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12/23/15

Reality bites: Results of the IKN "Ten random predictions for 2015"

On December 29th 2014 we ran our annual "Ten random predictions" post for the year ahead. As we're now all done bar the shouting, it's time to check out how we got on in this edition. Here below come the original calls, the result and the usual polemic slant on scoring for the year (1, 0.5 or zip nada zero per item), And by way of reminder...
  • In 2013 we scored 5.5/10
  • In 2014 we scored 6/10
...so let's see if the improvement continues. First (in small script) you get the prediction as it appeared on December 29th 2014. Then you get the result and a line or three of views'n'news, so starting at the beginning with forecast number one...

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.
Score: 0.5. For sure the $1,400/oz bit was out, but the low end prediction was pretty darned accurate, as we saw the $1.1k breached and $1k hasn't been threatened. So I'll rescue half points on this one.


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.
Score: 1 point. This one couldn't have been closer to the mark, as a) the GSR stayed high all year and only once spiked under 70X and then only for one day.


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). 
Score: 1 point. It didn't see a 2-handle, it saw a 4-handle very briefly, but for the vast majority of the year it simply languished in the mid-$30s per pound, not going anywhere and getting no love.

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. 
Score: Zero points. This was my left-field biz call and it would have been an eye-opener if it had happened, but the turgid state of the mining sector put paid to the idea quickly and nobody's even breathed about the idea for at least six months. Nada here, move on.


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.
Score: Zero points. On this one I'm happy to say I saw the reality early and stepped away from major copper stock exposure, but back in December 2014 I was way too optimistic about the world and frankly, 12 months on, the call looks plain silly. And that's not a bad thing, keeps the ego in check.


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.
Score: 0.5 points. Indeed Venezuela was tipped for economic death this time last year by the chatter-o-sphere and indeed one of the things it did was get a big bung from China (rumoured to be around U$7Bn) in March which helped them pay the bills. But I'm only going to award myself half marks on this one because even I agree that the political situation in Venezuela is now looking unstable and the Maduro government is under real pressure from all sides.  How 2016 will go for the country is anyone's guess, but there comes a time when the right wing boys who cry wolf are going to be right. It could be next year.


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).
Score: Zero points. The shock political result of the year, Mauricio Macri came from a losing position in August, ran a strong campaign (while Scioli's was weak and lacked total support from the hardline Kirchnerists) and came from behind to win in the second round run-off. It's also one I got wrong more than once, because my confidence that Scioli would win it grew as the year went on and I started calling him the very likely winner from August onward. Shows what I know.


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). 
Score: 0.5 points. Yeah I know Chile won it, but as they beat Argentina in the final and I picked those two as the candidates, albeit in reverse order, (and I nailed the Brazil call) I'm going to award myself half a point. Because it's my blog, bite me.


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.
Score: 1 point. The most wonderful sporting moment of the year, as simple as that.

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).
Score: 1 point. I still can't believe I called this exact result correctly ten months before it happened (and reader NA can't believe it either). What you see above is exactly what went down in the Rugby World Cup and to get that result it wasn't just a case of picking the winner in the game, but being able to predict where each team finished in the group stage so they'd meet in the quarter-final. I rule.


GRAND TOTAL: FIVE AND A HALF OUT OF TEN. That's half a point lower than last year, the same as 2013. So call me consistent and on due consideration I may turn IKN into a sportsbook prediction service blog in 2016, as my sporting forecasts are way better than my stockpicks.

At some point next week I'll post the Ten Random Predictions For 2016, so until then I'll leave you to laugh at the thought of ABX and NEM merging.