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Posts Tagged ‘India’

by Tyler Durden
ZeroHedge
06/21/2011 00:19 -0400

India’s heretofore “insatiable” appetite for precious metals will need to find a new adjective to describe it, after it surged by an absolutely unprecedented 500% in May MoM, and 222% compared to May of 2010, touching on a massive $8.96 billion in imports in the past month. Putting this number in perspective the yearly average Indian imports are about $22 billion: in one month the country will have imported about half its average quota for the year! And while inflation may have much to do with it, events like the Sensex flash crash from last night certainly are not helping matters:

“The gold story is puzzling” added financial analyst A S Kirolar. “Consumers are shying away from stocks and bonds and heading to safe assets like gold and real estate, but one cannot understand this given the meagre 12% growth in imports of petroleum and oil products.” Granted demand is not just at the retail level as ever more institutions are buying up gold: “Analysts maintained that India’s central bank, the Reserve Bank of India’s decision to grant licenses to seven more banks to import bullion has helped push up demand. Karur Vysya Bank, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, Punjab and Sind Bank, South Indian Bank, State Bank of Mysore and State Bank of Travancore were added to the list. As of the start of 2011, some 30 banks in India have been granted permission to import gold and silver. Jewellers are getting easy supplies which is also helping push up demand. Moreover, the flow of scrap is also expected to fall from a yearly average of 200 tonnes, which could again boost imports, underlining the insatiable appetite of the Indian consumer.” Add ongoing Chinese demand for PMs, and one can see why calls for an imminent gold crash absent a global deflationary vortex are largely overblown.

Mineweb has more:

“Even as inflation and a widening trade deficit to $15 billion in May continues to weigh on the minds of Indian investors, the demand for fresh gold has continued to grow. This is very confusing, especially when one sees it against the backdrop of a 400% rise in the value of the rupee over the last decade,” said bullion analyst Anand Patnaik with a brokerage firm.

India’s commerce and industry minister Anand Sharma recently released trade figures. India’s imports have surged to a 4-year high at a scorching pace of 54% mainly due to rising oil prices and a surge in gold imports.

The country’s imports have jumped to $40.9 billion, which has resulted in the gap between imports and exports widening to $15 billion – a 67% increase which is the largest since August 2008, prompting the government authorities to caution that India’s trade deficit for 2011-12 could touch a record $145-150 billion.

Minister Sharma pointed out that exports of iron ore were down given the ban on exports imposed by the country. Imports in pearls and precious stones, however, have risen 24.6% to $ 5.20 billion, gold and silver by 222% to $ 13.5 billion and iron and steel by 13% to $ 1.80 billion, he said.

But the true cause of this endless demand is and always will be the threat of central bank hijacked purchasing power :

“People in India have accepted high inflation as a reality of life,” said Rajesh Shukla of the centre for Macro Consumer Research. Noting that Indians tend to use gold as a hedge against inflation, Shukla said this would be partly responsible for the spike in imports.

He added that high imports reflected a strong demand for the yellow metal, despite the weakening of the rupee.

The Indian rupee fell to its lowest in three weeks on Monday weighed down by losses in domestic shares and the euro, with dollar demand from oil companies also adding pressure.

“Bidding from oil companies is keeping the rupee lower. All of last week, the rupee depreciated. Hiking of key interest rates has further weakened the rupee,” said a forex dealer at a national bank.

And that’s merely the anchor for current gold prices at over $1500 even as stocks continue to sink. Once the Fed announced Operation Twist 2 either on Wednesday, or in one or two month’s time, the PM complex will explode, reaching $2000 in no time whatsoever.

Read the entire article HERE.

by Tyler Durden
03/20/2011 20:41 -0400
ZeroHedge

While it will not come as a major surprise to most, according to senior BOE individuals and Wikileaks, Iran, as well as Qatar and Jordan have been actively purchasing gold well over the amount reported to and by the IMF, in an accelerated attempt to diversify their holdings away from the US dollar. “Iran has bought large amounts of gold in the international market, according to a senior Bank of England official, in a sign of how growing political pressure has driven Tehran to reduce its exposure to the US dollar. Andrew Bailey, head of banking at the Bank of England, told an American official that the central bank had observed “significant moves by Iran to purchase gold”, according to a US diplomatic cable obtained by WikiLeaks and seen by the Financial Times.” The reason for Tehran’s scramble into gold: “an attempt by Iran to protect its reserves from risk of seizure”. The misrepresentation of Iran’s holdings could be so vast that Iran could possibly be one of the largest holders of goldin the world. “Market observers believe Tehran has been one of the biggest buyers of bullion over the past decade after China, Russia and India, and is among the 20 largest holders of gold reserves… with an alleged 300 tons, big enough to challenge the UK at 310 tons, and more than Spain! ” As a reminder according to the WGC, Iran is not even disclosed as an official holder of gold. Also, Iran is not the only one: “Cables obtained by WikiLeaks cite Jordan’s prime minister as saying the central bank was “instructed to increase its holdings” of gold, and a Qatar Investment Authority official as saying the QIA was interested in buying gold and silver.” Which means that there is far more marginal demand by countries supposedly friendly to the dollar, as many more than previously expected are actively dumping linen and buying bullion. What all this means for the future price of gold, especially with geopolitical tension in the region, and QE3 imminent, is rather self-evident.

From the FT:

Andrew Bailey, head of banking at the Bank of England, told an American official that the central bank had observed “significant moves by Iran to purchase gold”, according to a US diplomatic cable obtained by WikiLeaks and seen by the Financial Times.

Mr Bailey said the gold buying “was an attempt by Iran to protect its reserves from risk of seizure”.

Market observers believe Tehran has been one of the biggest buyers of bullion over the past decade after China, Russia and India, and is among the 20 largest holders of gold reserves.

They estimate it holds more than 300 tonnes of gold, up from 168.4 tonnes in 1996, the date of the most recent International Monetary Fund data.

Ummm, according to the WGC the UK (thank you Gordon Brown) has 310 tons of gold… Iran has the same amount of gold in storage as the (formerly) biggest colonial power in the history of the world. And this is not breaking news?

The cable, dated June 2006, is the first official confirmation of Tehran’s buying. Last year central banks became net buyers of bullion after 22 years of large sales, helping drive gold prices to all-time nominal highs. Trades by central banks are often kept secret.

Bankers said other Middle Eastern countries had also been quietly adding to gold holdings to diversify away from the dollar amid political tensions and volatility in currency markets.

“The totality of central bank reserves is not what is reported to the IMF,” said Philip Klapwijk, executive chairman of GFMS, a precious metals consultancy. “There’s probably another 10 per cent on top of that.”

Cables obtained by WikiLeaks cite Jordan’s prime minister as saying the central bank was “instructed to increase its holdings” of gold, and a Qatar Investment Authority official as saying the QIA was interested in buying gold and silver.

“There is no question some Middle Eastern countries are very interested in buying gold,” said George Milling-Stanley, head of government affairs at the mining industry-backed World Gold Council.

Secret undisclosed purchases of physical gold… What next: secret undisclosed selling of paper gold by such unusual suspects as JPM? Impossible.

Read the entire article HERE.

JS Kim
Founder and Managing Director of SmartKnowledgeU
02/07/2011 05:36 -0500

I have stated this for many years now and I’ll continue to stand by this statement: Technical and fundamental analysis are of limited utility in predicting short-term trends in manipulated markets when analyzed in a vacuum absent of the context of government and bank manipulation. This not only applies to US stock markets but also to two of the most manipulated markets of all, the gold and silver futures markets. Often, with technical analysis, two analysts with multi-years of experience may offer widely diverging analyses when interpreting the exact same chart. However, if an analyst refuses or fails to take into account the massive amount of fraud and manipulation when interpreting charts of the S&P 500 or the Gold & Silver Continuous Contracts, then I would fathom that analyst would be off the mark at a much higher clip than he or she would be on the mark. For the past decade, it has been foolish to deny that massive fraud and manipulation existed in these aforementioned markets. Refusing to account for the “X factor” of fraud and manipulation, as it is frequently the single most important factor that moves these markets in the short-term, is what ultimately turns some gold/silver analysts into nothing more than weather forecasters.

During sharp corrections and/or consolidation periods in gold and silver, I inevitably stumble upon comments posted by gold/silver investors online that become greatly worried by some article posted by some analyst online that states that the silver and gold bull run has ended and that silver and gold prices are now going to crash. When this happens, gold/silver investors need to keep their focus on the big picture to avoid being led astray by the white noise that will constantly surround them during every single gold and silver pull back. As for the subset of gold and silver investors who, by nature, are worrisome creatures, they will always find analysts in the mainstream media that will gladly fuel their anxiety during every gold and silver correction or consolidation period. For ten years in a row now, gold and silver analysts come out of the woodwork to state that gold and silver are going to crash every single time these particular assets suffer a decent, rapid short-term correction or consolidation period.

To begin, it is quite easy to dismiss many of the analysts that call for a crash in gold and silver simply by conducting an internet search of their past predictions. Doing so will reveal that some of theses analysts have called for a crash of gold and silver every single year since the gold and silver bull run began.  Other searches will reveal that many of these analysts are just flat-out terrible and that they have made many other severe warnings about commodity crashes just about at the exact time they bottomed and then proceeded to soar higher.  Why waste energy worrying about an analyst’s calls when that analyst has proven himself or herself to be massively wrong multiple times year in and year out?

But what about analysts whose calls have been fairly accurate in the past and whose current calls create a level of concern for you? Then use this second process of separating the wheat from the chaff. Search the internet, find this analyst’s blog, and read about this analyst’s calls in the same asset class over a multiple numbers of years. If you can’t find any public record of past calls for this analyst regarding the specific asset class he or she is speaking of, then dismiss this analyst.  Sure, a lot of analysts will want to reserve their most detailed and best analysis for their paying clients only and perhaps this is why they lack any kind of past track record. I reserve my best and most detailed calls and strategies for my paying clients only as this makes good business sense. If an analyst posted his best calls online all the time, why would anyone every pay the analyst for information they can receive for free?

However, if any analyst ever wants to develop his or her business, he or she needs to establish a track record in the public arena as well to prove he or she indeed is worthy of a following. After establishing a track record for at least two or three years, then such an analyst can begin to pull back his public predictions and reserve them more exclusively for the privacy of his or her clients only. Thus, I believe that any analyst worth his or her salt will have a decent public track record.

Given the rise of gold/silver in the public consciousness for the past several years, there is now a plethora of self-proclaimed gold and silver analysts online now that have no discernible track record of accurate past predictions regarding past movements in the gold and silver markets or even public comments about gold or silver markets until just two or three years ago. First of all, if such a person was truly an expert in gold and silver, realizing that we are in the midst of one of the largest gold and silver bulls of our lifetime only after gold has risen from $250 an ounce to $1000 an ounce and silver from $4 to $16 an ounce should automatically disqualify that person from ever being able to proclaim they are an “expert”. Furthermore, if an analyst has discussed gold and silver markets before but never once discussed fraud and manipulation in gold and silver futures markets until the past couple of years when it became “chic” and mainstream to do so, then his or her credibility should be highly questionable. The job of an analyst is to dig deeper than the level of public understanding and to not be afraid of taking a stance that he or she knows to be true even if the rest of the world disagrees with him or her at the time. How could a gold/silver analyst refuse to acknowledge the single most important factor -  fraud and manipulation – that frequently moves these markets in the short-term, for years and call him or herself a gold/silver analyst? The equivalent scenario would be a US stock market analyst that refuses to acknowledge the massive effect of US Federal Reserve POMO schemes on the current short-term market behavior of the S&P 500, the DJIA and NASDAQ.

On January 25th, in this article I posted an article titled “Will Junior Mining Stocks be THE Investment of 2011?” on my online investment blog, the Underground Investor.

I iterated that my outlook for gold’s ongoing correction would be for a short-term bottom to form “somewhere around the $1,300 an ounce mark…and not with a further $250 an ounce correction and the $1,090 an ounce mark called for by Seabreeze Partners Management’s GP Doug Kass.” I further stated, “I’m going to directly contradict Kass and predict a pop higher of at least $40 to $50 an ounce in gold sometime during the 10 trading days between January 28th and February 11th.”

To my Platinum Members, to whom I provide much more detailed analysis than anything I publish in the public arena, I granted them even tighter timeframes for the turnaround on January 25th -

“I believe that this correction will end by Friday of this week [January 28th] if not sooner and that we are very close to a strong reversal now. Look for a bottom to form, and a rebound from gold at about $1,300 and the HUI at about 495”.

In regard to these predictions, I provided subsequent actionable strategies regarding gold/silver mining stocks as well. For the time being, gold bottomed at about $1,308 an ounce on January 28th in Asia, and the HUI bottomed in New York at 492.04 later on the same day (I issued my bulletin to my members before market open in New York that day). Between January 28th in Asia and February 4th in New York, gold popped higher by $51.70 an ounce, meeting my call for a $40 to $50 bounce between January 28th and February 11th.

I based these short-term predictions and dates of short-term reversals not by blindly picking numbers out of a hat, but by studying the behavior of the bullion bank manipulators that continuously manipulate gold (and silver) markets and by combining this information with technical chart analysis. Of course, we’re not completely out of the woods yet with gold and silver, and I’ll have to track and interpret both technical charts and the movements of bullion bank manipulators on a daily basis to understand whether this reversal in gold/silver markets will now stand its ground or not. Below, I’ll provide further examples of how I’ve been incorporating fraud and manipulation analysis into my technical analysis to accurately foresee both the short-term and long-term direction of gold and silver markets for years.

With gold and silver futures markets, one must understand the mechanisms of the likely fraudulent paper gold and silver ETFs, the GLD and SLV, and the fraudulent paper gold and silver futures markets and how both of these paper markets influence gold/silver prices independent of free market supply and demand mechanisms. Of course, this is just the tip of the iceberg when it comes to understanding the difference between the mechanisms of how markets truly operate and the false mechanisms that business schools worldwide teach to the future analysts of the world. An analyst must always keep in mind fraud and manipulation whenever using technical charts to predict future behavior in manipulated markets or that analyst’s technical analysis will ALWAYS be distorted and inaccurate. Whether it’s by design, sheer arrogance or plain ignorance, this is why a five-year-old child’s predictions about future US market behavior during the last five years would have stacked up very well against the predictions made by supposedly very learned men like US Fed Reserve Chairman Ben Bernanke.

On September 16, 2006, in my article  “Has the Commodities Bubble Burst? No, No, No!”, I stated:

“Everywhere in the media, you have pundits saying that the commodities Bull Run is over – including even chief global economists of major investment firms like Steven Roach of Morgan Stanley. THEY’RE ALL WRONG…I’ve dug deep enough down into the rabbit hole to know that gold will rise much much higher in the future.. Yes, oil has slipped to below $60 a barrel but again, this doesn’t mean that oil is done either.”

At the time I made the above prediction, gold had tumbled nearly 14% in the previous two months to $573 an ounce, oil had tumbled 25% from $80 a barrel to $60 a barrel and many global commodity analysts had called for people to sell out of all commodity based stocks across the board. In particular, a few precious metals analysts used this steep correction to foment fear among gold investors and called for gold to retrace all the way back down to its initial starting point in this gold bull run at $250 an ounce.

So what happened?

Gold, by the end of 2007, soared from its September 2006 correction that was supposed to usher in a collapse, by more than 45%, to $833 an ounce!

And for those of you that believe I am always positive on gold and silver because many of my public postings happen to be posted near interim bottoms when gold and silver are set to rebound, this is hardly the case. In my last 2010 Crisis Investment Opportunities newsletter issue, I warned of an impending gold/silver correction to begin 2011:

“The likely time frame for the likelihood of a Central Bank engineered attack against gold and silver prices has now been pushed out until January or February 2011.”

Interpretation of fraud and manipulation can help one identify warnings about short-term pullbacks in the price of certain assets as well as help in the identification of short-term bottoms.

On December 6, 2007, subscribers to my free online investment newsletter received this warning:

“Over the past six months, soaring oil prices are much more directly connected to a devaluing dollar than decreasing oil supply or peak oil. Had the Gulf Nations declared this week that they were going to unpeg their currencies from the U.S. dollar, I guarantee you that oil would have shot up beyond $100 to $120 a barrel within a matter of weeks [oil was trading at $88 a barrel at this time]. And that would have had nothing to do with supply and demand and everything to do with feared U.S. dollar weakness.”

Again, my statement above had nothing to do with fundamentals or technical charts but everything to do with the fraudulent nature of the US dollar and my understanding of the fraudulent nature of currency and oil markets. Sure enough, several Gulf Nations unofficially and quietly temporarily unpegged their currencies from the US dollar over the next few months, following Saudi Arabia’s lead of temporarily unpegging the Riyal from the US dollar at the end of 2007. During the next six months that followed my above statement, oil rose from just $88.40 a barrel to more than $120 a barrel. In mid-2008, oil peaked out at more than $140 a barrel, though a certain Wall Street firm’s opportunistic positioning in the oil futures markets based upon their knowledge of a single U.S. hedge fund that was short 260 million barrels of oil was largely responsible for the final spike in prices (again, just another example of how short-term price behavior was driven by manipulation of the banks and not supply-demand based).

Today, I’ve read in newspapers from the Americas to Europe to Asia, the attempt of many country’s finance ministers once again to deflect blame away from their Central Banks’ fiat currency devaluation policies as the root cause of rising commodity and oil prices. Today finance ministers worldwide have colluded to keep the people in the dark about reality by stating unilaterally that rising commodity prices are responsible for inflation versus stating the reality that currency manipulation is the main culprit of massive inflation.

This same type of “fraud and manipulation” analysis can be extended to another massively manipulated market, the US stock market. When predicting the future behavior of US stock markets, an analyst must always incorporate the fraud of Federal Reserve POMO schemes and the artificial propping up of a handful of core index stocks that keep entire indexes afloat into one’s technical analysis.

On March 21, 2007, on my investment blog, I pricked quite a few investors’ nerves when I wrote the article “The Short-Term May be Rosy, But Beware the Financial Crisis that is Building Steam”. In fact, back then, the rise of US stock markets on the back of massive fraud and manipulation was remarkably comparable to today’s current state of US stock markets four years later. In that article, I stated:

“Everywhere global stock markets have rebounded whether in China, Australia, Europe, or the US , short positions have decreased dramatically, and the bulls are back in full force. However, there are still two scenarios that every investor should be wary of, one that is very likely, and one that is near inevitable…I know that a lot of people will think that any talk of a future global economic crisis is ludicrous but that is why so few people actually build wealth through investing. Only the handful of people that take the time to really understand the economics that brew well below the surface of the Bloomberg reports and CNBC and the Wall Street Journal will readily prepare their investment portfolios for this crisis.”

“And this crisis that seems inevitable to me will be much bigger than the U.S. Great Depression of the 1930’s and much larger than the Asian Financial Crisis of 1997 because the conditions that are creating this crisis will have a much wider and more significant global impact than either of these two previous crises. Before those two crises hit, the overwhelming majority of investors believed that those people that believed a crisis was imminent were crazy. And during those times, salesmen and women in the financial industry were able to leverage the naivete of the thundering sheep herd to get them to do things that led to certain financial ruin.”

The “economics that brew well below the surface of the Bloomberg reports and CNBC and the Wall Street Journal” that I referenced in my above prediction was, of course, the real levels of key economic indicators versus the fraudulent, “official” government-reported economic statists that governments disseminate to the public via mainstream media distribution channels. Because I have always focused my analysis on government and banker levied fraud and manipulation of capital markets, even in March of 2007, at a time when many commercial investment advisors were taking advantage of the steady 9-month advance in US stock markets to tout their usual “get on board [the US market bull] or get left behind” propaganda, the precarious nature of the situation at that time was crystal clear to me.

So what happened after I made this prediction?

US markets continued to be rosy in the short-term as the title of my article indicated before eventually topping out in October of that year and falling by more than 20% by March of the next year. As far as the remainder of 2008, we all know the disastrous year that 2008 ended up being worldwide. How did we do in 2008? Our Crisis Investment Opportunities newsletter portfolio still ended up just positive for the year (barely positive, but still positive). Due to my prediction that a crisis would unfold, we avoided the 40% haircuts that nearly all commercial investment firm clients suffered that year.  Furthermore, just a few weeks ago, Reuters reported that “home prices fell for the 53rd consecutive month in November, taking the decline past that of the Great Depression for the first time in the prolonged housing slump” and that “home values have fallen 26 percent since their peak in June 2006, worse than the 25.9-percent decline seen during the Depression years between 1928 and 1933”.

But what about my prediction that this unfolding crisis would be “much bigger than the US Great Depression”? I still believe that the prediction I made on March 21 of 2007 will come to fruition over the course of the next several years and this global crisis will become much bigger than the US Great Depression as at some point this year, we will move from the eye of the economic hurricane back into the turmoil of the hurricane. In fact, we may already be witnessing the first signs of my prediction above that this current crisis would “have a much wider and more significant global impact than either [the Great Depression or the 1997 Asian Financial Crisis]” in the food and unemployment riots that have already started this year in Egypt, Tunisia, Algieria and India.

By April 23, 2008 as the signs of an imminent US stock market crash were becoming clearer, I posted another warning shot on my investment blog titled “Will US Markets Crash Now or Later?”

In that article, I stated: “Should an extended rally of the Dow above 13,000 occur, it will serve no purpose other than to create the illusion of wealth, as opposed to the creation of real tangible wealth. The higher U.S. markets rise in today’s environment, the more likely it is that they will fall even harder in the future. Here’s why. Currently, the U.S. Federal Reserve is playing the same shell game that it has for decades, one in which they alternately inflate stock markets and real estate markets. If stock markets are crashing, then they inflate real estate markets, and vice versa. It’s a vicious circle that eventually will collapse under the weight of its own foolishness. In the late 1920s, in very simple terms, the U.S. Federal Reserve’s solution to forestall a mild U.S. economic contraction and to stop England’s gold losses was to print more money.”

What happened?

The US DJIA started a steep decline just one month later, shedding almost 5,000 points between May and October of 2008!

In conclusion, I’m not stating that by studying fraud and manipulation, one’s predictions will be spot on year in and year out. There is no analyst, including myself, that has not made, or will not make a prediction or two at some point, that will appear silly in hindsight. No one is infallible, though some may infer as much. But I can guarantee you this. If an analyst incorporates an understanding of how bullion banks and governments operate fraud and manipulation schemes into his or her technical analysis of capital markets, his or her chances of making uncannily accurate calls in the behavior of capital markets year in and year out become exponentially better than if he or she were to attempt to predict future market behavior based on technical analysis alone.

At a time when everyone but the most naïve of the naïve understand how grossly distorted capital prices are both to the upside (in global stock markets) and to the downside (in gold and silver markets) due to massive manipulation schemes executed through collusive bullion-bank and government efforts, it makes zero sense to continue to put faith in technical and fundamental analysis alone. Though fundamentals may drive behavior in the long-term, fundamentals have had, at times, zero effect on the price discovery of assets in the short-term. Furthermore, with certain sectors such as the banking sector where insolvent bankrupt banks have been magically transformed into solvent profitable banks by corrupt regulatory agencies that have allowed banks to cook their books, the fundamentals of many sectors are not fundamentally sound! Fraud and manipulation analysis today is more critical than either fundamental or technical analysis if one wishes to avoid and even profit from the many pitfalls that remain ahead in the global economy.

Read the entire article HERE.

The Observer, Sunday 2 January 2011

Customers crowd into a department store in Hangzhou, Zhejiang province. China will continue to rise in the coming decades. Photograph: Chinafotopress/Getty Images

1 Geopolitics: ‘Rivals will take greater risks against the US’

No balance of power lasts forever. Just a century ago, London was the centre of the world. Britain bestrode the world like a colossus and only those with strong nerves (or weak judgment) dared challenge the Pax Britannica.

That, of course, is all history, but the Pax Americana that has taken shape since 1989 is just as vulnerable to historical change. In the 1910s, the rising power and wealth of Germany and America splintered the Pax Britannica; in the 2010s, east Asia will do the same to the Pax Americana.

The 21st century will see technological change on an astonishing scale. It may even transform what it means to be human. But in the short term – the next 20 years – the world will still be dominated by the doings of nation-states and the central issue will be the rise of the east.

By 2030, the world will be more complicated, divided between a broad American sphere of influence in Europe, the Middle East and south Asia, and a Chinese sphere in east Asia and Africa. Even within its own sphere, the US will face new challenges from former peripheries. The large, educated populations of Poland, Turkey, Brazil and their neighbours will come into their own and Russia will continue its revival.

Nevertheless, America will probably remain the world’s major power. The critics who wrote off the US during the depression of the 1930s and the stagflation of the 1970s lived to see it bounce back to defeat the Nazis in the 1940s and the Soviets in the 1980s. America’s financial problems will surely deepen through the 2010s, but the 2020s could bring another Roosevelt or Reagan.

A hundred years ago, as Britain’s dominance eroded, rivals, particularly Germany, were emboldened to take ever-greater risks. The same will happen as American power erodes in the 2010s-20s. In 1999, for instance, Russia would never have dared attack a neighbour such as Georgia but in 2009 it took just such a chance.

The danger of such an adventure sparking a great power war in the 2010s is probably low; in the 2020s, it will be much greater.

The most serious threats will arise in the vortex of instability that stretches from Africa to central Asia. Most of the world’s poorest people live here; climate change is wreaking its worst damage here; nuclear weapons are proliferating fastest here; and even in 2030, the great powers will still seek much of their energy here.

Here, the risk of Sino-American conflict will be greatest and here the balance of power will be decided.

Ian Morris, professor of history at Stanford University and the author of Why the West Rules – For Now (Profile Books)

2 The UK economy: ‘The popular revolt against bankers will become impossible to resist’

A view across the City at dusk. Photograph: James Brittain

It will be a second financial crisis in the 2010s – probably sooner than later – that will prove to be the remaking of Britain. Confronted by a second trillion-pound bank bailout in less than 10 years, it will be impossible for the City and wider banking system to resist reform. The popular revolt against bankers, their current business model in which neglect of the real economy is embedded and the scale of their bonuses – all to be underwritten by bailouts from taxpayers – will become irresistible. The consequent rebalancing of the British economy, already underway, will intensify. Britain, in thrall to finance since 1945, will break free – spearheading a second Industrial Revolution.

In 2035, there is thus a good prospect that Britain will be the most populous (our birth rate will be one the highest in Europe), dynamic and richest European country, the key state in a reconfigured EU. Our leading universities will become powerhouses of innovation, world centres in exploiting the approaching avalanche of scientific and technological breakthroughs. A reformed financial system will allow British entrepreneurs to get the committed financial backing they need, becoming the capitalist leaders in Europe. And, after a century of trying, Britain will at last build itself a system for developing apprentices and technicians that is no longer the Cinderella of the education system.

It will not be plain sailing. Massive political turbulence in China and its conflict with the US will define part of the next 25 years – and there will be a period when the world trading and financial system retreats from openness.

How far beggar-my-neighbour competitive devaluations and protection will develop is hard to predict, but protectionist trends are there for all to see. Commodity prices will go much higher and there will be shortages of key minerals, energy, water and some basic foodstuffs.

The paradox is that this will be good news for Britain. It will force the state to re-engage with the economy and to build a matrix of institutions that will support innovation and investment, rather as it did between 1931 and 1950. New Labour began this process tremulously in its last year in office; the coalition government is following through. These will be lean years for the traditional Conservative right, but whether it will be a liberal One Nation Tory party, ongoing coalition governments or the Labour party that will be the political beneficiary is not yet sure.

The key point is that those 20 years in the middle of the 20th century witnessed great industrial creativity and an unsung economic renaissance until the country fell progressively under the stultifying grip of the City of London. My guess is that the same, against a similarly turbulent global background, is about to happen again. My caveat is if the City remains strong, in which case economic decline and social division will escalate.

Will Hutton, executive vice-chair of the Work Foundation and an Observer columnist

3 Global development: ‘A vaccine will rid the world of Aids’

Within 25 years, the world will achieve many major successes in tackling the diseases of the poor.

Certainly, we will be polio-free and probably will have been for more than a decade. The fight to eradicate polio represents one of the greatest achievements in global health to date. It has mobilised millions of volunteers, staged mass immunisation campaigns and helped to strengthen the health systems of low-income countries. Today, we have eliminated 99% of the polio in the world and eradication is well within reach.

Vaccines that prevent diseases such as measles and rotavirus, currently available in rich countries, will also become affordable and readily available in developing countries. Since it was founded 10 years ago, the Gavi Alliance, a global partnership that funds expanded immunisation in poor countries, has helped prevent more than 5 million deaths. It is easy to imagine that in 25 years this work will have been expanded to save millions more lives by making life-saving vaccines available all over the world.

I also expect to see major strides in new areas. A rapid point-of-care diagnostic test – coupled with a faster-acting treatment regimen – will so fundamentally change the way we treat tuberculosis that we can begin planning an elimination campaign.

We will eradicate malaria, I believe, to the point where there are no human cases reported globally in 2035. We will also have effective means for preventing Aids infection, including a vaccine. With the encouraging results of the RV144 Aids vaccine trial in Thailand, we now know that an Aids vaccine is possible. We must build on these and promising results on other means of preventing HIV infection to help rid the world of the threat of Aids.

Tachi Yamada, president of the global health programme at the Bill & Melinda Gates Foundation

4 Energy: ‘Returning to a world that relies on muscle power is not an option’

Providing sufficient food, water and energy to allow everyone to lead decent lives is an enormous challenge. Energy is a means, not an end, but a necessary means. With 6.7 billion people on the planet, more than 50% living in large conurbations, and these numbers expected to rise to more than 9 billion and 80% later in the century, returning to a world that relies on human and animal muscle power is not an option.

The challenge is to provide sufficient energy while reducing reliance on fossil fuels, which today supply 80% of our energy (in decreasing order of importance, the rest comes from burning biomass and waste, hydro, nuclear and, finally, other renewables, which together contribute less than 1%). Reducing use of fossil fuels is necessary both to avoid serious climate change and in anticipation of a time when scarcity makes them prohibitively expensive.

It will be extremely difficult. An International Energy Agency scenario that assumes the implementation of all agreed national policies and announced commitments to save energy and reduce the use of fossil fuels projects a 35% increase in energy consumption in the next 25 years, with fossil fuels up 24%. This is almost entirely due to consumption in developing countries where living standards are, happily, rising and the population is increasing rapidly.

This scenario, which assumes major increases in nuclear, hydro and wind power, evidently does not go far enough and will break down if, as many expect, oil production (which is assumed to increase 15%) peaks in much less than 25 years. We need to go much further in reducing demand, through better design and changes in lifestyles, increasing efficiency and improving and deploying all viable alternative energy sources. It won’t be cheap. And in the post-fossil-fuel era it won’t be sufficient without major contributions from solar energy (necessitating cost reductions and improved energy storage and transmission) and/or nuclear fission (meaning fast breeder and/or thorium reactors when uranium eventually becomes scarce) and/or fusion (which is enormously attractive in principle but won’t become a reliable source of energy until at least the middle of the century).

Disappointingly, with the present rate of investment in developing and deploying new energy sources, the world will still be powered mainly by fossil fuels in 25 years and will not be prepared to do without them.

Chris Llewellyn Smith is a former director general of Cern and chair of Iter, the world fusion project, he works on energy issues at Oxford University

5 Advertising: ‘All sorts of things will just be sold in plain packages’

Advertising in Tokyo. Photograph: Mike Long / Alamy/Alamy

If I’d been writing this five years ago, it would have been all about technology: the internet, the fragmentation of media, mobile phones, social tools allowing consumers to regain power at the expense of corporations, all that sort of stuff. And all these things are important and will change how advertising works.

But it’s becoming clear that what’ll really change advertising will be how we relate to it and what we’re prepared to let it do. After all, when you look at advertising from the past the basic techniques haven’t changed; what seems startlingly alien are the attitudes it was acceptable to portray and the products you were allowed to advertise.

In 25 years, I bet there’ll be many products we’ll be allowed to buy but not see advertised – the things the government will decide we shouldn’t be consuming because of their impact on healthcare costs or the environment but that they can’t muster the political will to ban outright. So, we’ll end up with all sorts of products in plain packaging with the product name in a generic typeface – as the government is currently discussing for cigarettes.

But it won’t stop there. We’ll also be nudged into renegotiating the relationship between society and advertising, because over the next few years we’re going to be interrupted by advertising like never before. Video screens are getting so cheap and disposable that they’ll be plastered everywhere we go. And they’ll have enough intelligence and connectivity that they’ll see our faces, do a quick search on Facebook to find out who we are and direct a message at us based on our purchasing history.

At least, that’ll be the idea. It probably won’t work very well and when it does work it’ll probably drive us mad. Marketing geniuses are working on this stuff right now, but not all of them recognise that being allowed to do this kind of thing depends on societal consent – push the intrusion too far and people will push back.

Society once did a deal accepting advertising because it seemed occasionally useful and interesting and because it paid for lots of journalism and entertainment. It’s not necessarily going to pay for those things for much longer so we might start questioning whether we want to live in a Blade Runner world brought to us by Cillit Bang.

Russell Davies, head of planning at the advertising agency Ogilvy and Mather and a columnist for the magazines Campaign and Wired

6 Neuroscience: ‘We’ll be able to plug information streams directly into the cortex’

By 2030, we are likely to have developed no-frills brain-machine interfaces, allowing the paralysed to dance in their thought-controlled exoskeleton suits. I sincerely hope we will not still be interfacing with computers via keyboards, one forlorn letter at a time.

I’d like to imagine we’ll have robots to do our bidding. But I predicted that 20 years ago, when I was a sanguine boy leaving Star Wars, and the smartest robot we have now is the Roomba vacuum cleaner. So I won’t be surprised if I’m wrong in another 25 years. Artificial intelligence has proved itself an unexpectedly difficult problem.

Maybe we will understand what’s happening when we immerse our heads into the colourful night blender of dreams. We will have cracked the secret of human memory by realising that it was never about storing things, but about the relationships between things.

Will we have reached the singularity – the point at which computers surpass human intelligence and perhaps give us our comeuppance? We’ll probably be able to plug information streams directly into the cortex for those who want it badly enough to risk the surgery. There will be smart drugs to enhance learning and memory and a flourishing black market among ambitious students to obtain them.

Having lain to rest the nature-nurture dichotomy at that point, we will have a molecular understanding of the way in which cultural narratives work their way into brain tissue and of individual susceptibility to those stories.

Then there’s the mystery of consciousness. Will we finally have a framework that allows us to translate the mechanical pieces and parts into private, subjective experience? As it stands now, we don’t even know what such a framework could look like (“carry the two here and that equals the experience of tasting cinnamon”).

That line of research will lead us to confront the question of whether we can reproduce consciousness by replicating the exact structure of the brain – say, with zeros and ones, or beer cans and tennis balls. If this theory of materialism turns out to be correct, then we will be well on our way to downloading our brains into computers, allowing us to live forever in The Matrix.

But if materialism is incorrect, that would be equally interesting: perhaps brains are more like radios that receive an as-yet-undiscovered force. The one thing we can be sure of is this: no matter how wacky the predictions we make today, they will look tame in the strange light of the future.

David Eagleman, neuroscientist and writer

7 Physics: ‘Within a decade, we’ll know what dark matter is’

The next 25 years will see fundamental advances in our understanding of the underlying structure of matter and of the universe. At the moment, we have successful descriptions of both, but we have open questions. For example, why do particles of matter have mass and what is the dark matter that provides most of the matter in the universe?

I am optimistic that the answer to the mass question will be found within a few years, whether or not it is the mythical Higgs boson, and believe that the answer to the dark matter question will be found within a decade.

Key roles in answering these questions will be made by experiments at Cern’s Large Hadron Collider, which started operations in earnest last year and is expected to run for most of the next 20 years; others will be played by astrophysical searches for dark matter and cosmological observations such as those from the European Space Agency’s Planck satellite.

Many theoretical proposals for answering these questions invoke new principles in physics, such as the existence of additional dimensions of space or a “supersymmetry” between the constituents of matter and the forces between them, and we will discover whether these ideas are useful for physics. Both these ideas play roles in string theory, the best guess we have for a complete theory of all the fundamental forces including gravity.

Will string theory be pinned down within 20 years? My crystal ball is cloudy on this point, but I am sure that we physicists will have an exciting time trying to find out.

John Ellis, theoretical physicist at Cern and King’s College London

8 Food: ‘Russia will become a global food superpower’

A woman works on the production line of a poultry processing factory in Stary Oskol, central Russia. Photograph: Sasha Mordovets/Getty Images

When experts talk about the coming food security crisis, the date they fixate upon is 2030. By then, our numbers will be nudging 9 billion and we will need to be producing 50% more food than we are now.

By the middle of that decade, therefore, we will either all be starving, and fighting wars over resources, or our global food supply will have changed radically. The bitter reality is that it will probably be a mixture of both.

Developed countries such as the UK are likely, for the most part, to have attempted to pull up the drawbridge, increasing national production and reducing our reliance on imports.

In response to increasing prices, some of us may well have reduced our consumption of meat, the raising of which is a notoriously inefficient use of grain. This will probably create a food underclass, surviving on a carb- and fat-heavy diet, while those with money scarf the protein.

The developing world, meanwhile, will work to bridge the food gap by embracing the promise of biotechnology which the middle classes in the developed world will have assumed that they had the luxury to reject.

In truth, any of the imported grain that we do consume will come from genetically modified crops. As climate change lays waste to the productive fields of southern Europe and north Africa, more water-efficient strains of corn, wheat and barley will be pressed into service; likewise, to the north, Russia will become a global food superpower as the same climate change opens up the once frozen and massive Siberian prairie to food production.

The consensus now is that the planet does have the wherewithal to feed that huge number of people. It’s just that some people in the west may find the methods used to do so unappetising.

Jay Rayner, TV presenter and the Observer’s food critic

9 Nanotechnology: ‘Privacy will be a quaint obsession’

Twenty years ago, Don Eigler, a scientist working for IBM in California, wrote out the logo of his employer in letters made of individual atoms. This feat was a graphic symbol of the potential of the new field of nanotechnology, which promises to rebuild matter atom by atom, molecule by molecule, and to give us unprecedented power over the material world.

Some, like the futurist Ray Kurzweil, predict that nanotechnology will lead to a revolution, allowing us to make any kind of product for virtually nothing; to have computers so powerful that they will surpass human intelligence; and to lead to a new kind of medicine on a sub-cellular level that will allow us to abolish ageing and death.

I don’t think that Kurzweil’s “technological singularity” – a dream of scientific transcendence that echoes older visions of religious apocalypse – will happen. Some stubborn physics stands between us and “the rapture of the nerds”. But nanotechnology will lead to some genuinely transformative applications.

New ways of making solar cells very cheaply on a very large scale offer us the best hope we have for providing low-carbon energy on a big enough scale to satisfy the needs of a growing world population aspiring to the prosperity we’re used to in the developed world.

We’ll learn more about intervening in our biology at the sub-cellular level and this nano-medicine will give us new hope of overcoming really difficult and intractable diseases, such as Alzheimer’s, that will increasingly afflict our population as it ages.

The information technology that drives your mobile phone or laptop is already operating at the nanoscale. Another 25 years of development will lead us to a new world of cheap and ubiquitous computing, in which privacy will be a quaint obsession of our grandparents.

Nanotechnology is a different type of science, respecting none of the conventional boundaries between disciplines and unashamedly focused on applications rather than fundamental understanding.

Given the huge resources being directed towards nanotechnology in China and its neighbours, this may also be the first major technology of the modern era that is predominantly developed outside the US and Europe.

Richard Jones, pro-vice-chancellor for research and innovation at the University of Sheffield

10 Gaming: ‘We’ll play games to solve problems’

In the last decade, in the US and Europe but particularly in south-east Asia, we have witnessed a flight into virtual worlds, with people playing games such as Second Life. But over the course of the next 25 years, that flight will be successfully reversed, not because we’re going to spend less time playing games, but because games and virtual worlds are going to become more closely connected to reality.

There will be games where the action is influenced by what happens in reality; and there will be games that use sensors so that we can play them out in the real world – a game in which your avatar is your dog, which wears a game collar that measures how fast it’s running and whether or not it’s wagging its tail, for example, where you play with your dog to advance the narrative, as opposed to playing with a virtual character. I can imagine more physical activity games, too, and these might be used to harness energy – peripherals like a dance pad that actually captures energy from your dancing on top of it.

Then there will be problem-solving games: there are already a lot of games in which scientists try to teach gamers real science – how to build proteins to cure cancer, for example. One surprising trend in gaming is that gamers today prefer, on average, three to one to play co-operative games rather than competitive games. Now, this is really interesting; if you think about the history of games, there really weren’t co-operative games until this latest generation of video games. In every game you can think of – card games, chess, sport – everybody plays to win. But now we’ll see increasing collaboration, people playing games together to solve problems while they’re enjoying themselves.

There are also studies on how games work on our minds and our cognitive capabilities, and a lot of science suggests you can use games to treat depression, anxiety and attention-deficit disorder. Making games that are both fun and serve a social purpose isn’t easy – a lot of innovation will be required – but gaming will become increasingly integrated into society.

Jane McGonigal, director of games research & development at the Institute for the Future in California and author of Reality Is Broken: Why Games Make Us Happy and How They Can Help Us Change the World (Penguin)

11 Web/internet: ‘Quantum computing is the future’

The open web created by idealist geeks, hippies and academics, who believed in the free and generative flow of knowledge, is being overrun by a web that is safer, more controlled and commercial, created by problem-solving pragmatists.

Henry Ford worked out how to make money by making products people wanted to own and buy for themselves. Mark Zuckerberg and Steve Jobs are working out how to make money from allowing people to share, on their terms.

Facebook and Apple are spawning cloud capitalism, in which consumers allow companies to manage information, media, ideas, money, software, tools and preferences on their behalf, holding everything in vast, floating clouds of shared data. We will be invited to trade invasions into our privacy – companies knowing ever more about our lives – for a more personalised service. We will be able to share, but on their terms.

Julian Assange and the movement that has been ignited by WikiLeaks is the most radical version of the alternative: a free, egalitarian, open and public web. The fate of this movement will be a sign of things to come. If it can command broad support, then the open web has a chance to remain a mainstream force. If, however, it becomes little more than a guerrilla campaign, then the open web could be pushed to the margins, along with national public radio.

By 2035, the web, as a single space largely made up of webpages accessed on computers, will be long gone.

As the web goes mobile, those who pay more will get faster access. We will be sharing videos, simulations, experiences and environments, on a multiplicity of devices to which we’ll pay as much attention as a light switch.

Yet, many of the big changes of the next 25 years will come from unknowns working in their bedrooms and garages. And by 2035 we will be talking about the coming of quantum computing, which will take us beyond the world of binary, digital computing, on and off, black and white, 0s and 1s.

The small town of Waterloo, Ontario, which is home to the Perimeter Institute, funded by the founder of BlackBerry, currently houses the largest collection of theoretical physicists in the world.

The bedrooms of Waterloo are where the next web may well be made.

Charles Leadbeater, author and social entrepreneur

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