The following is a guest post by fellow investor mobile guru, whose interest lie within the mobile revolution, start-ups & IPO’s, and intellectual property.

The 2012 year opens with perhaps more uncertainty than any previous year in recent memory. The economies around the world are weak at best, Iran is test firing missiles in the Gulf and it’s an election year in the United States. The weak economy and US election year point to QE3 sometime before midyear not necessarily because it will actually do anything but psychologically it could give the impression the president is trying to do something to get the economy back on track prior to the election. The two basic factors that drive all investments fear and greed will cause more volatility than ever before. With that in mind here are several predictions for the stock market, oil and natural gas, precious metals and commodities. Keep in mind the volatility will likely cause a larger number of short term swings of +/-3-5% such as the DOW jumping +/-300 points at a time which has driven many small investors away from the markets.

DOW

I see the DOW in another tight range for the year of between 10,500 and 13,000. For individual stocks stick with those that are anticipating high growth independent of the rest of the economy. I pointed out several companies that are anticipating huge revenue growth in the Mobile Market, Biotech area and oil exploration in a recent Seeking Alpha article Top Growth Stocks For FY12.

 

Oil and Natural Gas

On the oil and natural gas front I see oil in a range between $90 per barrel and $120 per barrel. The wild card in this equation is going to be Iran. If Iran and the Untied States get into some type of skirmish expect to see oils recent record high around $147 per barrel taken out. Last years bottom was around $80 per barrel but I do not see it going that low again as the overall trend remains upward. Natural gas which is hitting 3 year lows seems like a safe bet for a rebound as winter is finally arriving in most parts of the United States which will greatly increase usage back to normal levels. Longer term, the US could be a significant exporter of natural gas. During October 2011, world natural gas prices averaged $4.12/mcf in the United States, $11.42/mcf in Europe, and $16.75/mcf in Japan. Due to rising production and supply, industry experts believe that the US may become the leading exporter of natural gas in the world.

Silver

Silver began the year near $30 an ounce, spiked to just under $50 in April, and has been all over the board since then. The year was marked with extraordinary volatility and silver’s bipolar behavior is expected to continue. It shows tremendous support in the $26 range and could easily take out its high of over $50 an ounce by year end.

Gold

Gold should find a good base in the $1500 region and continue it climb to over $2000 per ounce by year end. Central Banks continued to load up on Gold during 2011, and this trend shows no signs whatsoever of abating. In essence, this will provide a floor of support beneath the Gold price. The fundamentals of the gold bull remain intact and point to higher prices. The bottom line is gold is becoming harder to find, grades are getting lower and this directly impacts costs. Putting a mine into production can take 8-10 years and these new mines are going to require a high price for their gold output or they will never be put into production.
Wheat

Wheat put in a double bottom and then pushed above its downtrend. Technical indicators point to monster support at $5.7. The risk/reward profile does look attractive, and if price drops low enough, farmers stop planting. Wheat almost always sells for $1 premium to corn, so we’ll see if Mr. Market corrects the current price anomaly that is in place….corn and wheat trade within pennies of each other right now in the $6.50 range.

Conclusion

I expect 2012 is going to be one of the most volatile economic years in recent history. The US dependence on foreign oil is a wild card in any type of economic recovery. Oil prices over $120 per barrel will have a significant dampening affect on any type of recovery.

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