As the year’s end approaches, we will read several annual reviews and predictions of gold’s price in 2013. Specifically, a recent survey of 16 top analysts by Bloomberg shows an average predicted high of $1925 per ounce a year from now. That would be about 10% higher than gold’s current price. Although a 10% gain seems modest, any rise at all would also mark gold’s 13th straight year of positive gold gains, assuming we hold on to this year’s gain for another five weeks. (This year’s gain in gold is about 9%, so far.)
Here are a few specific gold price predictions and quotations from experts looking ahead to 2013 prices.
(1) Raymond Key, head of metals trading at Deutsche Bank, told Bloomberg News last week that he expects gold to surpass $2,000 an ounce next year. (2) ScotiaMocatta, a large bullion bank, issued its annual gold forecast last week, predicting a 2013 range from $1,600 to a new high of $2,200, due to “the broad-based appeal of gold as an alternative currency” and “monetization” of debts. And (3) Michael Mullaney, the chief investment officer of the $9.5 billion Fiduciary Trust in Boston, says, “It’s a good time to garner some protection in portfolios by having some real asset like gold.” Interesting enough, major dealers across the country are reporting increased sales of gold coins.
Platinum has been strengthening in recent months due to falling production in South Africa resulting from labor disputs. Platinum output is the least since 2000 leaving the market short by 400,000 ounces, the most since 2002. Meanwhile, silver continues to beat gold this week, this month, this year and over the last decade. Last week, Thomson Reuters GFMS (the former Gold Fields Minerals Services) predicted that silver would reach new highs above $50 in 2013. Their report was published before the key economic indicators in Germany and China pointed to more rapid global economic growth in 2013, so their forecast would likely be even more bullish today. They said the key to rising silver next year is a continuation of the world’s central banks’ easy money policies. That has been true for a long time, but silver is an industrial metal as well as a monetary metal, so it would rise even faster when China returns to rapid growth. To give you an idea of the role of a growing China in the global market for resources, Marc Faber said that China now consumes 53.2% of the world’s cement, 47.7% of its iron ore, 46.9% of its coal and 45.4% of its steel. In time, the wealth flowing into China will give its citizens sufficient disposable income to buy more gold.
Gold’s Track Record in the First Year of the 4-Year Presidential Election Cycle
The four-year Presidential cycle is one way to try to predict the stock market, which generally rises in election years and remains relatively flat in non-election years. Recessions tend to come during the first years of Presidencies, so that the incumbent can get the painful medicine out of the way early in his term. The last two recessions were in 2001 (Bush’s first year) and 2009 (Obama’s first year), for instance.
The gold market is harder to predict, but we have some evidence that the first year of each Presidential term is often good for gold. Here is the record of the first year after the last 10 Presidential elections.
Year Gold Winner
1973 +73% Republican Richard Nixon (re-election)
1977 +21% Democrat Jimmy Carter
1981 -32% Republican Ronald Reagan
1985 +7% Republican Reagan (re-election)
1989 -3% Republican George H.W. Bush
1993 +20% Democrat Bill Clinton
1997 -21% Democrat Bill Clinton (re-election)
2001 0% Republican George W. Bush
2005 +20% Republican Bush (re-election)
2009 +24% Democrat Barack Obama
2013 ? Democrat Barack Obama (re-election)
Looking at all 10 of the last post-election years, your odds of gains are about 2 to 1, with six rising years, three falling years and one flat year. The gains during re-election years (1973, 1985, 1997 and 2005) are even more impressive with three out of four re-election years rising. With President Obama’s re-election this looks promising for gold in 2013!