|Updated: 31 Dec, 2005|
The 2006 Gold Prediction Appears
It is pretty foggy in there, and I'm guessing (predicting) that this fog represents a bit of volatility for the upcoming year. However with gold finishing the year at $516/ounce, this may be expected. Since supply is to remain tight for the next few years, and gold production will actually decrease from South Africa, Australia and the USA, early returns from holiday shopping show a slight downward trend in the purchase of gold jewelry over the Christmas buying season, and the fact that 85% of gold is used for jewelry, I am predicting that for 2006 the magic numbers will be $450/ounce for a low and $550/ounce for a high for this yellow precious metal. I also suspect that it will end next year near it's high point.
Exactly how much the +$500/ounce price affects the buying of golden trinkets, will decide how long the price of gold remains below $500/ounce next year. On the other side of the coin, if national treasuries begin purchasing large amounts of gold, as some have hinted at doing, the price of gold could surge to $600/ounce. On the most optimistic side is the CEO of Newmont Mining, predicting a $1,000/ounce price tag for gold by 2011. For those of you that like four pages of graphs and three pages of spreadsheets, go elsewhere. There is no mathematical formula to predict the price of gold, and too many statistics can easily cloud the already foggy crystal ball.
The major determinants to watch out for are supply - how much gold will be available for the coming year, and demand - how much gold the consumers actually will purchase. Political and economic concerns are always there, and from time to time, they can push the market in one direction, or the other. But over the long run (2006), it will be governed by supply and demand.
So, once again, here's a toast to this golden metal, I hear the cork popping and the Dom fizzing. It looks like the New Year will be paved with gold and trimmed with silver, since it is pushing $9/ounce.
By the way, some one asked me what I drink when the gold market is going down. For their edification, I drink Kentucky Bourbon, and my aching head knows it the next day. So as long as gold is up, the Champagne will keep the headaches away and I wont need any aspirin on New Years day.
| But that's just my opinion.