By: P Radomski | Fri, Dec 30, 2011
We are on the cusp of a new year, and this is the time that we take a look at those brave (or foolhardy) financial analysts who take out their crystal ball and predict where precious metal prices will go in 2012.
But first let's see how last year's prognosticators (including Sunshine Profits) fared. We are talking about predictions for the very chaotic 2011.
Bank of America Merrill Lynch had forecast last year at around this time that gold would top at $1,500 in the near-term and that the second half of 2011 would be more challenging. Well, gold did a lot better than $1,500 this past year. It hit an all-time nominal high in August of $1,923.70 an ounce. Gold may be down about 16% from the August highs, but it's still up roughly 14% from the 2010 settlement of $1,421, which still makes it one of the best performers this year. Even with prices falling again this week, the metal is still the top performing commodity of 2011.
Peter Schiff said about gold prices: "You ain't seen nothing yet." He was overly optimistic and predicted that gold will go up to $2,000. He might yet be proved right, but not in 2011.
James West, publisher of the Midas Letter, said gold was likely break through $1,700 an ounce by the end of 2011 and silver will likely see $35, and may even go through $40 an ounce. Well, he was right. Gold definitely broke through the $1,700 an ounce range.
Nick Barisheff, president of Canada's Bullion Management Group Inc., was looking at $1700-to $2,000 per ounce gold in 2011; he was within the right range.
At Sunshine Profits we also went out on a limb and guesstimated gold's high for 2011 at $1,800 and $45 for silver.
A review of 2011 shows a chaotic picture for the precious metals. During the first few months of 2011 the price of silver sharply outperformed the price of gold and by the end of last April the price of silver rose by nearly 56%, while gold rose "only" 9% from the beginning of the year. With the sharp rise in silver prices the CME raised margins which caused silver prices to decline to 7% above the initial price level of 2011. The next rally came from May to the beginning of September for both metals due to uncertainty about the stability of the U.S. economy and the debate about raising the debt ceiling. The rally came to a halt in September due to the CME raising margins and also because the Fed did not come up with QE3. The decline of precious metal prices soon followed.
To predict how precious metals will behave in the short run, let's begin the technical part with the analysis of the USD Index. We will start with the very long-term chart (charts courtesy by http://stockcharts.com.)
Summing up, the situation in the USD Index is more bearish than not. The breakout above the declining long-term resistance line may be seen at some point, but until it is seen and verified, this situation here will not turn to bullish. The currently bearish outlook for the dollar translates into o rather bullish outlook for precious metals.
To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It's free and you may unsubscribe at any time.
But first let's see how last year's prognosticators (including Sunshine Profits) fared. We are talking about predictions for the very chaotic 2011.
Bank of America Merrill Lynch had forecast last year at around this time that gold would top at $1,500 in the near-term and that the second half of 2011 would be more challenging. Well, gold did a lot better than $1,500 this past year. It hit an all-time nominal high in August of $1,923.70 an ounce. Gold may be down about 16% from the August highs, but it's still up roughly 14% from the 2010 settlement of $1,421, which still makes it one of the best performers this year. Even with prices falling again this week, the metal is still the top performing commodity of 2011.
Peter Schiff said about gold prices: "You ain't seen nothing yet." He was overly optimistic and predicted that gold will go up to $2,000. He might yet be proved right, but not in 2011.
James West, publisher of the Midas Letter, said gold was likely break through $1,700 an ounce by the end of 2011 and silver will likely see $35, and may even go through $40 an ounce. Well, he was right. Gold definitely broke through the $1,700 an ounce range.
Nick Barisheff, president of Canada's Bullion Management Group Inc., was looking at $1700-to $2,000 per ounce gold in 2011; he was within the right range.
At Sunshine Profits we also went out on a limb and guesstimated gold's high for 2011 at $1,800 and $45 for silver.
A review of 2011 shows a chaotic picture for the precious metals. During the first few months of 2011 the price of silver sharply outperformed the price of gold and by the end of last April the price of silver rose by nearly 56%, while gold rose "only" 9% from the beginning of the year. With the sharp rise in silver prices the CME raised margins which caused silver prices to decline to 7% above the initial price level of 2011. The next rally came from May to the beginning of September for both metals due to uncertainty about the stability of the U.S. economy and the debate about raising the debt ceiling. The rally came to a halt in September due to the CME raising margins and also because the Fed did not come up with QE3. The decline of precious metal prices soon followed.
To predict how precious metals will behave in the short run, let's begin the technical part with the analysis of the USD Index. We will start with the very long-term chart (charts courtesy by http://stockcharts.com.)
Summing up, the situation in the USD Index is more bearish than not. The breakout above the declining long-term resistance line may be seen at some point, but until it is seen and verified, this situation here will not turn to bullish. The currently bearish outlook for the dollar translates into o rather bullish outlook for precious metals.
To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It's free and you may unsubscribe at any time.
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