Following Doug Kass' Prediction Of A 25% Drop In Gold, Here Is How His Other Recent Forecasts Have Fared

Tyler Durden's picture

Last night Doug Kass appeared on CNBC's Fast Money and caught the attention of the few who were watching the show with his gloomy prediction that gold would drop by 25% in the next year. As we noted last night, Kass' "thesis" was nothing more than a recap of the bearish half of the "All that glitters" letter released by Oaktree's Chairman Howard Marks, and not even a mention of the bullish section of the letter. That's fine. In fact, we welcomed this development as it at least partially offset the bullish sentiment on gold espoused by Kass' partner at The Street Jim Cramer, whose glowing recommendation of gold has had us very concerned about the price action in the precious metal into year end: after all there is no surer kiss of death that Cramer liking something. That said, as for Mr. Kass' predictive abilities, we would like to present his prior set of forecasts, specifically his prediction for 2010 issued a year ago almost to the day. With a predictive "hit rate" of about 25%, it is rather safe to assume that gold's path to $2,000 and higher is probably quite safe...

Doug Kass' entertaining set of prediction for 2010.

  1. There is a glaring
    upside to first-quarter 2010 corporate profits (up 100% year
    over year) and first-quarter 2010 GDP (up 4.5%).

    It grows clear that, owing to continued draconian cost cuts,
    coupled with a series of positive economic releases and a long
    list of company profit guidance increases in mid to late
    January and early February, there is a very large upside to
    first-quarter GDP (up 4.5%) and, even more important, to S&P
    profit growth (which doubles!). The upside on both counts is in sharp
    contrast to more muted growth expectations. While corporate
    managers, economists and strategists raise earnings per share,
    full-year growth and S&P target estimates, surprisingly,
    the U.S. equity market fails to respond positively to the much
    better growth dynamic, and the S&P 500 remains tightly
    range-bound (between 1,050 and 1,150) into spring 2010.
  2. Housing and jobs fail to revive.
    An outsized first-quarter 2010 GDP (up 4.5.%) print is
    achieved despite a still moribund housing market and without
    any meaningful improvement in the labor market (excluding the
    increase in census workers) as corporations continue to cut costs
    and show little commitment to adding permanent employees.
  3. The U.S. dollar explodes higher.
    After dropping by over 40% from 2001 to 2008, the U.S. dollar
    continued to spiral lower in the last nine months of 2009. Our
    currency's recent strength will persist, however, surprising
    most market participants by continuing to rally into first
    quarter 2010. In fact, the U.S. dollar will be the strongest
    major world currency during the first three or four months of
    the new year.
  4. The price of gold topples.
    Gold's price plummets to $900 an ounce by the beginning of
    second quarter 2010. Unhedged, publicly held gold companies
    report large losses, and the gold sector lies at the bottom of
    all major sector performers. Hedge fund manager John Paulson
    abandons his plan to bring a new dedicated gold hedge fund to market.
  5. Central banks tighten earlier than expected.
    China, facing reported inflation approaching 5%, tightens
    monetary and fiscal policy in March, a month ahead of a Fed tightening of 50 basis points, which, with the benefit of hindsight, is a policy mistake.
  6. A Middle East peace is upended due to an attack by Israel on Iran.
    Israel attacks Iran's nuclear facilities before
    midyear. An already comatose U.S. consumer falls back on its
    heels, retail spending plummets, and the personal savings rate
    approaches 10%. The first-quarter spike in domestic growth is
    short-lived as GDP abruptly stalls.
  7. Stocks drop by 10% in the first half of next year.
    In the face of renewed geopolitical tensions and reduced
    worldwide growth expectations, stocks drop as the threat of an
    economic double-dip grows. Surprisingly, though, the drop in
    the major indices is contained, and the U.S. stock
    market retreats by less than 10% from year-end 2009 levels.
  8. Goldman Sachs goes private. Goldman Sachs (GS)
    stock drops back to $125 to $130 a share, within $15 of the
    warrant exercise price that Warren Buffett received in Berkshire Hathaway's (BRK.A) late 2008 investment
    in Goldman Sachs. Sick of the unrelenting compensation outcry,
    government jawboning and associated populist pressures, Warren
    Buffett teams up with Goldman Sachs to take the investment
    firm private. The deal is completed by year-end.
  9. Second-half 2010 GDP growth turns flat.
    The Goldman Sachs transaction stabilizes the markets, which
    are stunned by an extended Mideast conflict that continues throughout
    the summer and into the early fall. While a diplomatic
    initiative led by the U.S. serves to calm Mideast tensions,
    flat second-half U.S. GDP growth and a still high 9.5% to 10.0%
    unemployment rate caps the U.S. stock market's upside and
    leads to a very dull second half, during which share prices
    have virtually flatlined (with surprisingly limited rallies and
    corrections throughout the entire six-month period). For the
    full year, the S&P 500 exhibits a 10% decline vs. the general
    consensus of leading strategists for about a 10% rise in the major
  10. Rate-sensitive stocks outperform; metals underperform.
    Utilities are the best performing sector in the U.S.
    stock market in 2010; gold stocks are the worst performing group, with
    consumer discretionary coming in as a close second.
  11. Treasury yields fall.
    The yield of the 10-year U.S. note drops from 4% at the end of
    the first quarter to under 3% by the summer and ends the year
    at approximately the same level (3%). Despite the current
    consensus that higher inflation and interest rates will weigh
    on the fixed-income markets, bonds surprisingly outperform
    stocks in 2010. A plethora of specialized domestic and non-U.S.
    fixed-income exchange-traded funds are introduced throughout the year,
    setting the stage for a vast speculative top in bond prices,
    but that is a late 2011 issue.
  12. Warren Buffett steps down.
    Warren Buffett announces that he is handing over the
    investment reins to a Berkshire outsider and that he plans to
    also announce his in-house successor as chief operating officer
    by Berkshire Hathaway annual meeting in 2011.
  13. Insider trading charges expand. The SEC
    alleges, in a broad-ranging sting, the existence of extensive
    exchange of information that goes well beyond Galleon's Silicon
    Valley executive connections. Several well-known long-only
    mutual funds are implicated in the sting, which reveals that
    they have consistently received privileged information from
    some of the largest public companies over the past decade.
  14. The SEC launches an assault on mutual fund expenses. The SEC restricts 12b-1 mutual fund fees. In response to the proposal, asset management stocks crater.
  15. The SEC restricts short-selling. The SEC announces major short-selling bans after stocks sag in the second quarter.
  16. More hedge fund tumult emerges.
    Two of the most successful hedge fund managers extant announce
    their retirement and fund closures. One exits based on
    performance problems, the other based on legal problems.
  17. Pandit is out and Cohen is in at Citigroup. Citigroup's Vikram Pandit is replaced by former Shearson Lehman Brothers Chairman Peter Cohen. Cohen replaces a number of senior Citigroup executives with Ramius Partners colleagues. Sandy Weill rejoins Citigroup as a senior consultant.
  18. A weakened Republican party is in disarray.
    Sarah Palin announces that she has separated from her husband,
    leaving the Republican party firmly in the hands of former
    Massachusetts Governor Mitt Romney. An improving economy in
    early 2010 elevates President Obama's popularity back to
    pre-inauguration levels, and, despite the market's
    second-quarter decline, the country comes together after the Middle
    East conflict, producing a tidal wave of populism that moves ever
    more dramatically in legislation and spirit. With the
    Democratic tsunami (part deux) revived, the party wins November
    midterm elections by a landslide.
  19. Tiger Woods makes a comeback.
    Tiger Woods and his wife reconcile in early 2010, and he
    returns earlier than expected to the PGA Tour. After announcing
    that his wife is pregnant with their third child, both the PGA
    Tour's and Tiger Woods' popularity rise to record levels, and
    the golfer signs a series of new commercial contracts that
    insure him a record $150 million of endorsement income in 2011.
  20. The New York Yankees are sold to a Jack Welch-led investor group. The Steinbrenner family decides, for estate purposes, to sell the New York Yankees to a group headed by former General Electric (GE) Chairman Jack Welch.

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citationneeded's picture

Ok, fair, his predictions are worthless, but he did call the bottom this year (the second call) which he was mocked here for.

Tyler Durden's picture

He also subsequently called the "top" about three times, a call(s) for which he was not mocked: one example being this one from October 28. Point being "calling" market inflection points is about the most useless activity one can engage in.

freemarketfantasy's picture

Even a broken clock is right twice a day.

rocker's picture

One must ask ?     Is Doug Kass the CNBC contra-contributor ! 

suckapump's picture

Maybe it's so CNBC can point to whatever talking head was most accurate for any given prediction after the dust settles and say, "See? We were right! You should trust us in our future predictions!" That is of course, without reconciling on how to choose between mutually exclusive propositions, but those are just minor details....

TWORIVER's picture

Setting up to be an interesting day with this early reversal in metals.

JonNadler's picture

Tyler, please keep posting these, am begging you!


metals underperform.

The price of gold topples. Gold's price plummets to $900 an ounce

Central banks tighten


Xibalba's picture

This from the guy who said Goldman would fold and go private this year....

AccreditedEYE's picture

Going private is not "folding" Xibalba

Jupiter's picture


This guy should be a novelist.


How do I get a job like this, seriously?



JonNadler's picture

well, we're not going to tell you how to get a job where your predictions can ALWAYS be wrong and you're still consulted by media outlets like Bloomberg an CNBS.

I've been calling for gold to crash for years and am still the senior ANAL-ist at Kitco

youngman's picture

A big raid under way right now....this nex 10 days of trading are going to be a wild ride i think...I think there is a shortage of the real stuff....and the paper pushers are nervous....but they also have the computers..

SheepDog-One's picture

None of these people saw 2008 melt down comin, theyre no gurus.

Whatta's picture

I predict most of Kass's predictions are toilet paper.

I predict in 2011 an ambiguous threat on an unannounced party will have more, or less, consequences than previously thought.

I further predict that gold and silver will continue to be the investment of choice by some, and not so much, by others.

Cognitive Dissonance's picture

Some one or thing is playing around with Gold right now.

Miss Expectations's picture

These Things will not bite you.
They want to have fun.
Then, out of the box
Came Thing Two and Thing One!

Cognitive Dissonance's picture

Nothing like Dr. Seuss and Miss Expectation to put things in perspective. :>)

tmosley's picture

The move up and the move down appear to have seperate causes.  I think the move up in gold was caused by the sudden USDX downturn, while the move down was caused by the PM fix.

Nothing out of the ordinary just here (as price manipulation is standard in ALL markets these days).

Alex Lionson's picture

Yes! And Oil will fall and Cotton will Drop and Sugar will decline and Corn will plunge and so on and so forth! Well said Mr Kass. You should have added and from then on there will be a Paradise located in the greater NYC Area!

Pladizow's picture

That interview was literally the first half of the Oaktree letter plagiarized.

If Kass cant even come up with an original thought, why listen to his predictions?

New Revolution's picture

Was that Doug Kass,.... or Jack Kass?

Kaiser Sousa's picture

Date: Tue, December 21, 2010 6:25:06 AM
Subject: So Obvious.....
doesnt seem like we're getting any help out here.....

Vergeltung's picture

he was so spot-on with that "Republican Party in disarray".....

wait, he wasn't?


SheepDog-One's picture

These people are all just shills, repeating what theyve been told to say. They know nothing.

trav7777's picture

was he crazy?  I guess he called for 900 when it was 1000 or something.

but, the NeObama popularity shit was...huh?  Democrap tsunami???  This was 2010?!?!  How much MORE assbackwards could he've gotten?

RobotTrader's picture

Looks like Blythe Masters is shoveling out more "short gold at market" order tickets at the COMEX.

AccreditedEYE's picture

Good... God Robo.... horrific. I didn't need to be subjected to that.

JonNadler's picture

And the funny thing is goldbugs are praying for a 25% drop!

1050 would be a an answer to prayer for them. THankfully for me they won't be able to buy any physical, because you won't find any anyway near 1050

Sudden Debt's picture

That could be the first decoupling from physical and paper and could bring down the entire paper markets and start another crisis. UNLESS they have about 15 to 20 billion in physical laying arround to serve the needs of the markets at paperprice.

But indeed, if it breaks and the markets offer, all will be bought out in less then a week.

Hal n back's picture

since steinbrenner kicked the bucket in 2010--there is no estate tax.

TradingJoe's picture

Oh well right now pretty much everyone and their mom's are saying either PMs will rise even more and/or PMs will "correct", I say BullShitttttt! Who ever has PMs in Physical rather then paper, have no fear! Even if it should go lower, a better opportunity to load up on more Physical!?! Go for coins and small bullions, the ones you can trade in, should it be necessary, store anything that is storable, it may take a while for this "scenario" to unfold but you can't be prepared too early! Everything else is NOISE!

israhole's picture

"Dougie" Kass, as the Mishpucka call him, is a drunkard.

Silverhog's picture

Picture of that woman is disgusting. She needs to get that mole tested.

Doctor sahab's picture

agreed. she ought to use the cig and burn it

Sudden Debt's picture

please explain your fascination for the picture and why you scanned it.


because I scrolled down so fast, I never saw that :)

ColonelCooper's picture

Keep drinking. She'll start to look better.

Cognitive Dissonance's picture

That's what my first wife said about me. :>)

Hal n back's picture

got to remember that the "folks" that appear on TV are looking for attention and fame and have to say things that are on the edge to get attention.


Oh regional Indian's picture

Read like a child's predictions. 

Half looks like a joke-set. Tiger woods reconciliation?