Mostly: Classical

[Frank Pembleton]

Gold, silver, platinum and palladium price forecasts for 2007
By: Lawrence Williams
http://www.mineweb.net/gold_silver/574487.htm

LONDON (Mineweb.com) --Giving credit where credit is due, Mineweb is showing here the precious metals price forecasts, and reasoning, for 2007 from Ross Norman of thebulliondesk.com precious metals website for this year’s London Bullion Market Association annual competition. Last year Norman was the winner in the LBMA competition gold price category and runner up for the other three precious metals. Over the past five years he has claimed two firsts, a second and a third in a field which includes leading bullion analysts from the global precious metals market, including Mineweb correspondent Rhona O’Connell.

Predicting precious metals prices can be a pretty pernicious exercise as too often one is left with egg on one’s face when the reality may prove far away from the prediction, however good the analyst. This year Mineweb will also be running a similar competition, open to all its readers, but just seeking predictions on the gold high, low, average and year-end prices for 2007. Details will be published on Mineweb this weekend. We hope a good number of readers will participate.

Norman is universally bullish on precious metals prices again this year following good runs in the previous few years.

ROSS NORMAN’S 2007 FORECASTS AND REASONING

Gold - High $850.00. Low $580. Average $716.

"We remain manifestly bullish for gold. Over the last five years gold has notched up a successive 23%, 25%, 5%, 20% and now a 23% rise ; for 2007 we expect the gold price to rise by a comparatively modest 18% to an average of $716, with a possible spike to an all time record high of $850. Whilst a weakening US dollar, stagnating mine production, buoyant oil prices, ongoing geopolitical tension and the spectre of inflation may provide a positive backdrop, we expect that sentiment by institutional investors demand growth arising from a broader access to gold both across a broader geographic spectrum as well as in terms of more products such as ETFs and bullion-linked indices. However, the fragmentation of the gold market that follows in consequence may well lead to increasing problems with liquidity and thus price volatilitity is also expected to remain high."

Silver - High $14.85. Low $11.95. Average $13.60.

"Despite less than inspiring fundamentals, silver confounds the critics having put in successive gains of 28%, 38% and 42% over the last three years. Even these very significant rises pale compared to the increases seen in the base metals sector where many of those metals play host to silver as a by-product (rises of between 44% for copper and 148% for nickel were seen in 2006). Investor demand, however, remains resolute and is driven by the belief that mine supply is finite, while industrial and consumer demand from the newly industrialising BRICS nations are likely to lead to levels of demand for goods that the West now takes for granted. The consenus seems to be that the long term impact on commodities will be deep and will be long term. Silver remains a beneficiary of that mood and we forecast 'stronger for longer'."

Platinum - High $1495. Low $1075. Average $1350.

"After years of a supply deficit, South African miners have been working hard to close the gap - but it just keeps racing away from them. There has been an ongoing concern that high yet volatile prices could trigger massive spend by industrials looking for substitutes. With the possible exception of fuel cells, the all important auto and industrial sector remains wedded to platinum and strength in the US and Asian economies is likely to continue to fuel demand. However, jewelllery demand is expected to suffer again in 2007 with platinum as wedding bands being more than compensated for by demand for allocated loco Zurich investment platinum."


Palladium - High $550. Low $290. Average $435.

"Late 2006 and 2007 has seen supply disruptions of oil, gas and indeed palladium from Russia that are vaguely reminiscent of the palladium shenanigans of 8 years ago. The effect back then was explosive upon the palladium price and there is merest possibility that we may be brewing for a second round of Russian delayed supplies which could potentially become the main issue affecting palladium in 2007. That aside, we remain positive about palladium prices notwithstanding concerns of a slow-down in the US economy as industrial demand slows. As a comparator to platinum, palladium remains very cheap while sharing most of the same chemical properties while palladium jewellery demand is at last establishing itself. We are bullish for palladium in 2007 and expect the auto sector to continue to drive the market higher (pun intended) as palladium makes in-roads (pun intended) into platinum usage on diesel catalytic convertors - a market which had historically very much favoured platinum."