinking has been reinforced – particularly in the past 15 years or so by central bank “printing and buying”.
Personally, I believe that we are in a situation where it is likely that those hoping for a rally are likely to be SEVERELY disappointed as just about all of the economic numbers are pathetic at best and without the “printing and buying” the entire edifice would likely collapse in a matter of minutes.
Having said that, many may say that the central banks have UNLIMITED amounts of cash that they can conjure up from nowhere. In one way they are correct. There is no limit on the amount that the central banks can create from nowhere. The point that may be missing here is that, as they “print” in unlimited amounts the freshly conjured up cash joins with existing cash and chases a FINITE amount of goods. This leads first to inflation and possibly then a far worse inflation that leads to social unrest and many times- war. I believe we are seeing the beginnings of this scenario already even though the mainstream media is ignoring the riots taking place globally because of rising prices for food and energy.
In addition, much of the “rally” since 2008 was built on zero and negative interest rates and now that tide has turned. All of that “Cheap” credit is now maturing and is having to be rolled over at far higher rates. There were already MANY zombie companies out there that had to count on more debt to stay alive. As credit tightens and rates rise look for MANY of these companies to capitulate and collapse. We are already seeing massive layoffs being announced across all segments of the economy. I just saw that even Amazon is eliminating 18,000 jobs.
This should come as no surprise as most of the Fed presidents have been saying that “many more people need to lose their jobs” to tame inflation. In other words, they are doing this on purpose to have something to blame their collapsing of the economy on.
Keeping this in mind, it appears to me that the road ahead for financial (debt-based) assets is rocky.
On the other hand, I believe the prospects for things that have tangible value is extremely bright.
As I look ahead to what I expect in 2023 I will make some predictions based upon what I am seeing right now.
- Gold makes an all-time high in 2023.
- Gold miners may be the best investment of 2023.
- Silver makes a major move and could reach an all-time high in dollar terms also.
- Many countries join BRICS and the US dollar experiences a major pullback. (May rise short-term first)
- Tech stocks and interest rate sensitive investments suffer another difficult year.
- Food crises pick up globally and social unrest soars as the necessities of life become too expensive for the bottom 25% of society to afford.
- US Government and most developed nations keep spending like drunken sailors to keep propping up the economic numbers. This could be the year when the straw that breaks the camel’s back arrives.
- Job losses will likely surprise to the upside since the Fed is engineering it that way
- There could be a major black swan in 2023- if not then- then in 2024 because the CBDC (Central Bank Digital Currencies) are to be rolled out in 2025. Many people will resist this so there has to be a MAJOR problem so many will be begging for a solution- which is already here.
- Real Estate prices- commercial real estate prices in particular- will collapse in 2023. Rising rates, rising crime and work-from-home will likely create a perfect storm for commercial real estate- particularly in the major cities.
- Look for major retailers to close stores in areas where crime is rampant and the consequences are not meaningful for those committing the crimes..
- I believe there will be bankruptcies in companies that many will believe could never happen. This could lead to a panic and a rush for the exits as many investors will be left wondering “Who’s Next?”
I believe that 2023 will be a year of extraordinary chaos and also of extraordinary opportunity. If you are positioned correctly the opportunities will likely show themselves. If not positioned correctly it is likely that 2023 could bring the same pain- and possibly greater- than we witnessed in 2022.
Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
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