While fundamentals seem to favour much stronger gold and silver prices this year, strange goings-on in the markets, should they continue, could see price rises fall short of expectations.
LONDON (MINEWEB) – Yes – its annual stick your neck out time for precious metals commentators as we try and foretell what will happen in the markets over the coming year – and precious metals price forecasting is an invidious business.
Once you go on record with a prediction it’s there for all to see – and, if you’re unlucky, to refer back to should your crystal ball prove to be wildly incorrect. So, firstly, what is this writer’s track record in predicting the gold price? Well, in 2012 not great, although far less inaccurate than most.
My prediction for the year-end gold price was $1875 – well above the final London close for the year of $1664, indeed a little more than $200 (or 12%) out. Perhaps not too bad, when one considers that in January, $2,000 was a fairly common year-end target and even the more conservative analysts were mostly predicting better things for the gold price.
For 2011, I was also rather over-optimistic with a year-end price prediction of $1760 against a final London close of $1574, despite gold soaring to well above this predicted level earlier in the year. Timing is everything in the gold price prediction game. This was 10.6% above the final figure – and even so, far closer than many were predicting.
Now if we go back to 2010, I managed to come within $34 of the year-end price of $1410 – this time on the conservative side and only 2.4% out.
So, what about 2013? The global economic price drivers which have brought the yellow metal to where it is today are virtually all still in place.
Indeed, some parts of the global economy are remain pretty dire and there’s likely to plenty of bad news still ahead which should drive the gold price higher.
However, in recent months we have seen some strange market activity which defies normal trading logic. Activity which suggests the gold market (and the silver one too) are open to manipulative abuse through huge amounts of paper metal being dumped instantaneously in what looks to be a concerted effort to keep the price from rising – or indeed to force it lower.
It may just be that some institutions with enormous pockets are using high frequency trading to drive the price down, taking weak holders out of the market to then buy back at lower prices and make vast profits when gold does eventually move to a higher level. Others attribute more sinister motives to these sales – see Sinclair incandescent – biggest manipulative play in gold ever as an example of one such interpretation of what has been seen as the most recent take-down in the gold price.
While I personally discount the likelihood of a major gold price crash during the current year, there are obviously powerful forces at play which seem to cause the metal price to defy logic.
Virtually all the fundamental indicators suggest that the gold price should increase, and increase strongly in 2013.
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