On March 9, 2015, the ECB is going to begin a QE program that has them purchasing sovereign debt until at least the end of third quarter in 2016. Unfortunately, this program is probably going to be too little too late. The increase in debt and global QE will do little to stop the deceleration of the global economy. Deflation and a contraction in precious metals and other commodities will likely be coming.
Already, oil has slid from $100 to the $50 range but could see $20 a barrel if the deterioration I’m forecasting appears. Copper will fall below $2.00, and the price of gold and silver could see $900 and $12, respectively. Even these forecasts may be too high–$700 for gold and $10 for silver is not out of the question.
Silver and gold have seen two major turns down since market highs that occurred three years ago. I believe we are going to see a final third leg down before these precious metals continue their secular bull phase. The time to buy silver and gold is going to be later in 2015.
Right now, TLT has seen a sharp correction and is poised to continue its uptrend. With the stock market at all-time highs and the threat of deflation looming, TLT is probably going to be considered a safe haven and attract investors once the snowball effect of global economic contraction occurs. This could send the long bond to a 1% interest rate.
I will be surprised if the Fed raises rates this year.