Gold at $3,000 and 'UnBrexit' referendum among Saxo Bank’s outrageous predictions for 2023

Danish investment bank reveals its annual list of 10 events that are unlikely to happen, but would send shock waves across markets if they did

In 2023, gold will finally find its footing after a challenging 2022, according to Saxo Bank. Khushnum Bhandari / The National

The theme of the war economy has shaped Saxo Bank’s annual Outrageous Predictions report for 2023, according to the Danish investment bank.

The bank’s list of 10 events that are unlikely to occur in 2023 — but would send shock waves through global financial markets if they did — include the resignation of French president Emmanuel Macron, creation of an EU Armed Forces, an “UnBrexit” referendum in the UK and gold price rocketing to $3,000.

“This year’s Outrageous Predictions argue that any belief in a return to the disinflationary pre-pandemic dynamic is impossible because we have entered into a global war economy, with every major power across the world now scrambling to shore up their national security on all fronts; whether in an actual military sense, or due to profound supply-chain, energy and even financial insecurities that have been laid bare by the pandemic experience and Russia’s invasion of Ukraine,” Steen Jakobsen, chief investment officer at Saxo, said.

Here are Saxo Bank’s 10 outrageous forecasts for 2023:

Illustration: Saxo Bank

Billionaire coalition creates trillion-dollar consortium for energy investment

Outrageous prediction: In 2023, owners of major technology companies and other technophile billionaires will grow impatient with the lack of progress in developing the necessary energy infrastructure to address the energy transition. Teaming up, they create a consortium code-named Third Stone, with the goal of raising more than a trillion dollars to invest in energy solutions.

What Saxo says: “It’s the largest research and development effort since the original Manhattan Project that developed the first atomic bomb.”

Market impact: The companies that partner with the Third Stone consortium and can help realise its vision soar in value in an otherwise weak investment environment.

Illustration: Saxo Bank

French President Emmanuel Macron resigns

Outrageous prediction: After French President Emmanuel Macron and his allies lost their majority in Parliament following the June 2022 legislative elections, he understands that will be a lame duck for the next four years and he will not be able to pass his signature pension reform. Therefore, he decides to resign and retire from politics in early 2023.

What Saxo says: “Macron’s resignation opens the door of the Elysee Palace to the far-right contestant Marine Le Pen, thus causing a wave of stupefaction throughout France and beyond, and setting up the latest existential challenge to the EU project and its shaky institutional foundations.”

Market impact: Causes a wobble in the euro, but eventually the opposite as the sense of crisis galvanises a broader anti-populist coalition under new leadership — French OAT sovereign bond yields converge with German Bunds.

Gold price rockets to $3,000

Outrageous prediction: In 2023, gold will finally find its footing after a challenging 2022. In 2023, the hardest of currencies receives a blast of support from three directions.

First, the geopolitical backdrop of an increasing war economy mentality of self-reliance and minimising holdings of foreign FX reserves, preferring gold.

Second, the massive investment in new national security priorities, including energy sources, the energy transition and supply chains. Third, rising global liquidity as policymakers move to avoid a debacle in debt markets as a mild real growth recession takes hold.

Gold slices through the double top near $2,075 and hurtles to at least $3,000 next year.

What Saxo says: “2023 is the year that the market finally discovers that inflation is set to remain ablaze for the foreseeable future.”

Market impact: Spot gold rises above $3,000 per ounce and the VanEck Junior Gold Miners index quadruples in value.

Illustration: Saxo Bank

Creation of EU Armed Forces

Outrageous prediction: In a dramatic move, all EU members move to establish the EU Armed Forces before 2028, with the aim of establishing fully resourced and deployable land, sea, air and space-based operational forces, to be funded with €10 trillion ($10.5 trillion) in spending, backloaded over 20 years.

What Saxo Bank says: “In 2023, it becomes clearer than ever that Europe needs to get the union’s defensive posture in order.”

Market impact: Leading European defence companies outperform broader European market by 25 per cent, and new popular European defence exchange-traded funds are formed and enjoy strong investor interest.

Illustration: Saxo Bank

A country agrees to ban all meat production by 2030

Outrageous prediction: In 2023, at least one country, looking to mark out its lead in the race for most aggressive climate policy, will move to heavily tax meat on a rising scale, beginning in 2025. In addition, it will plan to ban all domestically produced live animal-sourced meat entirely by 2030.

What Saxo says: “Countries most likely to consider the food angle on climate change will be those that have legally binding net-zero emissions targets.”

Market impact: Equities like traditional “ESG-lite” Tyson foods suffer steep drawdowns until they begin investing in sustainable and even lab-grown meat.

UK holds 'UnBrexit' referendum

Outrageous prediction: In 2023, UK Prime Minister Rishi Sunak and Chancellor Jeremy Hunt manage to take Tory popularity ratings to unheard-of lows, as their brutal fiscal programme throws the UK into a crushing recession, with unemployment soaring and deficits soaring too as tax revenues dry up.

Mr Sunak caves and calls an election. A Labour government takes power in the third quarter, promising an “UnBrexit” referendum for November 1, 2023. The ReJoin vote wins.

What Saxo says: “Supply side tax cuts and demand-boosting subsidies for energy are a toxic cocktail for a country’s bond and currency markets.”

Market impact: After a weak performance in early 2023, the British pound recovers 10 per cent versus the euro and 15 per cent versus the Swiss franc on the anticipated boost to the London financial services sector.

Widespread price controls are introduced to cap inflation

Outrageous prediction: Inflation will remain a challenge to control as long as globalisation continues to run in reverse. In 2023, expect broadening price and even wage controls — maybe even something like the National Board for Prices and Incomes that Britain had in the late 1960s — being established in the UK and the US.

What Saxo says: “In a war economy, the government hand will expand mercilessly as long as price pressures threaten stability.”

Market impact: Surging demand for gold as markets become increasingly difficult to trade.

Opec+, China and India walk out of the IMF

Outrageous prediction: In a conference convened in Kazakhstan's capital Astana, leaders from Opec+ countries, China, India, Brazil, Pakistan, Central Asia countries, and tens of African Union countries gather to establish an international clearing union based on a new accounting unit and reserve asset: the Bancor (currency code KEY).

The KEY is used as an accounting unit to settle international trades and as a reserve asset. All the ICU member countries of the newly created monetary union withdraw from the International Monetary Fund.

What Saxo says: “Recognising the ongoing weaponisation of the USD by the US government, non-US allied countries move to leave the USD and the IMF to create an ICU and a new reserve asset, the Bancor.”

Market impact: Non-aligned central banks vastly cut their US dollar reserves, US Treasury yields soar and the US dollar falls 25 per cent versus a basket of currencies trading with the new KEY asset.

Japan pegs USD-JPY to sort out its financial system

Outrageous prediction: As the USD-JPY currency pair rises through 160 and 170 and the public outcry against soaring inflation reaches fever pitch, the Bank of Japan and Ministry of Finance know that the crisis requires bold new action.

First, they declare a floor on the Japanese yen at 200 in USD-JPY, announcing that this will only be a temporary action of unknown duration to allow for a reset of the Japanese financial system.

What Saxo says: “Japan’s real GDP [gross domestic product] drops by 8 per cent, but the reset puts the country back on a stable path.”

Market impact: USD-JPY trades to 200, but is well on its way lower by the end of the year.

Tax haven ban kills private equity

Outrageous prediction: In 2023, the Organisation for Economic Co-operation and Development launches a full ban on the largest tax havens in the world.

The EU tax haven ban jolts the private equity and venture capital industries, shutting down much of the ecosystem and seeing publicly listed private equity companies dealt a 50 per cent valuation haircut.

What Saxo says: “As the war economy mentality deepens further in 2023, national security perspectives turn increasingly inward. As defence spending, reshoring and investments in the energy transition are expensive, governments look for all available potential tax revenue sources and find some low-hanging fruits in haven-enabled tax dodgers.”

Market impact: iShares Listed Private Equity UCITS ETF falls 50 per cent.