Investment Forecasts for 2010 in the US

The investment forecast for 2010 according to a John Myers report – Washington is trying to jumpstart the economy with unprecedented amounts of money. Yet the old economist adage holds, “It’s like pushing on a string” said John Meyers, editor of Myers’ Energy and Gold Report.

Will the Economy Improve?

Unless there is demand for money by willing lenders and borrowers the economy is not going to improve. What is going to happen is a train-wreck for the dollar. The dollar is more than 14 percent off its March peak, and some worry that additional losses could prompt foreign investors to start selling dollar-denominated assets. But while a sluggish U.S. recovery and low interest rates mean the dollar may have further to fall in the year ahead, very low inflation means financial crisis is far from imminent, said Henry Kaufman, president of Henry Kaufman & Company, Inc.

The Retreat of the Dollar!

“There has been no dollar crisis,” Kaufman said. “The retreat of the dollar has been gradual, it has been orderly and it has not had an impact on the securities market.”

“If the dollar continues its slide in 2010, as I think it will, it will break below its 2008 lows of 71.5 – when that happens the dollar will be in uncharted territory. Just how far it could slump from here is anybody’s guess, but with offshore investors holding trillions in dollar assets, the dollar’s direction is of critical importance to everyone” Kaufman said.

Dollar: Look for an even weaker dollar in 2010. The U.S. Dollar Index is close to breaking down and losing all technical support. That could throw traders into frenzy.

Bonds: Expect a smash-up in the bond market as investors are now holding bonds that pay a pittance. To sell off its Treasury debt the Fed is going to be forced to raise interest rates which will throw bond prices into a tailspin. Higher rates will also be a stake in the heart of the…

Stock Market: The Dow Industrials are flirting with 11,000. My expectation is that the Dow may touch upon this level before higher rates drive stock prices lower. Look for the Dow to be under 7,500 by the end of the year. I expect an even worse year for the tech-packed NASDAQ. This year will be a tough year for investors unless they are in real assets, especially…

Precious Metals: Gold continues to shine, although expected profit taking will happen along the way. Washington and other governments would love to keep a cap on the price of bullion, but right now they have much bigger fish to fry. My expectation is that the Midas metal will top $1,500 per ounce before year’s end and silver will rise from the $17 range to $25 per ounce. That leaves us with one other key sector…

Energy: It is going to be a mixed bag for energy this year. In fact, oil could easily fall back toward the $60 per barrel range if interest rates increase enough to choke off the recovery. Still, world demand for oil continues to grow. I think that over the long-term oil prices are headed back toward $150 per barrel. That may not happen, however, until we are closer to 2012.