A Deluge of Anti-Gold Predictions Last Summer Predicting Doom For the Yellow Metal Proved Spectacularly Incorrect.

Late July 2015 Gold Bashing Session Marked Bottoming for Gold Prices.

Part 1

Gold Authorities – the Experts

Gold’s fundamentals never change. The world around it does and you cant predict that – at least not the monetary side. You might be able to project industrial and jewelry demand.

In a crisis, you cant sell price.

Predictions are generally a fool’s errand. When those holding themselves out as experts or gurus make consistently bad preditions they risk looking even more foolish than the average person making price predictions.

One trait most gold price prognosticators share is when the price of gold is going down, they predict further declines. When the price of gold is going up, they predict higher prices.

Let’s take a look at some of the experts who often make predictions on the price of gold:

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The Gold Authorities

The Investment Banks

Goldman Sachs

Most of our gold price “experts” raise their targets when the price is rising and lower them when the price of gold is falling. Goldman Sachs, however, was brave enough to step in front of a freight train and repeat its “short gold” call twice during gold’s 2016 rally.

Bear Goldman Sachs

Feb 9, 2016 – Goldman Sachs: Gold $1,100 in three months, $1,050 in six months and $1,000 in 12 months.

February 16, 2016 – Goldman Sachs urges clients to short gold

Gold price when forecast made: $1,200 an ounce

Were they right? Oops! So far, no. Their call for gold at $1,100 in three months is off by $230 an ounce as of September 9, 2016, when the price of gold was $1,330 an ounce.

Update:June 24, 2016 Goldman raised its gold price targets to $1,300, $1,280 and $1,250 per ounce on a 3, 6,and 12-month basis, from $1,200, $1,180 and $1,150, respectively.

The bank also raised its average forecasts to $1,260, $1,261 and $1,250 per ounce, from $1,202, $1,150 and $1,150 for 2016, 2017 and 2018, respectively.

Will they finally be right?

The Goldman Sachs Muppet Show

An employee leaving Goldman Sachs, noted in a New York Times editorial in 2012 “Why I Am leaving Goldman Sachs” that he heard at least five different Goldman Sachs managing directors call the firm’s clients “muppets”.

Gold is a pet rock

The anti gold hysteria reached a peak last summer in a July 17, 2015 Wall Street Journal article entitled “Let’s Be Honest: Gold Is A Pet Rock”

Revenge of the Muppets!

Then Kermit got an idea…

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Goldman Sachs also participated in the summer of 2015 gold price bashing festivities.

July 21, 2015 – Goldman Sees Gold Dropping Below $1000 as Rout Deepens

Gold price when forecasts made: $1,080 an ounce

Were they right? Oops a daisy!

July 22, 2015 – ABN Amro Bank and Societe Generale join Goldman Sachs in wrongly predicting lower gold prices. Bloomberg: Goldman’s Currie Sees Gold Dropping Below $1,000 on Dollar In Bloomberg’s 7/22/15 article ABN Amro Bank and Societe General analysits were cited as saying they believed the price of gold “will approach $1,000 by December.”

Brave Goldman came back.

October 21, 2015 – Marketwatch article Goldman Sach: Don’t be fooled by gold’s recent comeback – Gold $1000 in 12 months

Were they right? Fool me once, can’t get fooled again!

Goldman Sachs hasn’t always been 100% bearish on gold. In 2013 Goldman Sachs was a tempered gold bear.

Bullish? Goldman

Feb 26, 2013: Goldman Sees gold at $1650 in 2013; $1450 in 2014

Gold Price when forecast made: $1,598 an ounce

Were they right? Nope. Gold finished 2013 at $1204 an ounce, never trading over $1,610 an ounce after Goldman’s 2/26/13 prediction of gold $1650 in 2013. In 2014, gold blew past Goldman’s $1450 an ounce price target on the downside and closed 2014 around $1200 an ounce.

Deutsche Bank

Deutsche Bank, who recently agreed to settle charges that they manipulated the gold market, was a mega bear last summer.

Bear Deutsche

July 20, 2015 – Michael Lewis commodities chief at Deutsche Bank: “‘fair value’ for gold is around $750; all the ducks are now aligned for a gold slide”

Gold Price when forecast made: $1104 an ounce

Were they right? Nein, gold hit its low for 2015 of $1080 four days later.

Michael Lewis of Deutche Bank has proven that he can make bad bullish calls too.

Bull Deutsche

October 2, 2012 – Marketwatch: Deutsche Bank lifts 2013, 2014 gold-price outlook 2013 gold forecast $2,113 an ounce; 2014 $2,000/oz; “Next year, the price of gold could exceed $2,200/oz. A surge in the gold price above this level is only a matter of time”

Gold Price when forecast made: $1,775

Were they right? Nicht wieder. Gold never hit $2,000 an ounce and had already peaked at around $1900 in September 2011.

The Gurus

Martin Armstrong

Martin Armstrong is a popular forecaster who seems to delight in telling his readers that the “gold promoters” don’t understand what moves the price of gold.

Does Mr. Armstrong?

Mr. Armstrong has been a gold bull and a gold bear. Last summer he was a gold bear. Here is what he had to say in July 2015:

Bear Martin

July 20, 2015 – From Gold:The Panic Cycle is Here “Gold is sharply declining, it will break the $1,000 level, and then everyone will start to look for $600–$700 area.”

A few days later on July 23, 2015, the “forecaster” made this observation in It Ain’t Over Until the Fat Lady Sings “Their target forecasts will be in the $600–$700 level. The key Weekly Bearish Reversals are 1084 and 1075, followed by 1042 and 1026. We have four Weekly Bearish Reversals providing support before the break at $1,000.”

Gold price when forecasts made: $1097-$1100 an ounce.

Was he right? The price of gold on September 9, 2016 was $1330 or about 20% higher than the price when Mr. Armstrong made his bearish assessment last summer and more than two times higher than the “$600-700 area”.

Mr. Armstrong wasn’t always a gold bear. He has also been a gold bull.

Bull Martin

In this November 7, 2009, piece Martin Armstong called for “Gold $5000”

Gold Price when forecast made: $1,135 an ounce.

Was he right? We are waiting for Gold $5,000.

Claude Erb/Cambell Harvey

Messr. Erb and Harvey were given prominence in the summer of 2015 for their call of gold $300.

Bears Erb/Harvey

July 30, 2015 Study predicts gold could plunge to $350 an ounce – authors of a landmark study say the recent decline in prices is just the beginning “the recent decline in prices is just the beginning” the gold community now needs to consider the distinct possibility that gold will trade for as low as $350 an ounce. “The first is gold’s fair value, which is currently $825

Bulls Erb/Harvey

From the same “landmark study” abstract posted May 3, 2013 – “If prominent emerging markets increase their gold holdings to average per capita or per GDP holdings of developed countries, the real price of gold may rise even further from today’s elevated levels”

Gold Price when forecasts made: July 30, 2015 $1,087 an ounce. May 3, 2013 $1,469 an ounce.

Were they right? Wrong on both counts. The gold price decline of the summer of 2015 was not ‘just the beginning’ but the end of the gold price slide and their speculation in May 2013, re emerging markets increasing their gold holdings perhaps resulting in a price higher than today’s price ($1,469 an ounce) has not happened.

Perth Mint

July 28, 2105: The Perth Mint Treasurer Nigel Moffatt Gold could fall to the $1000 mark

HSBC

HSBC weighed in last summer with a bearish prediction on the price of gold.

Bear HSBC

July 27, 2015 Gold may “move within striking distance of $1,000

HSBC adjusts gold price forecasts:
2015 average annual price forecast from $1,234 to $1,160 an ounce
2016 to $1,205 from $1,275 an ounce

Gold price when forecast made: $1,100 an ounce

Were they right? YES! According to Kitco, the average price of gold in 2015 was $1160 an ounce. As of May 9, 2016 the average price of gold in 2016 was $1202.70 just $2.30 off HSBC’s forecast.

HSBC got it right on the down side, but swung and missed on its bullish prediction in 2013.

Bull HSBC

September 12, 2013: HSBC lifts 2013 gold price forecast on higher physical demand HSBC “lifted its gold price outlook for this year to $1,446 per ounce from $1,396, and kept its 2014 forecast unchanged at $1,435 an ounce. http://in.reuters.com/article/2013/09/12/research-hsbc-gold-idINDEE98B0EM20130912

Gold Price when forecast made: $1,330.66

Were they right?

ABN Amro

December 8, 2015 – ABN Amro repeats their July bearish gold price prediction. ABN Amro and National Australia Bank: gold will drop to $1,000; Goldman Sachs said in November it expected gold to hit $1,000 in twelve months.

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