Friday, 13 November 2009

Forecasting skills of John Nadler = C-minus. 2009-11-13

Forecasting skills of John Nadler = C-minus. 2009-11-13

It was time to take a look and try to find what perennial bearish John Nadler at Kitco who is the wet blanket for all gold investors had forecast for the 2008 price. I seemed to recall that he mentioned about US $740 as the price for gold for 2009 but I might have been wrong, so I listened to some downloaded interviews and then google'd a bit:

Here he mentions India’s Associated Chamber of Commerce and Industry (Assocham):
who forecast:
"$740 price for same, come next year. Start sending them 'why are you a bear' e-mails, shall we?"
on 26 Feb 2009.
He seems to give this some credibility. Maybe he mentioned this price in some online interview around that time. He added:
"some players see every day that passes with gold spending time above $900 as a reason for messianic fervor. ... The L.A. Times finds that 'gold already has been widely labeled "the next bubble.' "
There's always hope, eh, John?

from 24 October 2007.
"Nadler’s forecast was $665 for one year from now and $775 in five year’s time."

Actually he wasn't that far off on the first one because gold dipped to about $680 in the credit crunch.

The weekly chart on :$gold
shows the low of 681 that occurred in October 2008 so he gets an 'A' grade for that one, falling into the deflationist camp with Robert Prechter I guess. No gold bugs predicted that so it is not wise merely to dismiss John Nadler. However the deflationists are a bit like a stopped clock. They were correct on one occasion, that was September to November 2008. Will they be right again?

However, John is getting a D-minus or possibly an F for his 2009 forcast because as you can see from adding a 45 week moving average to the weekly chart for gold, the average price for 2009 is around $950-960, so he is low by a clear $200!

A poster here recalls a forecast for $640!
"$640 gold in 2009 predicted Mr. Nadler. Is there no accountability for guys like this"

Here he proposes that 2009 investment demand will slow:
and says will it end up at $900, 800 or 700 - he's not sure, no mention of $1100!

This post recalls:
"John Nadler, senior Kitco analyst, predicted gold would trade between 640$ and 940$ an ounce for 2009. At the moment, gold is over $1100 an ounce."

On The Gold Report interview he says:
TGR: Earlier you suggested that in a deflationary period or one just slightly inflationary, gold might be somewhere in the $500-$600 range. But over the longer term, you think it is more likely to stabilize somewhere between $650 and $850?
JN: I think that’s what we’re looking at in order to reflect current levels of supply and demand, basically make the mining community reasonably happy and keep India buying, which it’s currently not. Anything over $850 is just too much as far as they’re concerned, and they’ve demonstrated that stance for most of this year. ... We’re in Indian Festival season and they’re lamenting about very poor sales.

One thing he mentioned that I missed:
"I think in part that’s one of the things that delayed supplies from Valcambi, one of the refiners in Switzerland, which is probably trying to focus on ramping up to send a gazillion one-gram coins throughout India"

True that Indian demand has been low in 2008 and now also in 2009. Except for the Indian Central Bank, that is!
India buys 200 tonnes of IMF gold - Telegraph
3 Nov 2009 ... The International Monetary Fund has sold 200 tonnes of gold to the Reserve Bank of India for $6.7bn (£4.1bn). The sale represents almost ...
ACtually, I am not sure they are correct there. It's half of what they are selliing, ie half of 400 tonnes for sale. They have more but technically doesn't it belong to the central banks of the member countries. So perhaps it's half of the maximum they can sell without taking it from the member countries' banks. Too complicated! Ever wondered if some of this central bank gold could have multiple claims against it?
Meanwhile, on the price projections front, our friends at HSBC have issued theirs today, and they read as follows according to Reuters' Jan Harvey
"HSBC raised its 2009 gold forecast to $825 an ounce from $800, and its 2010 price view to $775 from $725, but left its long-term forecast at $700."

No mention of Bill Murphy's forecast!!!!!!! ;-)

Even deflationist Mike Mish Shedlock disagrees with Nadler's assertion that gold is not in a bull market (Nadler echoes here Paul van Eeden's opinion):
It seems to me that if gold isn't in a bull market then nothing is!

he said,
"If anything, festival-related buying might prevent a faster meltdown towards $700, but if the trends in commodities continue along their current path, it will not be able to turn the gold market ... around and back into bull mode," said Nadler.

Fair enough but the commodities trends did reverse so his caveat was met. However, he seems to love being pessimistic on the gold price!


'Even so, Nadler said he remains a "strong advocate of a core insurance position in gold bullion. Trouble, it seems, is always but one headline away from undoing the best-laid plans." '

Isn't that fair enough? With these pullbacks gold bugs get the chance to load up yet another time!

As long as you don't die before you can cash in a good profit!

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