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Bloomberg Gold Price Forecast 2009 Survey- Gold the Perfect Insurance

Commodities / Gold & Silver 2009 Jan 07, 2009 - 11:41 AM GMT

By: Mark_OByrne

Commodities Best Financial Markets Analysis ArticleGold and Silver Investments have partaken in the Bloomberg Precious Metals Survey (see table of forecasts below) and the Reuters Precious Metals Poll. We would prefer not to get into the forecasting and predictions business as predictions and forecasts are fraught with uncertainty at the best of times and this is particularly the case in 2009 given the massive macroeconomic and geopolitical uncertainty and risk.


As many have found to their cost in recent years it is nigh impossible to predict the future movement of any commodity, currency, equity indices, property market or any other asset class (particularly in the short term) as there are so many variables. Having said that, in terms of accuracy we have been far more accurate than most other commodity brokers, bullion dealers and banks in recent years as we have called these markets right on a consistent basis and hopefully we can predict lines of probability.

Company Gold Silver Platinum Palladium
Dallas Commodity Co. $1,200
MF Global $1,200 $18
GoldMoney $1,150
Gold & Silver Inv. $1,025 $19.5 $950 $250
Adrian Day's Asset Management $990 $13.5
Standard Chartered $985 $11 $1,000 $203
HanMag Futures Corp. $950
Midas Management $950
Bullion Desk $921 $16.25 $1,080 $256
Heraeus $910 $10.15 $945 $230
Religare Commodities $910
NH Investment & Futures $900
R.W Wentworth & Co. $900
Samsung Futures $840
Korea Exchange Bank $825
Fortis and VM $825 $12 $900 $180
Barclays $820 $9.80 $1,020 $210
JPMorgan $800 $9.80
Kitco $810
Finotec $780
----------------------------------------------------------------------------------------------------------
2009 Forecast: (Median) $910 $12 $975 $220
2008 Average: $872.25 $14.97 $1,574 $350.90

Massive volatility and unpredictability in all markets is why we advise avoiding leverage as leveraged players will likely again have a very torrid time in 2009.

Gold and Silver Investments are the fourth most bullish on gold but the most bullish on silver. We believe our estimates to be conservative as the average price of gold in 2008 was some $872/oz and thus an average price of some $1,020 is only some 20% above the 2008 average price. Similarly a high of $1,250 is only 21% above the 2008 high.

There is a potential that prices rise far above these levels, particularly as the (Commodity Futures Trading Commission) CFTC is now investigating the massive concentrated short positions in the COMEX gold and silver markets – if these short positions get squeezed and some of the bullion banks are forced to buy back their huge short positions, prices could rise to levels that will surprise even the bulls.

The survey is very interesting as it shows that there is a wide disparity between the forecasts of the many participants and between the bulls and the bears. There are more bulls than bears with only 7 of the 20 participants calling for a lower average price in 2009.

Most bearish are the online trading platform Finotec, bullion dealer Kitco and the bullion banks JP Morgan and Barclays. They all forecast an average price of between 6.3% and 11.8% below the average price of $872/oz in 2008. Many of the bears have been bearish for a number of years and have failed to realize that we are in a bull market. Given the deflationary headwinds assailing us early in 2009, they may be proved right this year as further massive deleveraging could affect the gold price.

However, we believe this to be unlikely given the massive macroeconomic and systemic risk and increasing monetary and geopolitical risk. And we believe that should the deflationary pressures continue throughout 2009 than most commodities and asset classes will again fall sharply in 2009 but gold will again outperform. As gold did in 2008 when it was up 6% in USD terms and by far more in most other currencies. Importantly, gold also rose during the last bout of sharp deflation in the Great Depression of the 1930's when Roosevelt revalued gold by 60% and devalued the dollar by 60%, from $22/oz to $35/oz.

Also there is the significant risk that deflation will gradually give way to virulent stagflation (especially in the US) if the dollar resumes its bear market and begins to fall sharply again.

All in all it promises to be a very uncertain and likely volatile year and it will be interesting to see how gold and silver actually perform.

More details of the Bloomberg Precious Metals Survey, can be read at 'Gold May Advance for Eighth Year as 'Perfect Insurance' Sought' - http://www.bloomberg.com/apps/news?pid=20601103&sid=a1C1lhTmTaFo&refer=us

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold and Silver Investments Limited
No. 1 Cornhill
London,
EC3V 3ND
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@www.goldassets.co.uk
Web www.goldassets.co.uk

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

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