- Posted December 15, 2012 by
Dubai, United Arab Emirates
This iReport is part of an assignment:
Europe's financial crisis
Towards the end of 2012 the gold price had increased on an annual basis in each year for a decade. What is the forecast for the gold price 2013 and beyond? Will the 10-year upwards trend of the gold price continue in 2013?
A majority of gold investors views gold more as an insurance or store of value than as a means of speculation. These investors therefore regularly take a longer-term view on gold as an investment. What trend of the gold price can we expect in 2013 and for the following years? Gold price forecasts will never be completely accurate, but we collected some information on the key drivers influencing the gold price and analysts’ gold price forecasts for 2013.
Before i will present my forecasts for 2013 about gold price, i want to make your attention in a several facts. Firstly we must review of gold in 2012. The gold price started into the year 2012 at US dollars 1,530 per ounce. Over the full year 2011 the price of gold had increased by more than 12% despite the two dips in September and November/ December. This made 2011 the tenth consecutive year in which the gold price increased. By November 28, 2012 the gold price has further increased – amid high volatility – to roughly US dollars 1,713, i.e. by more than 12% from the beginning of 2012. In Euro terms the price increase was very similar with also about +12% over the same period. Gold price after friday trading ranging between: 1690-1694 USD. The gold price is – as the price of any commodity – driven by the basic laws of supply and demand. The demand for gold falls into four sectors: The official sector, i.e. central banks, jewellery, technology, i.e. industrial and dental sectors, and private investment.
In 2010 the central banks have developed from net sellers to net buyers of gold, driven by a decrease of sales from developed countries and an increase in buying activity from developing countries. Given the low percentage of central banks asset allocation into gold in emerging countries like China (2% versus about 70% in countries like the United States, Germany and France), there is a solid chance that the official sector will continue to be a net buyer of gold in 2013 and even beyond 2013.
Over the last decade jewellery demand for gold decreased in relation to demand from other sectors, mainly the investment sector. High gold prices and economic uncertainties will likely keep gold demand from jewellery moderate in 2013.
The overarching driver of the gold price for the year 2013 and beyond will be the development of global financial crisis. The levels of debt piled up by Western governments and often also corporate/private sectors are still not sustainable. There is basically one scenario to get rid of this burden: disciplined deleveraging, i.e. reduction of debts. The alternative, which was pursued over the past years, is to create more debt. This could eventually lead to inflation levels significantly above the inflation rates we saw during the last decade in Western currencies. Either way, both a deleveraging, which will probably be long and painful (‘the lost decade’), or a reduction of the real debt pressures by means of higher inflation will potentially preserve gold as an attractive insurance asset or store of value for many conservative investors in 2013 and beyond. Geopolitical risks, e.g. in relation to Iran, will support this position of gold as a ‘safe haven’ further.
According from all this information i analysed potential price of gold in 2013 year and as my view gold price will reach to 2050 $ for per ounce.
By Irakli Berdzenadze
Personal Financial and Investment Consultant
Global Partner of Bauhaus Capital Partners in Kuwait, Qatar, UAE and Turkey
Website: www.ib-financial.com; www.bauhauscp.com