REVISITED: 2012 Gold Price Predictions: High $2202, Average $1832, Year-end $1981

How well are we doing?

2012 gold price  - Predictions

**Silver Prices Now Added Below**

The Mineweb gold price competition is now closed and readers have come up with their verdict - and the average price predicted for the year is very close to that of a number of top banks. [We have constructed a sortable Excel Worksheet for Mineweb's table below & added a Bullish Ranking category. If you wish a copy please ask us: bilrum @ knology (dot) net]

Author: Lawrence Williams
Posted:  Monday , 23 Jan 2012 

LONDON - 
We have had 101 entries for this year's Mineweb gold price competition and the full listing of these is set out in the table at the foot of this article.  As can be seen in general readers are expecting gold to hit new highs during the year but perhaps not managing as high a year-end price as the forecast peak might suggest.

To an extent one suspects that many of the predictions represent wishful thinking by gold investors, although if this is the case such thinking could, in all but a couple of cases, be considered pretty muted, although there is a marked consistency in expectations of a $2,000 figure being breached at some stage during the year with 78% of entrants predicting this to occur.  Mineweb readers as a whole have tended to be bullish on the gold price in the past, but, in the event their annual averages have tended to be not far off the mark and just as accurate, if not more so than the professional gold analyst entrants to the similar London Bullion Market Association competition each year.  For the record the relevant LBMA competition figures for this year are High: $2055, Low: $1433, Average: $1766 - they are not asked for a year-end figure.

Interestingly too, the predictions from many of the entries in both our own and the LBMA competitions suggests entrants may be looking for a repeat of the 2011 price pattern with the gold price surging to new highs during the year before falling back sharply before the year end.  This is actually counter to the trend of most prior years when the gold price peaks have been much later in the year, while weakness has mostly been seen in the summer.

 Overall though the average gold price forecast for the year by readers is remarkably similar to the early year predictions of a number of top banks who mostly seem to be coming out in the high $1700 - low $1800 range for the year's average gold price - and the banks are not exactly known for over bullish forecasting.

We do not think that the general price trends expected by entrants are particularly surprising given the state of the global economy.  China remains a price driver with continuing advertising pressures being put on its citizens to buy gold in campaigns by the big (state-controlled) banks while all the while there is the strong assumption that the Chinese government is adding surreptitiously to its own reserves which had been seen as very small in relation to the country's economy.  This does tend to underpin the price to an extent with falls in the West during the day often countered overnight in the eastern markets.

However, the U.S. remains the world's biggest economy and any perceived recovery there does tend to have a negative impact on gold buying sentiment - as does any sign of dollar ‘strength', although the latter is somewhat spurious given the American debt situation which just means the dollar is perhaps weakening less fast than the other currencies against which the dollar index is measured.  The green shoots of recovery in the U.S. economy too may be partly due to temporary fiscal stimuli, some of which were heavily reduced at the beginning of 2012 so it remains to be seen whether some of the gains by U.S. industry will continue as strongly this year.

The overall U.S. debt situation continues to be a worry for long term investors, many of whom still see gold as the ultimate safe haven, as of course does the European debt crisis which is currently in the spotlight, and will continue to remain so as feverish attempts are made to maintain the common currency within those 17 nations which subscribe to this - the Eurozone.  The likelihood of a break up of this remains strong with both Greek and Portuguese debt currently rated at ‘junk' status, and some much bigger economies - notably Italy and Spain - near the brink.  No-one really knows the full ramifications of a default by any of these countries on the hugely interconnected global banking sector, but if it occurs the fallout could be pretty horrific - perhaps far worse than the Lehmann collapse which battered the markets in 2008.

But it is not just the Eurozone countries which are at risk.  The U.K. too, although making perhaps a more concerted effort to roll back its debt (so far unsuccessfully) is a major world economy which is also at serious risk.  It does, unlike the individual Eurozone nations, but like the U.S., have the facility to print its own money and ultimately perhaps inflate its way towards mitigating its debt problems through devaluation of its currency, but the Eurozone imbroglio is making this more and more difficult with Europe being the U.K.'s major market and a downturn there impacting adversely on Britain's exports.  Already nine European nations have been downgraded by at least one of the major ratings agencies and it may not be long before others suffer the same fate, as could even Japan.  A Greek or Portuguese default could accelerate this process.

As noted above China has been the main driver of the global economy in the past few years with huge growth (by Western standards) but there are fears that this growth could be slowing as the country's export-driven economy (buoyed by a heavily controlled exchange rate) cannot be but adversely affected by the austerity programmes being put in place in the West.  True its domestic  economy is growing by leaps and bounds, but it could still take time before this can grow fast enough to counter the downturns elsewhere.

Gold should be a beneficiary in all the global uncertainty, but this does not necessarily mean there won't be setbacks in the progress of the price.  As was seen in 2008, gold can fall back sharply as a struggle for liquidity in the face of bank collapses means good assets are sold along with bad.  But as in late 2008/early 2009 gold may well bounce back far faster than other assets so the big money is likely to remain invested in gold as a possible wealth preserver.

In the U.S., election rhetoric from the more hard-money Republican Presidential candidates may also help raise gold's profile, so this could be another factor which could benefit the price overall.

So, be prepared for a bumpy ride in gold in the current year, and perhaps for several more years to come until some realistic end to the global financial crisis is seen.  Overall one would expect the price trend to remain upwards but as the Mineweb reader, and other, predictions suggest there could be some sharp falls along the way.

Table: Entries for the 2012 Mineweb gold price competition.

Name or Nickname    High      Low  Year end  Average

007robo	2150	1575	1855	1788
Aaron Vederoff	1989	1478	1946	1743
ALLGOLD	2400	1520	2100	1700
Alvaro Velasco	2175	1150	1320	1662
Andy Palan	2050	1550	1900	1750
apcklapka	2367	1607	2235	1998
Arrien Westhuis	2200	1495	2110	1895
Baron	2478	1578	2267	1988
Barry	1939	1549	1879	1780
Bill Rook	1885	1530	1720	1670
Bill Rummel	2180	1590	1834	1750
Bob Butalia	2128	1454	1973	1641
Bradley Vooren	2217	1517	1958	1718
Brimstone	2034	1534	1875	1734
Broncel	1910	1515	1712	1714
CIGA Doc	2512	1568	2246	2063
Clint O'Bullion	2115	1490	1890	1815
Colin Porter	2215	1589	2115	1990
Craig Stockill	1840	1080	1200	1640
David Fell	2460	1486	2360	1950
David Tretbar	2122	1371	1782	1674
Dennis	2412	1598	2274	1936
Dick Leonard	2700	1700	2700	2200
Divad	2020	1580	1810	1740
Doug Silver	1700	1300	1300	1550
Douglas Cundey	4210	1550	3700	2560
DR KOK	1850	1500	1700	1675
egarf	2131	1598	1996	1901
Erik Highwind	2777	1444	2333	1999
Euan Worthington	2237	1429	1673	1735
Fazuza	2145	1350	2145	1755
fitmike	2227	1478	2156	1843
Frank	2924	1599	2924	2261
FreeLance	2414	1570	2265	1980
FUBAR	2116	1365	2076	1748
G-Vision	2030	1536	1990	1779
Geoff Candy	2019	1460	1573	1840
Gold Bull	2212	1486	1812	1793
Gold Stock Bull	2350	1400	2200	1950
GoldenSing	2250	1522	2050	1700
Gorm	2875	1605	2388	1995
Graham Smith	2089	1525	1872	1710
graybeard063	2520	1598	2160	2010
GUY SMILEY	2398	1522	2222	1806
H.J. Clifford	1964	1574	1791	1822
Herb Duerr	2120	1430	1947	1778
Hilton Tarrant	1944	1765	1836	1854
Jerry	2450	1550	2000	1900
Jon Darcey	2223	1506	2103	1776
Jonathan Bell	1957	1547	1654	1682
Lawrence Williams	1985	1590	1875	1778
LOOKOUT	2400	1540	2100	1910
Maguana 6	1990	1500	1800	1758
Malcolm Hutton	2122	1611	1839	1839
Marcocruces	2375	1600	2250	2075
Maria Steyn	1985	1412	1638	1548
markk	2050	1400	1750	1830
Martin M	2125	1450	1950	1835
Matt	2100	1566	1925	1825
Matthew Grainger	2075	1275	1955	1750
Mike Booton	2115	1585	1720	1786
Mike Riegelman	2552	1520	2309	2062
Mluzar	2520	1595	2297	2089
Morne Kotze	1996	1589	1845	1745
mwhof	2013	1567	1877	1845
Neil Robinson	2113	1430	2038	1895
Nic Wilson	2045	1615	1924	1723
Obewon86	2241	1435	1849	1790
Ocnus	2013	1646	1996	1826
Palladium is safer	2040	1560	1995	1900
Pat Willis	2101	1520	1820	1810
Peter Weiss	1857	1412	1534	1670
petscho	2441	1486	1946	1921
Phil	2400	1500	2400	1800
Phillip Swanepoel	2280	1598	2130	1880
R. Christian	2148	1442	1890	1768
Richard M Palmer	2518	1590	2485	2075
Robert Blair	2120	1590	1920	1890
Robert Schafer	2312	1496	2198	1876
Robert Wallace	2250	1475	2010	1860
Ron Wimmer	2048	1590	1811	1730
Ross Norman	2100	1590	1940	1765
Ryan Bogenschneider	2122	1490	1876	1837
S.E. Hayden	2023	1520	1823	1738
Skagit Bob	2137	1373	1973	1873
Socrates	1906	1482	1794	1772
Stephen R Merriman	2430	1580	2300	1970
straightsix	2810	1560	2620	2010
Sunil Kumar Gupta	1785	1150	1550	1500
T. Kelly	1975	1450	1600	1750
Tazio 2012	2300	1550	2150	2050
Tim Dudley	2155	1566	2075	1850
Timot 78	2200	1430	2050	1891
Tom Hartanto Soendoro	1910	1100	1600	1605
Tony Low-Beer	1705	1195	1425	1485
Vern Rampton	2375	1590	2360	2115
Victor Gapare	2020	1300	1800	1600
William C Lee	2500	2000	2200	2200
Wilze	1880	1404	1735	1630
www.gold-invest.co.uk	1680	980	980	1350
Zee	2453	1598	2250	2025
Averages	2202.24	1499.1	1981.2	1832.3

Source

Here's how we compare in both Gold and Silver with the "experts" - BANKERS!

       Silver Hi: $50.00 Lo: $20.00 Average: $37.35. As with gold, we expect heightened price volatility for silver in 2012 – but more so, with investors seeing silver as a leveraged play on gold. This in part reflects heightened political and economic uncertainty which plays havoc with the commodities markets. We expect to see silver holding robust interest amongst the speculator community and gaining in respect amongst the investor community with a tightening market justifying prices well above the $20 level.

       However, slower global industrial output coupled with a firm US dollar in H1 2012 should provide a drag on runaway silver prices – although we see the possibility of a brief price spike based around difficult geopolitical concerns. Should economic conditions prove less difficult than feared in H2, then there are grounds for saying that silver could benefit as a recovery stock of sorts based upon its good industrial applications. So for silver its a case of heads or tails / we win really.

from BullandBear