LAWRIE WILLIAMS: Bleak 1-year forecasts for gold ($1160) and platinum ($1072) at LBMA conference
Perhaps the attendees at this year’s LBMA conference in Vienna had been taking lessons from the bank analysts in predicting forward gold prices. Take the current price level and go up or down a little – most probably down! The audience at this year’s conference was, as in past years, asked to predict the likely principal precious metals prices for the date of next year’s conference – to be held in Singapore from October 16th-18th. For gold and platinum the predictions were, to say the least, pretty dismal for those involved at the producer end of the industry, although those for silver and palladium perhaps a little more positive, but still not hugely bullish.
The average gold price prediction from the audience, which encompassed a wide spectrum of the precious metals sector from many countries, was for a price of $1159.88 at this time next year – in other words a little lower than it is today. I suppose in retrospect that might be seen by some as positive given the hugely negative outlook by the Day 1 conference panel discussion on Precious Metals Investment where predictions of gold to fall below $1000 – perhaps down to $800 – were the consensus (see: Little cheer for gold investors from LBMA conference panel). No comfort at all for those looking for a gold price pickup.
The prediction for the platinum price in a year’s time was $1072 - marginally above where it is residing today. Still at a discount to the gold price. Given that few at the conference had anything good to say about platinum in the current diesel-engine negative environment that might be considered a positive but perhaps they were swayed marginally here by Peter Duncan of Johnson Matthey’s comments that media reporting on diesel emissions was both irresponsible and irrelevant (See: LBMA: Media coverage of diesel emissions irresponsible and irrelevant) – but obviously not by much.
Somewhat surprisingly, given the low gold price prediction, that for silver was rather more positive with a forecast of $18 from the audience. With silver usually riding on gold’s coattails, but perhaps in a more exaggerated manner, this price prediction bore little relationship to that suggested by a lower gold price - a rise of around 14% over the next year.
Palladium – perhaps the worst performing precious metal year to date (down 13%) despite most analysts predicting it to be the likely best performer in the complex – was seen as rising to $844. Will the LBMA audience be as far out as the analysts have been so far this year?
Predicting future metals prices – particularly in the precious metals sector – is something of a mug’s game, but a popular one. Everyone wants to prove to be a better forecaster than the analysts who are paid to do just that job – and beating the analysts at their own game is sometimes not difficult to achieve. But when the experts can’t get it right what hope has a conference audience. But then averaging out the responses might well produce a more accurate result. We’ll get to know this time next year.