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LAWRIE WILLIAMS: New Gold Price Forecast from Murenbeeld

As regular readers of my musings will be well aware I rate Murenbeeld & Co. very highly among those who make a regular stab at predicting the path of the gold price.  I would describe Martin Murenbeeld himself as cautiously bullish on gold, as I am, and his Vancouver Island-based team’s predictions over the years have tended to be far closer to actual gold price performance than most others.  Thus I do tend to cover his gold price predictions and their updates as being among the most realistic, and likely, out there.  Murenbeeld has just updated his current forecast - not wildly different from his previous one (See: Murenbeeld decidedly bullish on gold).  He therefore remains bullish, although he has cut his anticipated price position marginally from his previous forecast – see below for his latest expectations and their calculation: 

As can be seen from the above table taken from the Group's latest Gold Monitor newsletter, Murenbeeld comes up with three gold price scenarios – a bearish case (A), a most likely one (B) and a bullish one (C).  He gives each of these scenarios a likelihood weighting and then comes up with a calculated forecast for the average quarterly price, and then adds an additional amount for geopolitical events – for the current quarter this takes into account reactions before and after the U.S. Presidential election.  Thus his prediction for the current quarter is for an average price of $1,965, rising to marginally over $2,000 for Q1 2021 and then continuing to trend higher as time progresses up to $2,335 by Q1 2022.

Murenbeeld describes his forecasts as ‘very bullish’ for gold, and for him they are, although way below those of most of the ultra-bullish commentators out there.  So far the Murenbeeld forecasts have been much closer to reality!  The slight decline from his previous forecast back in July is due to the view that the growth rate in global money supply has moderated somewhat quicker than was assumed back then, although the growth rate in global liquidity still remains high so there is only a marginal reduction in the gold price forecast from last quarter, while the extreme rate of growth in the U.S. Fed’s balance sheet has moderated slightly.  The analysts do anticipate a return to Fed balance sheet growth in 2021 and there is an expectation that the U.S. dollar index will continue to fall, but perhaps at a fairly slow rate.  These factors are all seen as gold positive.

The Murenbeeld team has always pointed to the extremely close correlation between the movement in the gold price and the inverse of the 10-year Treasury Inflation Protected Securities (TIPS) yield and there is the expectation that the TIPS yield will continue to weaken and the gold price rise accordingly.  Murenbeeld also notes that the group’s projections, although they are well below the expectations of the more bullish analysts, are still a fair amount higher than the futures markets are currently predicting – again those figures are shown in the above outlook table.

24 Oct 2020 | Categories: Gold

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