Sharps Pixley’s CEO Ross Norman predicts gold price for 2012

Precious metals trader Sharps Pixley has laid out its predictions for commodities prices through 2012, including the possibility gold could hit $2,100.

Gold

Hi:$2,100 – Lo:$1,590 – Average:$1,765

Black swan events are by nature high-impact, hard to predict and beyond the realm of expectations. By that reckoning financial markets are awash with them and forecasting for gold in this environment is treacherous. Never has forecasting been so difficult – gold’s fortunes are primarily linked to those of the dollar and the Euro and by extension to decisions made by politicians.

Fundamentally gold remains a good bet – the market is supply constrained and demand in Asia remains robust. As such gold has a strong underpinning. However the ‘economic premium’ in the gold price may remain volatile, reflecting increased uncertainty and heightened anxiety during H1. On the negative side a firmer dollar (in election year) could provide a drag on runaway prices.

In his book “Black Swan Events” Nassim Taleb argues against trying to predict the largely unpredictable and recommends building “robustness” into your portfolio. In that regard – gold should continue to benefit from solid investment demand as the difficult economic themes of the last few year darken in H1 before brightening in H2. We forecast an average gold price of $1765.

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