LAWRIE WILLIAMS: ‘Very bullish' on gold – Murenbeeld
When one of the world’s foremost gold forecasters comes up with a highly positive viewpoint on the gold price, other analysts and investors tend to take his pronouncements very seriously. Vancouver Island-based economist, Dr. Martin Murenbeeld, who would normally be described as one of the more conservative, but perhaps most consistently accurate, of the world’s gold analysts ends his commentary in his latest newsletter to subscribers with the following statement: “Rising global debt, rising budget deficits, and easy monetary policies are front and center in our medium-term outlook. Ergo, we are very bullish on gold over this time frame!
Dr. Murenbeeld’s annual gold forecasts are highly rated by followers of the gold market and this writer is among these. While he has yet to come up with his full price forecasts for the 2020 calendar year, we should point out that ‘very bullish’ in his terms is not looking at $5,000 gold or higher as are some of the more bullish commentators, but perhaps somewhere in the $1,600s unless something catastrophic happens globally, in which case anything is possible, but perhaps we wouldn’t want to contemplate this kind of scenario. He has promised an updated price forecast for gold early in the New Year.
:Last year his mid-year forecast for the gold price was a little low, but his September update was just about spot on. He forecast an average gold price of $1,390 (the final outcome was $1,391.6 - based on the London afternoon fix throughout the year – and a year-end price of near $1,500.
As noted in his summary quoted above, Dr. Murenbeeld is particularly concerned about global debt levels and seemingly ever-increasing budgetary deficits in some of the world’s leading economies - and particularly in emerging economies where a rise in interest rates could create major difficulties. While he sees any significant rise in U.S. interest rates as unlikely in the near term with perhaps a further fall and a weakening U.S. dollar in prospect, which would be positive for gold. But, he is also concerned that some central banks could allow interest rates to rise to help ease heavy debt burdens in the major economies which could manage such increases.
In the U.S., and presumably also in a number of other countries, Dr. Murenbeeld is also concerned about the aging population and the state’s likely inability to support an older population in its declining years. He notes that some commentators suggest that in the U.S. alone some 41% of current 35-64 year olds will run out of money in their later life as companies shift responsibility for retirement savings to individuals. If the government can’t or won’t offer support to these aging households, just how will the consequent lack of demand affect the economy? And how will this play out under the Federal Reserve’s policies of price stability and low unemployment?
In the oft repeated mantra of Michael Lewitt’s Credit Strategist newsletter, people should ‘buy gold and protect yourselves.’ But while this may be self-evident to gold supporters it may not be so to the average person in the street. Over the years gold has been a solid wealth protector. Maybe it won’t provide the kind of huge uptick in value that some may be hoping for, but if one follows Dr. Murenbeeld’s analysis it can provide a slow and steady protection against declining values elsewhere.
21 Dec 2019