It's that time of the year again, when I outline precisely what is going to happen over the next 12 months.
It's the Ninth Day of Christmas.
But this year I think the I' word - inflation - will make something of a return, so here are ten predictions for 2018...
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I always enjoy writing this Money Morning. I find it a useful exercise because it challenges any mental pre-conceptions that might have set in over recent months it makes me confront so-called recency bias, in other words.
A reminder of the scoring system: I get two points for a hit, one for a near miss, zero for a miss and minus one for an "epic fail".
I try to make my predictions as precise as possible, so that there's as much scope as possible to be wrong. They're mostly financial, and I like to throw in a couple of left-field ones as well for good measure. Some of my predictions happen and of course, some don't, although my record over the years hasn't been too shabby.
But let's cut the preamble and get straight down to the nitty gritty.
1: Sterling goes above $1.40
The bear market in the pound is well and truly over. Currently sitting at $1.33 as I write, I think $1.46-$1.48 is not an unreasonable target. But for the purposes of this prediction I'll say the high is above $1.40; as for the low, sterling does not go below $1.30.
2: Oil gets above $80 a barrel
Oil is in a bull market and the world hasn't realised it yet. In 2018 it will start to wake up to the fact, as Brent crude makes three-year highs. I have to say, I think $85 or even $90 a barrel are possible, but I don't want to get carried away. So I'll say highs above $80. The lows? I doubt it goes below $50.
3: The FTSE 100 breaks through 8,000
Buoyed by the higher oil price, and also by higher metal prices, in 2018 the FTSE 100 goes past the 8,000 barrier. Stronger sterling prevents it from really tearing away, though it doesn't go below 6,800.
4: The Bank of England rate doesn't get above 1%
Interest rates "should" rise by a lot more than they do, but any rises are tiny and glacial. We get one, possibly two quarter-point rises. A 1% Bank of England base rate is as high as it gets, even if inflation gets above 3% during the year.
5: Gold gets back above $1,400 an ounce
In 2018 gold surprises a lot of people by having quite a good year. It goes above $1,400 an ounce. This is a four-year high. I'm even tempted to say it flirts with $1,500, but I don't want to curse it, so perish the thought. It goes no lower than $1,200.
6: Gold miners are good-ish
In 2017 gold had an OK year it was up 12%, though it was overshadowed by the 18% rise we saw in the S&P 500, and of course, by bitcoin's gains. Gold miners, however, as measured by the XAU (the Philadelphia Gold and Silver Index), underperformed, with a paltry 4% rise. Will 2018 be the year when the miners finally start outdoing the metal? I've got a hunch it might be. But so many companies are so badly run, any outperformance is unlikely to be stellar.
7: Inflation means commodities in general see some improvement
Inflation becomes bigger theme in 2018 than it has been for a while, as all the money-printing and asset-price inflation we have seen since 2008-09 spills over into other areas of the economy. Commodities in general are one of the beneficiaries of this. I particularly like energy (I've already mentioned oil) and base metals, both of which have a decent year.
8: Theresa May is here to stay, like it or not
A combination of staying power and always taking the safest option means that Theresa May does not stand down, but is still prime minister this time next year. Nobody quite knows how or why; she's just one of those things that always seems to be there.
9: US stocks stay strong for now at least
In the US, both the Dow Jones and the S&P 500 continue their strong 2017s into the first half of 2018. I'm not sure where they'll be by the end of the year, but at some stage they'll both be a good 13%15% higher than where they are now (the Dow, for the record, is 24,800: the S&P 500 is at 2,600)
10: Bitcoin? You ain't seen nothing yet
Is this the year the bitcoin bubble bursts? It's already had five 80% corrections in its nine-year life will it see another in 2018? An 80% correction from its $20,000 high would take it to $4,000, which is still high a lot higher than most predicted at the beginning of 2017.
The problem I have is that so many people are calling bitcoin a bubble and most of them have never tried the tech that it's not inconceivable the mania continues for a lot longer. The consensus is for a crash and markets have a habit of flicking two fingers at consensus.
On the other hand, bitcoin at $20,000, as it was a fortnight or so ago, is insane.
So I have to make my mind up. Do I go stupid and say $50,000, or do I play safe and say crash?
To hell with it, it's Christmas. In 2018, bitcoin goes above $50,000. (I cannot believe I am saying that bitcoin goes above $50,000. That's how bananas things have got.)
Your sporty bonus prediction: England does OK in the World Cup
This crop of England players looks to be the best we've had since the 2002 squad. We've got two or three good players in almost every position. Our defence looks good. Our attack looks good. The midfield is OK. And, hopefully, the delusion that was selecting Joe Hart between the sticks has now passed.
Russian conditions will suit us better than, say, the Brazilian tropics. And we've got a moderately easy group. Further, the teams we meet in the next round are all beatable too. So we should get through the quarter-finals even if the players freeze and "good company man" Gareth Southgate is both uninspiring and unimaginative. But there we will meet either Brazil or Germany.
My prediction: England make it to the quarters, but no further.
Here's to 2018. May it be a belter.
Dominic Frisby (“mercurially witty” – the Spectator) is the world’s only financial writer and comedian. He is MoneyWeek’s main commentator on gold, commodities, currencies and cryptocurrencies. He is the author of the books Bitcoin: the Future of Money? and Life After The State. He also co-wrote the documentary Four Horsemen, and presents the chat show, Stuff That Interests Me.
His show 2016 Let’s Talk About Tax was a huge hit at the Edinburgh Festival and Penguin Random House have since commissioned him to write a book on the subject – Daylight Robbery – the past, present and future of tax will be published later this year. His 2018 Edinburgh Festival show, Dominic Frisby's Financial Gameshow, won rave reviews. Dominic was educated at St Paul's School, Manchester University and the Webber-Douglas Academy Of Dramatic Art.
You can follow him on Twitter @dominicfrisby
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