Top 3 Forecasts

I love cycles and spend considerable time to understand it. I was exposed to this work when I had a chance of working with Geoffrey Moore, a leading guru in this field at the early part of my professional career. I heavily indebted to him, and thus far, his works have done pretty well for me.

As part of my half-yearly secular review, I put forward my Top 3 forecasts for those, who believe!

The first big move in gold in the late 1970s and now we are in the second big move. However, I see possible correction here in 2009, then I see gold moving higher in 2010 and still higher in 2011. The most recent peak, we saw in gold was in 2008 and already central banks around the world are fighting this economic crisis tooth and nail, printing money like there is no tomorrow, hence driving hundreds of billions, perhaps, trillions of dollars worth of frightened money into gold, silver, platinum, oil and other assets. So for short term traders, I think this is an opportunity to make money on the downside and for longer term investors, I think it is going to be an opportunity to add to the core holdings.

And in the case of US dollar, I have been the bear for as long as memory serves. Cycles suggest an 11-year decline of US dollar that does not end until 2012. Right now, in parallel with a gold correction, I see the likelihood of a dollar rally. In this regards, I would keep at least some portion of my money out of the dollar, putting it into stronger currencies like the AUD, NZD or the Swiss franc. The intermediate swings are too big and too regular to ignore.

I expect interest rates to move higher, especially those of high-grade paper but a new decline later this year and ending in 2012. Of course, low grade paper would probably move closely the pattern in the stock market in terms of price. In relation to the equity, I would take a very cautious, balanced, long-term to play the big sweeping negative trend in the stock market over the next several years.

What we are witnessing today – right now – is merely the calm before the big hurricanes hit. The combination of the 20-year economic cycles and the 500-year geopolitical cycle – a major power shift from East to West and or West to East, which is now the case, both crushing down on the economy in one singular time frame.

I see this as one time in the lifetime when we can build a great fortune like a handful of smart investors did in the great bear market of the 1930s, and then build still another fortune in the great bull market that follows.