Episode Details

Before we get started today, I just wanted to flag two articles from last week. First, my special report on helium. And, second, Dr John’s latest on bonds. Both for paying subscribers, there is lots of valuable info to be had, so please check them out.

So to today’s piece … Every December Saxobank puts out ten outrageous predictions for the year ahead.

It does not claim that these predictions will happen, but that they could happen. The purpose of the exercise is to stimulate thought, discussion and debate.

And that is just what Saxobank has achieved because today we consider its ten outrageous predictions for 2023.

The 10 outrageous predictions for 2023

I went back to look at their predictions for 2022 to see if any of them actually happened. 

The very first was “The plan to end fossil fuels gets a rain check.” Net Zero has not yet been abandoned, but this year has certainly seen a quite dramatic change in attitude towards fossil fuels. 

The second was “Facebook faceplants on youth exodus”. Facebook has certainly faceplanted. But I wasn’t aware the youth were ever on it.

After reading the first two, I was about to bestow Nostre Damus status on Saxobank, but the rest of their 2022 predictions did not really pan out. I won’t go through them here. They are in the past. Nobody can do anything about the past. It’s the future we need to worry about.

So to 2023. Saxobank describes the year as a “war economy”. The days of low-interest rates and a harmonious world built on renewable energy, equality and independent central banks are gone. Now “sovereign economic gains and self-reliance trump globalisation”.

That’s the macro. Onto the specifics.

Prediction one. The pressing global energy needs drive the world’s richest to launch an “R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb”.

Well, you can bet your bottom dollar that they are talking about it. But I don’t think it happens. Not just yet, anyway. Somebody would have to organise it.

Prediction two says that, due to the political stalemate in France, and the rise of Marie Le Pen since the 2022 elections, President Macron resigns. 

I don’t see that happening either. France’s daft electoral system is what enabled him to be President. The political stalemate means he stays President. Presidents like Macron don’t resign unless they are forced to. Too big an ego. Though this McKinsey affair does seem to be hurting him.

The gold price surges to $3,000

Prediction three is that gold goes to $3,000. 

Now you’re talking my language!

“As markets and central banks realise that the idea that inflation is transitory is wrong and that prices will remain higher for longer, gold is sent through the roof,” says Saxobank.

To rocket, gold needs inflation expectations to be markedly higher than government bond yields - negative real rates in other words. In the US we do not yet have that. Saxobank is describing a situation where we do.

I’ve got to be straight with you guys. I don’t think gold goes to $3,000 in 2023. It’s got a better chance of going to £3,000.

Prediction four suggests an EU army is coming and that it forces the EU down the path to full union. 

We know that, despite denials, the EU has been talking about an EU army for years. With that man Mr Putin on the doorstep the need gets rather more pressing. It’s possible but it needs the US to take a backward step in its global policeman role, something President Biden and the US military-in