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The Gold Stock Strategist analyzes leading junior gold producers and major gold mining companies.

Comments are welcomed!

Tuesday, May 19, 2009

GFMS Quarterly Gold Forecast Report is Released

I received the following in an email today from GFMS announcing that their Quarterly Gold Forecast Report has been released. GFMS provides the most comprehensive analyses of gold bullion markets (among other precious metals) than any other group and I recommend their work for those who want to really understand how the gold markets work.

"GFMS expects the annual average price of gold to rise for an eighth consecutive year and to a fresh record high in 2009. Quantitative easing in the United States and elsewhere, Chairman Bernanke's decision to monetise US government debt, coupled with ambitious fiscal stimulus programmes around the world could well spark inflationary pressures and thereby significantly widen gold's investment base. Furthermore, with global economic growth set to contract for the first time in the post-war era, the outlook for traditional investments arguably remains very poor, in spite of recent rallies in global stock markets. This, plus ongoing strains in the financial system and worries about the health of major banks could well ignite fresh safe haven inflows into the gold market.

On the other hand the behaviour of gold's supply/demand fundamentals in the first quarter - chiefly plummeting fabrication demand and surging scrap supply - showed that even strong investment flows into the yellow metal cannot necessarily be relied upon to drive prices higher. The tension between these forces will continue to be critical to price determination in the months and years ahead."

Last week at the Hard Asset Conference in
NYC, I listened to Philip Klapwijk, Executive Chairman of GFMS, Ltd., make an outstanding presentation on the current dynamics of the gold market consistent with today's announcement.

There are a lot of crosswinds in the gold markets and GFMS does a great job at pulling apart and examining each factor. I encourage those with greater interest in what drives the price of gold to review the GFMS Ltd. Powerpoint presentation delivered last week in NYC.


The Gold Stock Strategist

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