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12/29/14

Ten IKN random predictions for 2015

Here we go with the blog's official forecasts and soothsayerations for the year to come. After the effort in 2014 (politics good, financials ok, sport calls crappy) we're sticking to the same general format, a bit from each. After that 5.5/10 in 2013 and 6/10 in 2014 we'll be batting for 6.5 or above this year to keep the trend rolling, so here come the big ten that carry the hopes, fear, dreams and stuff of your author in the 12 months to come. As usual, you get a mix of financial, political and sporting forecasts, most with a LatAm flavour:
1) Gold to trend up gradually, with a rough U$1,400/oz target for some time at the end of the year. For sure with the normal wobbly stuff along the way and I wouldn't bat an eyelid to see it go under U$1,100/oz again at some point or other, but talk of its utter demise (South of 1k) strikes this author as plain silly talk from people who don't get the sector.
2) The gold/silver ratio to stay high, by which we mean 1/70 or above. It can spike down briefly under that along the way, but I don't expect it to trend down meaningfully. When they call silver "the poor man's gold", the real message is "the choice that poor people make". Semi-on-topic, I'd definitely hold gold miner stocks over silver miner stocks this year.
3) Uranium will go nowhere again. We're in the high $30s today, it could fluctuate up into a 4-handle, down through to the 2s, but the prediction is to watch it flatline in general terms. Uranium's going the way of the buggy whip, the world has moved on from the fallacy of "near limitless/near free energy" and knows how expensive these things are to decom, the type of cost that's built into projections by serious countries (China an obvious exception to that category). 
4) Barrick (ABX) will merge with Newmont (NEM). It's long past fusion date for these two. The sooner the outsized self-important egos on both boards start caring less about themselves and more about their shareholders, the better. 
5) Copper to maintain around U$3/lb average for 2014. This is perhaps the toughest and most important commod market to call in the year ahead. Also (and to push my luck on the prediction) it wouldn't surprise me in the least to see Cu weak in the first part of the year, trending higher in the second part. If it exits between $3.10/lb and $3.20/lb I'd be a happy long.
6) Venezuela's government to be bailed out by China. It's no secret that Venezuela's finances are under severe pressure due to the drop in oil prices, but it's not going to lead to a fall in the government in 2015 (sorry haters, it's the way it is). China wants crude oil and has dollars, Venezuela wants dollars and has crude oil, the two countries get along just fine, the synergies are obvious. The question is how much Venezuela will have to cede for the bailout.
7) It's a difficult call this early in the process, but I'm contractually obliged to make a call on the Argentina presidential election so the forecast is for Daniel Scioli to be the next President of Argentina. Main opponent is Massa, in with a squeak is Macri, outsider Randazzo, the rest are just noise. But it's still a very fluid situation so this one is only tentative. For the record, the Argentina vote slated for October is the biggest single political event in LatAm this year and arguably the most important one in terms of regional repercussion potential for the last five or even ten. It's going to be big, noisy and full of FpV/CFK-hate in your English language press (who'll be rooting for Massa and/or Macri).
8) Argentina to win the Copa America 2015, the equivalent of the European Championships for the continent, held in Chile in June/July this year. If that doesn't turn out right, hosts Chile must be in with a strong chance and I'd place them as clear second faves today. FWIW it's easy to bet against a Brazil that will need a couple of years to re-build after its World Cup disaster (no other word for it). 
9) River Plate to win the Copa Libertadores (for those of you who don't know, that's the LatAm equivalent of the Champion's League trophy). This is the easiest forecast of the year. Vamo lo millo.
10) Argentina to beat Ireland in the Quarter Finals stage of the 2015 Rugby World Cup, held in the UK in October. How about that for a specific forecast? (Also, the All Blacks for the cup).