So the gold price drops, so the gold forecasts drop. Some recent calls in order of bearishness:
- Deutsche Bank – fair value $785
- Morgan Stanley – $800 under worst case scenario, $1,190 average for 2015
- Claude Erb – fair value $825, will overshoot on downside to $350
- Bloomberg Survey – $984 average estimate by 31 Dec 2015
- Goldman Sachs – could fall below $1,000
- ABN Amro – $1,000 by 31 Dec 2015 and $800 by 31 Dec 2016
- OCBC – $1,050 by 31 Dec 2015
- Capital Economics – $1,050 by 30 Sep 2015, $1,200 by 31 Dec 2015
- UBS – $1,180 average price over second half of 2015
Towards the end of 2010 I started recording forecasts in a spreadsheet, as I noticed many analysts revised their forecasts frequently in response to moves in the gold price. By 2012 I had given up as it was a lot of work to make one point – that in general analysts were just following or projecting the trend.
The chart below shows the forecasts I accumulated from late 2010 to early 2012 (the clustering around July are yearly average forecasts) and I’ve added in the recent ones above.
The first red arrow shows that in general most of the 2012 and 2013 forecasts were just extrapolating the 2011 trend, with varying levels of bullishness. The second red arrow shows that these recent forecasts seem to just be extrapolating the recent downward price trend.
Hard not to be cynical about it, especially since many were not out there loudly making these sub $900 calls before the mid-July gold price breakdown. Even Goldman Sachs, who were prepared to make a big call in mid-2013 for gold to reach $1,050, were about a year early, with their forecast being for 31 Dec 2014.
One of the most reliable forecast surveys has been the LBMA with the chart below showing their performance.
Generally the average yearly price has been within the highest and lowest forecast across the analyst surveyed (except for 2013). For 2015 however, the range is so wide as to be impossible for the price to not get within it, and thus not very helpful.
So far this year the average gold price is close to $1,200, compared to an average forecast of $1,211. If the gold price averages $1,050 for the rest of year the yearly average for 2015 will be $1,140, so it looks like the LBMA’s pool of bullion bank analysts will perform well this year, on a “wisdom of crowds” basis.
I’ll leave you with an upbeat prediction from my spreadsheet for gold to reach $5,000 by the end of 2015 by, surprise, Martin Armstrong (who has been putting the boot into the “gold promoters” recently), made in Dec 2010:
Martin has been negative on gold recently but I guess the $5,000 gold move hinges on his long mentioned 2015.75 Big Bang. If gold does indeed move up from the $1,000s to anywhere near $5,000 in the space of 3 months, that will be best gold call ever made.