According to my tradition I present you with an account of the forecast I made one year ago. Eventually everyone can write his/her own predictions and forget about it in few months.

Here no one takes prisoners. Forecasting is not an easy task but if one wants to be in this business a healthy reality check is there to stay. This document I divided in two parts just like I did with forecasting – geopolitics and financial assets.

Written in italics is my forecast and regular font presents the follow up comment.

Let us get to work then.


1. USA

“In 2015 we all will be witnessing further alienation of Washington. Symptoms starts with open and active opposition to expansive policy of the US both in Europe (overt veto against sanction war) and in Asia. Japan being an exception – for at least 8 months.”

Comment: European politics has been dominated by the US. Prolonging sanctions and pushing them through without any standard procedure. To silence attention of media and what comes next public debate, decision itself was made on the level of ambassadors of respective EU members. Despite wave of protests in Germany, Czech Republic or Austria verdict had not taken any of those voices into account. Unfortunately it is clear confirmation that the US has very strong voice in shaping policy of the old continent.

Zone where Washington is visibly losing its grasp is Asia dominated by China. Heavily promoted by the US the TTIP that avoids China and Russia loses chances to be introduced whilst both the New Silk Road and the AIIB are getting more international traction. Worth noting is the fact that importance of a conflict between Japan and China over Senkaku islands totally shrinked.

“Colonisation of the US by Chinese have to accelerate. Their systematic buy-outs of companies, airports or farmland in long-term will re-industrialise North America but in 2015 I see no way unemployment dropping by 1-2%.”

Comment: Level of China’s buy outs – companies, farm land and real estate – is still high although it fell by a small margin. This drop happened during second half of the year and coincided with China’s authorities closing bank that enabled transferring money outside China. Unemployment in the US counted with our European methods is peaking at 22.9%.

“Intensification of movements that fight TBTF banks and the Federal Reserve. Main protagonist in this cleansing experience may be Senator Elizabeth Warren. Claims of return to a republican dollar issued by the US Congress can be found from time to time in an alternative media. Group still will not get traction as long as nearly 95% of population believes that the FED is governmental institution.”

Comment: Momentum gained by those committed individuals is bigger than I was expecting. More and more information is breaking into mainstream media.

“The US Congress will not agree for the IMF reform that takes away veto right form Washington. Adding yuan to the SDR basket is another big point that is a big ‘no’ form America.”

Comment: The US Congress did not consent to revocation of veto right by the US. Reform of the IMF has been done at the expense of the EU, the UK and Japan.

“The biggest threat to the financial sector in the US is energy sector bond bubble. At the end of 2014 Shale industry was indebted for over 2 trillion USD. This is triple the worth of the MBS worth (Mortgage backed securities) in 2008 when they triggered recent economic meltdown. Should oil stay below 60 USD and natural gas below 3,5 USD many companies will inevitably go bankrupt.”

Comment: Companies from the Shale sector reserve over 83% of their revenues for debt servicing – already rated as a ‘junk’. Dozens of companies filed for bankruptcy that surprisingly still made yield of shale bonds hold above the average. For the bubble to burst we need more bankruptcies, at least few more.

“In my opinion the FED do want to start their printing presses. Financing federal deficit of 1 trillion and keeping up the US government debt bubble has to be done from someone’s pocket. You can play the markets for so long as a mystery buyer from Japan or Belgium but in the long run the FED will intervene and ‘solve’ this problem. Alternative? Going bust and uncontrollable nosedive of financial sector. Price no one wants to pay.”

Comment: The FED did not start printing. Still it is rolling debt and reinvesting interest from them in further issue rounds but officially they did not start QE.

2. Europe

“Economic sanctions and recession will be felt ever more harshly on the old continent. Even Germany can face recession. Practically every European country is on the brink of social unrests. To keep them at bay governments will use old trick – ‘incoming war with Russia’. Another ‘Charlie Hebdo’ attacks should be studied carefully as it’s a great excuse for politicians to legally take civil liberties from people. Fortunately propaganda will achieve goal opposite to one planned – anti-governmental and anti-EU trends being strengthened. Moreover politicians will start talking openly about leaving NATO. Spain and UK elections could shock with Eurosceptics scoring very high. Social unrest due to anti-EU and anti-governmental agendas gained. Trend of immigration policy decisions can only worsen this situation.”

Comment: Official GDP growth in the EU rose to 1.6% year to year. Unemployment fall to 10.7% but this does not stop the youth (under 25) unemployment to hold above 22%. Germany is not yet in recession. Their growth is estimated at 1.8%. Attacks in Paris gained media attention and served as perfect excuse to introduce martial law. Around Europe anti-immigration views are gaining. Still we have not seen win of Eurosceptics neither in the UK nor in Spain.

“Austria, Czech Republic, Spain, Greece, France, Slovakia and (possibly) Germany may oppose economic sanctions.”

Comment: Many protested, farmers, entrepreneurs but at the end they all were ignored by media and politicians.

“Only if sanctions warfare will be over I see Germany and Russia fall into each other’s arms. China is already on the opposite pole to the US which also will attract Merkel and Putin to solidify their positions with Beijing. For other reasons Angela Merkel government loses public support.”

Comment: Sanctions war is still going strong. Merkel is losing in polls but not fast enough to make her desperate and actually do what needs to be done.

 “The big unknown is Greece struggling with debt restructuring. Printing press of the EBC for the debt being rolled is now blocked by Germany. Both Berlin finally unchain Draghi and accept printing Euros and further financing Greece or creditors (Germany, France, Italy, and Spain) accept some form of compensation for debt relief.”

Comment: Germany agreed to print. All junk debt is bought by the EBC as there is (surprisingly) no other buyer.

3. China

“Beijing continues very level-headed policy of internationalising yuan. Thanks to global demand for yuan The People’s Bank of China can go unpunished with printing RMB and buying material assets all over the world with their currency. Accumulated throughout the years huge dollar reserves are also used for that.”

Comment: Chinese economy in last year was the 3rd fastest growing in the world right after India and Ireland. Officially it grew by 6.9%. Export from China fell by 15%. Still current trade balance strengthened, in other words the excess of export over import is bigger than year before. Reason? Lower price of mineral and energy commodities.

“In 2015 Chinese will speed up their buyouts of land, real estate and corporate takeovers in Australia and Europe. Additionally Chinese economy has to accelerate due to low commodity (especially energy) prices. Several times bubble in real estate in China will be mentioned but reserves of their central bank are enough of the dam to stop this flood from spreading onto other sectors.”

Comment: Although it is hard to estimate how many acquisitions have Chinese made but one is sure – limits in transfer of capital outside of China cannot be helpful here. What we know is that cities when real estate price tags were going up are those where majority of clients are from China.

“Regarding lack of the IMF reform China cannot hesitate to us the AIIB (Asian Infrastructure and Investment Bank). This is 100 billion USD capital (aiming at 200 billion or more) to build the New Silk Road and creating common Eurasian trade zone. Hitting two birds with one stone: alternative for the TTIP and maritime trade secured by trade routes guarder and controlled by the US NAVY.”

Comment: No IMF reform. China struck US with devaluating yuan. After two months of a brawl yuan has been accepted in the SDR. The New Silk Road is accelerating and thanks to that US NAVY is diminishing in importance to world trade.

4. Russia

Economy deteriorating only by small margin. Low oil price (expressed in the USD) is not enough to bring down 18% hydrocarbon dependent economy. Note that in 1998 it was 36%.”

Comment: Russian GDP lost 4%. Do not look at oil price alone, it was drastic slash in industrial commodities prices that Moscow felt more than ever.

“First half of the year we may see riots in Moscow finances by the West. Goal? Obviously toppling Putin and hoping for more puppet style Yeltsin. Coup must be organised quickly before low oil price fuels China economy - number 2 and a threat to the US hegemony. After few weeks of media-driven coverage everything will be back to square one and Vladimir Putin will come out stronger than ever from this confrontation.”

Comment: Vladimir Putin solved the prevented anything from happening. Deleting hybrids founded by Soros effectively making it immune from any sort of Maidan 2.0 as whoever is left cannot pull off this without external funding.

“Many countries can hear Russian offer aiming at disrupting the EU and NATO. Good example is Greece – ‘leave the EU and sanctions are gone’ deal.”

Comment: If Russia did extend their hand to someone than it wasn’t effective at all. Moscow by sending troops to Syria would give reason for NATO to consolidate.

“Big unknown? Internal situation of the Russian Central bank. Being outside of Putin’s control it makes it a tasty target. Should Russian government control it we can await for changes in oil and gas trade. 20/80 ruble, dollar payment structure could help rebuilding value of Russian currency. If positions of the central bank and people around Putin will not converge further decline of ruble is in order. In crucial moment new alternative currency may be presented, controlled by the government and being based on commodity (e.g. energy resources). Key in the whole process is starting SWIFT (US controlled) substitute – which is supposed to start around May/June.”

Comment: It seems like people around Putin still do not control central bank. Ruble lost another 25% against dollar and this is despite 11% interest rates. SWIFT alternative was launched in the second half of 2015.

5. Ukraine

“In my opinion first half of 2015 will only make situation worse – coincidentally with manifestations in Russia. The West will play Kiev and arm it just like Russia will do to separatists in Novorussia. Collateral damage in civilian casualties will be immense.

Lack of coal, gas, means of payment will initiate another revolution and change of government after which we can see normalising of relationship between Ukraine – Russia and Ukraine – Novorussia. Novorussia will stay as highly autonomous Ukraine district.”

Comment: Fortunately armed conflict slowly calms down. Ukraine was marginalised strongly by Syria’s situation. We have seen few attempts to restart clash between Eastern and Western part but due to Right Sector disobedience Yatsenyuk has gigantic trouble even without war on the international headlines. Another bankruptcy of Ukraine (restructuration of the debt) and before the year ended oil was cut from her. Government still was not kicked out.


“Initially being a product of marketing department of the Goldman Sachs now evolved with China and Russia playing main roles. Cooperation between India, Brazil and the RSA looks worse than it should.

Transformation in 2015 looks like this: originally we had 4 countries aiming at tight cooperation but now BRICS are joined by those who seeks alternative to bankrupt West. Main role playing Turkey. Although being NATO member and recent EU membership bid will be lured by cooperation with bigger group – BRICS. Another player playing in anti-dollar team is Iran.

Controlled by China the Asian Infrastructure Fund will make those economic ties closer. United States Dollar as a trade currency will be marginalised in exchange between those countries with yuan taking over and other local currencies taking their shares.”

Comment: BRICS internal situation stayed the same. Cooperation between Moscow and Beijing develops continuously while other states focus on their internal issues. Turkey did not connect to the US and their existence in BRICS is of low probability. Iran competently balances amid the US team and the Eastern team with Russia and China

7. Germany

“Key player in Europe blocked for 4 years direct print of euro. In 2015 they will soften this position and enable the ECB to increase supply of money to buy bad debt. Finally bankruptcy / dropping euro by one country will inevitably draw conclusion to this project of common currency. On the other hand organised printing not only buys time but also make German get leverage for their change of mind.

In the event of the EBC printing money to buy junk bonds of euro bankrupts in 3-5 year perspective we will see EUR in much changed shape. Germany understands perfectly consequences of the currency collapsing not to stick for long enough to be exposed to this risk. In the long term we may see much probably return to German mark or replacement of euro for new ‘Northern euro’ encapsulating Germany, Austria, Finland, Netherlands or Luxemburg rather than Germany sinking together with Eurozone.”

Comment: Berlin gave consent to print euros. Before 2016 Merkel requested from Greece handing over control of material assets (e.g. airports) for debt restructuring.

“Foreign policy is defined by ever increasing pressure on politicians to end sanctions against Russia. Finally German economy is set to export and loses huge billions due to US sanction war. It is possible to see softening sanctions being leveraged for accepting printing euros.

Nevertheless if Merkel’s government does not change its angle towards Moscow she will be pushed out of politics soon. Sanctions are hurting business a lot. Companies require firm actions – when sponsors of ruling class do not see results they change political representation for one that solves their problems.

In general Washington – Berlin relation is deteriorating. With Americans ‘refusing’ giving back gold deposited in New York and wiretapping German politicians by the NSA we see a conflict growing. Printing euro and saving Southerners is constant struggle. What is more the US has nothing to offer in exchange for their ‘requests’ apart from extortion and scaremongering with the US Ramschtein base.

Outcome of policy conducted this way can only be one – Germany falling into China’s orbit and rebuilding economic relations with Russia. Adding the biggest economy of Europe to create trio with Russia and China has to be the last nail to the US coffin.

To sum up, Germany was and still is an area of silent intelligence agencies war with US in one corner (dirt on politicians due to wiretapping) and Russia (organising protests like ‘End the FED’ and information war conducted through the Russia Today outlet). Finally I must remind that since the end of Second World War Germany just like Japan are not sovereign country but still depend on the US.”

Comment: German export even with sanctions is fine. Washington’s policy line is now trampling anything else in Berlin. Wiretapping scandal was silenced, similarly to topic of sanctions. Relations vis-à-vis Moscow worsened thanks to the above.

8. Persian Gulf

“The Persian Gulf is experiencing silent war and the stake is control over Saudi Arabia. Several months since the beginning of 2014 Saudi family returned to trade cooperation with the US for military security.

Still in 2015 Arabs may break connections with the US as it is getting ever closer in relations with China and Russia. Symptomatic to this will be showing off public executions in mass media in turn officially accepting that it was Saudis who for years financed terrorism. Incremental change and making it an open conflict for power. Who control Arabia controls OPEC and who controls OPEC in turn takes charge of petrodollar having in hands fate of the US.

Apart from the alliance change I await warming relations between Saudis and Iran facilitated by China. Now Israel and the US are the only beneficiaries of the aforementioned clash and their grip is visibly loosening.”

Comment: Saudi Arabia expertly playing both the US and China. Washington is ok with Riyadh bombing Yemen while Beijing intensifies trade cooperation in the region making the kingdom more independent from Americans with each year. Without reduction of oil supply correlated with oil price slump (done in the last 20 years) Saudi Arabia singlehandedly dismantled the OPEC.

9. The IMF and the SDR

“Having the US Congress composition of today the chances to agree on the US losing veto right in the IMF and change of the currency basket of SDR are minimal. Nevertheless the IMF will not wait forever for Washington to accept the 2010 agreements. Both some pivotal changes await the IMF or its role and role of SDR will be diminished. The IMF management announced their plan B for an emergency of the US not consenting to proposed changes. To put it plainly, BRICS have the biggest capital reserves on the planet although being marginalised and main players the US, the EU, the UK and Japan are in debt over their heads. My take: the IMF meeting planned in October 2015 can finally bring Yuan into the SDR but it is also possible for Brazilian real and Indian rupee. This can not only downgrade status of the EU but also EUR and GBP as reserve currencies.”

Comment: Plan B is in effect as the US did not agree to resign over their veto right. Yuan was added to the SDR at the expense of EUR, GBP and YEN. Share of the USD remained practically untouched.

10. Central Banks

“In 2015 I believe interest rates practically all over the world will stay on their minimum/zero levels. Some countries like Switzerland in defence against excessive influx of capital can introduce high negative interest rates. In other words Swiss can asked to pay them to use their currency as a deposit of capital.”

Comment: Low interest rates did not stop Canada, Australia and the EU to further lower them. The Swiss Central Bank defending against immigration of capital indeed introduced negative interest rates (the lowest in history).

“The FED will find enough number of excuses not to raise interest rates. The EBC has no other choice just like the Bank of England and the Bank of Japan. All of those will leave their rates at minimums.”

Comment: Two weeks before the New Year’s Eve Yellen increased interest rates by 0.25%.

“About printing money, in H1 it will be the Bank of Japan whose printing press can record highest speed. Sustaining this way global debt market. Next in limited fashion but still, the EBC will follow effectively lowering value of EUR vs USD. Euro can minimally fall due to political chaos in Greece or other South bankrupts. Strong USD coupled with low (official) inflation is the initiating factor for another round of QE in the US of A.”

Comment: The Bank of Japan during first half of 2015 was number 1 when it comes to speed at which they increased supply of the currency. They have done that to sustain not only debt market but also stock market. In Aprlik the EBC started printing further plummeting EUR. It made EUR/USD equal 12 year low.

“Having nearly 1 trillion budget deficit, public debt equivalent to 100% of GDP and USD being dropped as reserve currency there is no other option than for the FED to start another QE. Question is will they do it officially of covertly in ‘Belgian style’?”

Comment: The FED did not start another QE. We have not heard about back room US debt buy out.

“In 2 – 3 years I think derivative market will significantly shrink. Leverage 1:70 that we experience today is fatal for any financial institution. Fortunately more people form the ‘circles close to management’ comprehends the scale of this mess and level of leverage should slowly fall into safer levels of 1:10. For such serious changes we are bound to wait at least a decade. Process will start in 2015.”

Comment: The Bank of International Settlements publishes data about derivative market twice per year. We do not have data from December 2015 yet. Comparing records from June 2014 -2015 derivative market shrinked from 629 000 billion USD to 552 000 billion USD.

11. Casual forecasts

a) “China and Russia form their own rating agency, independent from the US-controlled systems.”

Comment: New rating agency was created by China alone.

b) “For the first time we will hear about trends towards replacing currencies with one’s under government controls. Obviously a process rather than an event but movement should start this year.”

Comment: In the United States we have seen effort to support transferring control over currency to government but it is marginalised for now. Switzerland called for referendum about revoking the privilege to create money from commercial banks.

c) “Intensification of voices against occupation of Palestine by Israel.”

Comment: Greece and Malaysia officially called for end of Palestine occupation.

d) “Talks about unification of Koreas.”

Comment: China became the biggest promoter of unification of Koreas. Thanks to that first talks had already happened. This process was stopped by the ‘forest shooting’ incident on the Southern part of border.



1. Stocks
„Generally 2015 will be a year of slow capital flight from stock markets. The developing markets are now cheaper (P/E, P/BV) than already developed ones, they bear more risk of imminent crisis. I believe that reduced position in the stock markets is a viable action. Prices in most markets are high and with few exceptions stocks are expensive now.”

Comment: After few fat years today we observe beginning of capital evacuation from stock markets. Prices rose for first four months last year and then went opposite direction. The MSCI index for developed countries lost 9% since and for developing nations it landed 24% lower (we officially can say ‘hi’ to slump). Counting year to year, prices lost 3% in developed states and 16% in developing.

“Cheaper stocks can be found in Russia, but the Ukraine situation must be resolved for some hikes in prices.”

Comment: Circumstances never clarified but nonetheless, Russian market was one of those which from dollar point of view gained a little bit compared to last year.

“Small businesses in Indonesia (INXJ) are paying 4% dividend while being cheap. China’s stocks were cheap but after recent climb of nearly 50% they sit on the expensive shelf now.”

Comment: Prices of small firms in Indonesia were losing practically whole year. Chinese shares gained spectacularly between March and July to end up also with an ungraceful fall. Comparing both years they ended lower by a small margin than the last year.

Unfortunately, quite a lot of stock markets are correlated with the share prices in the US. In the situation that desired collapse will finally materialise this will push prices down in the whole world.”

Comment: S&P lost 12% during August which may be a chink in the armour of never-ending boom believers. This translated into red colour in the markets around the globe.

2. Bonds

„If I need to estimate yield of the 10 year US bond at the end of 2015 I would aim at 2.4%. A lot higher than it is right now and way lower than analysts’ forecasts.”

Comment: Last year yield of 10 year US bond rose from 1.8% to 2.3%. I was close.

„Above circumstances makes shale bonds good option but only if you short selling them.”

Comment: Shares High Yield Corporate Bonds ETF lost in 2015 10.2%

3. Gold

„I think that losses that put the price between 1050-1100 USD are already behind us. There are number of circumstances that underpin this forecast. Every single time prices of precious metals were record low, the demand in China, India, and Russia was exploding. Today it is extremely hard to get big volume trade with official price. For a cartel it is simply easier to allow steady increase of gold price to acceptable 1650-1700 USD rather than sell out whole reserve and control its price without physical collateral. During last three years multiple attacks on the gold price pushed weak, short-term investors out of this market.  The contemporary price for those who stay is not the main objective. Many things suggest relative ease in terms of price. After big hikes there will be time for the price to correct itself and land around 1200 USD. Again, next 2-3 months on the rise to 1350-1400 USD and adjustment. This scheme will repeat until end of the year when traditionally the price of gold and silver will be attacked.”

Comment: Gold price indeed fell into area of 1150-1200 USD /oz and stayed there till July. Afterwards they lost again to the level of 1050 USD/oz. Year took 10% off the gold price.

4. Silver

„Assuming that gold will rise up to 1650 USD we can by correlation imply that price of silver will get into range of 30 USD and the gold/silver ratio to fall to 55. In my opinion this assumption can hold and it is realistic.”

Comment: Missed diagnosis. Price of silver lost 14% (in USD).

5. Mining Companies’ Stocks

“Stocks of companies that works in the mining sector guarantees big leverage compared to the price of the metal itself. This is due to the fact that when the price of the metal changes by 10-15% the corresponding profit/loss of the company changes by 30-40%. (…) When it comes to forecast, in incoming year the indexes of big mining companies (GDX) will rise from its levels today by 80% and indexes of small companies by 100-140%. There is one ‘but’ here! Stocks here are leveraged by a significant factor(…)”

Comment: Results of further drops of both gold and silver GDX (big companies) and GDXJ (small companies) lost respectively 27% and 21%.

6. Oil

“The most manipulated and affected by speculation prices can be found (apart from precious metals) in oil. When you look at it the reason is evident – trade war with Russia. In my opinion prices we see now will not hold for longer than 6 months.”

Comment: Brent price in first quarter of 2015 rose from 48 to 67 USD per barrel. Then it dropped to 36 USD (today). Last time we saw this level was 11 years ago.

7. Natural Gas

“Natural gas turns from being investment asset into one of very speculative nature. In the past I always tried to buy cheap gas and wait until more investors recognise it. It was in 2014 I needed to sell it twice to buy it out at lower price as its price changed so drastically. Markets have to wait for the comeback of long lasting high prices. Still I will be surprised if natural gas in 2015 does not break barrier of 4USD/mmBTU.”

Comment: Natural gas continued its fall ending its run at 2.33 USD today.

8. Industrial Commodities

“Industrial resources are THE big mystery for me in the coming year. On the one hand, we have recession on global scale that drives demand for any industrial resources down. Copper price has dropped 45% from its peak, lead lost 55%. On the other hand, central banks all over the world increased supply of currencies and as a result a lot of unused capital will find its place in the market of industrial resources. It is hard to say whether it is good time to enter this market. Personally I would wait for the air to clear out for better assessment.”

Comment: Commodities index lost last year 27%. As of now it is below 2009 panic bottom level.

9. Real Estate

“In general I stay away from real estate. Main reason being unprecedentedly low interest rates pushing prices of properties up. What is worse, most countries experience bigger inflation (in real money) than the level of their interest rates. (…) Leaving aside global trends of 2015 prices will still be on the rise in Chinese enclaves of Toronto, Vancouver, Sydney or Auckland. Over Chinese millionaires diversify their portfolio by buying properties there for cash.”

Comment: Real Estate prices in locations favoured by Chinese like Toronto, Vancouver or Syndey rose by 8%, 10% and 12% respectively. Other ‘hot’ locations like London already started experiencing falls. S&P Global REIT index representing real estate prices over the globe lost 4% last year.


With final remarks I would like to wish you all the best for the New Year.