metal forecast 2013

8/13/2019 Metal Forecast 2013

1/25


2/25

2

$1,

300

$1,

200

$1,

400

$1,

500

$1,

600

$1,

700

$1,

800

$1,

900

$2,

000

$2,

100

$2,

200

$2,

300

$2,

400

$2,

500

$2,

600

Adams, William

Bhar, Robin

Brebner, Daniel

Cooper, Suki

Fertig, Peter

Hochreiter, Rne

Jollie, David

Kendall, Tom

Klapwijk, Philip

Kotecha, Mitul

Melek, Bart

Murenbeeld, Martin

Nagao, Eddie

Norman, Ross

Panizzutti, Frederic

Proettel, Thorsten

Rhodes, Jeffrey

Savant, Rohit

Steel, James

Teves, Joni

Tremblay, Anne-Laure

Vaidya, Bhargava

Zumpfe, Alexander

$2,020

$1,800

$2,000

$1,900

$1,975

$1,720

$2,000

$1,885

$2,002

$1,830

$2,012

$2,025

$1,800

$1,800

$1,880

$1,850

$1,925

$1,850

$1,950

$2,100

$2,000

$1,800

$1,895

$1,620

$1,400

$1,525

$1,540

$1,525

$1,480

$1,520

$1,545

$1,642

$1,500

$1,527

$1,475

$1,450

$1,550

$1,580

$1,620

$1,525

$1,450

$1,575

$1,575

$1,530

$1,515

$1,500

$1,765

$1,700

$1,860

$1,778

$1,775

$1,600

$1,785

$1,740

$1,847

$1,650

$1,895

$1,768

$1,600

$1,736

$1,753

$1,745

$1,727

$1,658

$1,760

$1,900

$1,865

$1,670

$1,751

HighName Low Average

$1,914Averages $1,529 $1,753

Fastmarkets

Societe Generale

Deutsche Bank

Barclays Capital

QCR Quantitative Commodity Research Ltd

Allan Hochreiter (Pty) Ltd

Mitsui & Co Precious Metals

Credit Suisse Securities Europe (Ltd)

Thomson Reuters GFMS

Credit Agricole

TD Securities

DundeeWealth Economics

Sumitomo Corporation

Sharps Pixley Ltd

MKS (Switzerland) S.A.

LBBW

INTL Commodities

CPM Group

HSBC

UBS

BNP Paribas

BN Vaidya & Associates

Heraeus

Au $1,665 $1,7531st week Jan

2013Forecast Avg2013

Average

HighLow

Click on the name of a contributor and it will take ou direct to the su ortin commentar


3/25

3

$5.

00

$0.

00

$10.

00

$15.

00

$20.

00

$25.

00

$30.

00

$35.

00

$40.

00

$45.

00

$50.

00

$55.

00

Adams, William

Bhar, Robin

Brebner, Daniel

Cooper, Suki

Fertig, Peter

Hochreiter, Rne

Jollie, David

Kendall, Tom

Klapwijk, Philip

Melek, Bart

Nagao, Eddie

Norman, Ross


Proettel, Thorsten

Rhodes, Jeffrey

Savant, Rohit

Steel, James

Teves, Joni


Vaidya, Bhargava

Zumpfe, Alexander

$45.00

$36.00

$45.00

$38.00

$37.50

$31.00

$43.00

$36.30

$43.40

$48.00

$34.00

$35.00

$39.00

$36.40

$50.25

$36.00

$37.00

$47.00

$45.00

$37.00

$35.00

$26.00

$26.00

$29.00

$25.50

$26.00

$23.00

$23.45

$27.90

$29.50

$26.00

$23.50

$26.00

$27.00

$29.00

$25.75

$26.00

$27.00

$26.00

$25.00

$23.50

$29.00

$33.30

$31.00

$37.00

$32.50

$33.25

$27.00

$31.85

$32.20

$35.60

$40.52

$28.25

$31.16

$34.00

$33.20

$36.25

$30.70

$32.00

$36.80

$39.05

$30.25

$31.50

Fastmarkets

Societe Generale

Deutsche Bank

Barclays Capital






TD Securities


Sharps Pixley Ltd


LBBW

INTL Commodities

CPM Group

HSBC

UBS

BNP Paribas


Heraeus

$60.

00

$65.

00

$70.

00

AgAverage

HighLow

$30.36

1st week Jan2013


$39.75Averages $26.20 $33.21

$33.21

Forecast Avg2013



4/25


5/25

5

$200

$100

$300

$400

$500

$600

$700

$800

$900

$1,0

00

$1,1

00

$1,2

00

Adams, William

Bhar, Robin

Brebner, Daniel

Cooper, Suki

Fertig, Peter

Hochreiter, Rne

Jollie, David

Kendall, Tom

Klapwijk, Philip

Melek, Bart

Nagao, Eddie

Norman, Ross


Proettel, Thorsten

Savant, Rohit

Steel, James

Stevens, Glyn

Teves, Joni


Zumpfe, Alexander

$900.00

$900.00

$850.00

$835.00

$840.00

$800.00

$835.00

$815.00

$875.00

$990.00

$900.00

$820.00

$810.00

$820.00

$850.00

$800.00

$782.00

$850.00

$940.00

$800.00

$600.00

$650.00

$625.00

$590.00

$625.00

$600.00

$590.00

$620.00

$646.00

$632.00

$550.00

$675.00

$630.00

$620.00

$560.00

$650.00

$576.00

$560.00

$600.00

$550.00

$765.00

$775.00

$715.00

$736.00

$737.50

$700.00

$745.00

$725.00

$753.00

$874.00

$725.00

$787.00

$740.00

$745.00

$682.00

$750.00

$666.00

$780.00

$780.00

$700.00

Fastmarkets

Societe Generale

Deutsche Bank

Barclays Capital






TD Securities


Sharps Pixley Ltd


LBBW

CPM Group

HSBC

INTL Commodities

UBS

BNP Paribas

Heraeus

$1,3

00

$1,4

00

Average

HighLow

$689.64

1st week Jan2013


$850.60Averages $607.45 $744.03

Pd $744.03Forecast Avg2013



6/25

6

William ADAMSFastmarkets, Salisbury

Range: $1,620 - $2,020Average: $1,765

We remain bullish for gold as we feel creditorsof US and EU debt (we are not so worried aboutJapanese debt) will become increasingly nervousabout how the debt is managed. Will the debtors betempted to debase the currencies in which the debtis denominated? In addition, we feel the legacyof all the quantitative easing that has been donecould well stoke ination once economic growth inthe US and China gathers momentum, which wethink we will start to see in 2013. Central banks,we feel, will be reluctant to tighten monetary policyin fear of stiing the recoveries and that may wellmean ination gets a head start. Overall, we feelwith so much debt denominated in at currencies,creditors will want to reduce exposure to at paperin order to protect the value of their wealth.

W

Range: $26.00 - $45.00Average: $33.30

Generally, we feel silver will follow golds directionand it should also benet from any pick-up inindustrial activity. Our high price, if seen, is likely tohappen in a spike higher in prices as, generally, wewould expect good supply in the form of forwardproducer hedging, especially from producers ofbi-product silver, in the $35 - $37 area. Given thatwe would not be surprised to see gold challengethe $2,000 area, we feel that it is bound to dragsilver prices higher too fundamentally, we wouldnot expect prices to hold above $37 for any lengthof time.

W

Range: $1,500 - $1,900Average: $1,715

We are generally bullish for the PGMs on a supplystance as we fear there will be an escalationin labour unrest and resource nationalism inSouthern Africa, especially in South Africa. WithSouth Africa providing 75% of the worlds platinum,any lasting disruption could have a signicantimpact on supply. On the demand side, althoughwe feel the global auto industry will see strongergrowth in 2013, we feel platinum demand will notbenet to the full extent, as the European autosales are likely to remain subdued and with theirpreference for diesel engine cars, that is likely toput platinum at a disadvantage.

W

Range: $600.00 - $900.00Average: $765.00

We are bullish for palladium from a supply point ofview as we fear there will be further labour unrestin South Africa, and with the country supplyingsome 37% of palladium supply, that could have abig impact on the metals availability. In addition,slow sales from Russian stockpiles are likely toreduce supply further. On the demand side, we feelthat palladium will benet from stronger growth indemand for petrol engine cars in North America,China and other emerging markets.

Au Ag Pt Pd

Robin BHARSocit Gnrale CIB, London

Range: $1,400 - $1,800Average: $1,700

Gold will be underpinned by renewed fears ofinationary forces and currency volatility, whilethe US dollar is also expected to remain relativelyweak on the back of QE3 and the possibility ofother monetary tools designed to help offset anyheadwinds from scal consolidation. That said, webelieve that much of these forces are priced intothe market and that, while investors remain friendly

towards gold, they are to some extent positionedaccordingly. The ofcial sector is expected toremain on the buy side, reecting a continueddesire for reserve diversication, helping to keepthe future price decline reasonably gradual.

W

Range: $26.00 - $36.00Average: $31.00

Silver began developing support at $30 early inthe fourth quarter of 2012 and we expect this tobe largely sustained for much of 2013, as silvermoves higher in sympathy with gold. With goldsbull run drawing to a close this year, silver will alsoturn down and the $30 support is likely to comeunder pressure again during 2013. Investor buyingand industrial demand growth, coupled with a

stagnating supply side, should limit falls.

W

Range: $1,500 - $1,900Average: $1,688

The disruption in the South African mining sectorwill have long-term ramications on the platinummarket, where continued troubles are jeopardisingboth short-term output and longer-term productionplans. Economic recovery (notably in the Europeanautomotive sector) will boost sentiment withrespect to platinums prospects and potentiallyfuel a run towards a high of $1,900 in 2013.

W

Range: $650.00 - $900.00Average: $775.00

With the exception of 2011, when ETF salespushed the residual market into surplus, palladiumhas been in a global decit for more than 10 yearsoverall. Over 10 million oz of Russian governmentstocks have been shipped into the market overthe period, however, and have more than offsetthe decit in the underlying market dynamics.We continue to believe that these shipments are

in their nal phase and see this as thrusting themarket into a chronic decit, which will support arenewed price rise over the longer term.

Au Ag Pt Pd

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7/25

7

Daniel BREBNERDeutsche Bank, London

Range: $1,525 - $2,000Average: $1,860

Of course, gold cannot tarnish in the physical sense,but certainly from an investment perspective, ourconviction for continued structural strength in thegold market is being tested. There are legitimatearguments being made with respect to an inectionin performance, reversing a 10+ year trend ofappreciation.

Global investment demand for gold has moderatedconsiderably over the past 18 months (down c. 16%year on year for Q3 2012), largely a function of theapparent success of central bankers in mitigatingthe risks associated with excessive nancialleverage within the Western economic system.The strength in other more conventional assets,US equities for example, as economic conditionsappear to normalise has also resulted in lessurgency for investors to buy unorthodox investmentinstruments such as gold.

There is a growing conviction by many investors and

analysts that the US dollar is likely to strengthenover the longer term. US energy independence isa key contributor to this theme. Certainly, a strongdollar would mitigate upside for gold in dollar terms.Finally, we note that the US Feds latest minutessuggest that there may be earlier-than-expectedpolicy tightening. Several board members thoughtthat it would probably be appropriate to slow or stopasset purchases well before the end of 2013, citingconcerns about nancial stability.

Despite the issues highlighted above, we are notconvinced that the Western economies have kickedtheir addiction to zero-cost funding, particularlygiven the importance of growth for this highlyindebted region. On this basis, and given the

likelihood that Chinese demand remains robust, weexpect that gold should continue to appreciate overthe course of the year.

W

Range: $29.00 - $45.00Average: $37.00

Investor demand for silver has been disappointingover the past several quarters, with considerablyless interest in the US. However, with strong coinsales since the beginning of the year, we expectthat investment demand could improve in 2013.We expect that further economic recovery in theUS and an acceleration of GDP growth in Chinacould support silver industrial demand. We expectthat gold to silver ratio to decline steadily from 55to 50 this year.

W

Range: $1,400 - $1,800Average: $1,670

Our base case platinum supply-demand estimatessuggest a net decit of c.40koz. There are anumber of risk factors which could push themarket into a more signicant decit, the biggestof which is the potential closures coming out of anAmplats review.

W

Range: $625.00 - $850.00Average: $715.00

For palladium, we expect the ma rket to remain in aconsiderable decit of c. 900koz this year.

Au Ag Pt Pd



8/25 8

Suki COOPERBarclays Capital, New York

Range: $1,540 - $1,900Average: $1,778

Lack of conviction has tainted gold price action,and gold has struggled to establish its identity asa safe-haven asset, instead rallying amid a risk-onenvironment. The hurdles for gold are mountingfrom dollar strength to a sof ter physical market, butin our view, a number of positive macro catalystsstill exist that could push prices signicantly higher.Beyond central bank balance sheet expansion,uncertainty over the US debt ceiling vote andreduced risk premia in Europe should set a positivebackdrop for gold. Furthermore, central bank buyingcontinues, while gold held across physically backedETPs remains close to record highs despite pricecorrections. However, this also poses the key risk toprices: should ETP ows turn negative, prices couldtumble sharply. We retain a positive outlook on themarket and continue to believe that rising marketcondence, outperformance of alternative assetsand rising real interest rates will dictate the turningpoint for prices, factors we do not expect to hindergold in 2013.

W

Range: $25.50 - $38.00Average: $32.50

Silver found little support from its fundamentalslast year, and we expect lack of fundamentalsupport to remain the theme in 2013. The marketis set to deliver a wider surplus, as industrialdemand has softened but mine supply growsunabated to set fresh record highs. Silver priceshave been able to rally when industrial demandhas been relatively rm, compounded by signicantinvestment demand growth. Thus, given the fragilefabrication demand backdrop, investor interest hasa much larger gap to plug. Should the gold marketset a positive tone for trading, we believe silverinvestor interest has the scope to play catch-upand lead prices beyond the highs set in 2012.ETP holdings are below their peak, coin saleshave recovered and speculative positioning hasbecome more favourable. Given the dependenceon non-fabrication demand, we expect silver pricesto remain volatile and the least supported acrossthe sector.

W

Range: $1,390 - $1,840Average: $1,690

Platinum found itself pulled and pushed by theescalation of supply disruptions in South Africaand tumbling European auto demand. But unlikein the previous year, the metal struggled to ndmeaningful support from its marginal cost ofproduction. Given the soft demand conditions,particularly in Europe, we believe risks remain tothe downside for platinum in the near term, butfundamentals are set to evolve constructivelyover the course of 2013. We expect the marketto deliver a second year in decit in 2013 after asizeable decit in 2012, but despite this, supplyhas not been constrained and inventory levelsremain healthy, with consumers well hedged.Although this implies that additional supplycutbacks are required for prices to move higher,this would send unaffected output above thecost of production, in turn reducing the likelihoodof voluntary cuts. In our view, prices will needa stimulant on the demand side to facilitatesustained gains, which we expect to materialise as

inventory is run down and tighter auto emissionslegislation is implemented.

W

Range: $590.00 - $835.00Average: $736.00

In our view, palladium retains the strongestfundamentals across the precious metals and isset to deliver the widest decit. However, we donot believe it will be plain sailing for palladiumprices, given that the demand picture looks softin the near term, with Chinas palladium importsfalling to the lowest level since February 2009.Although nished goods inventories have fallen,sustained growth in sales is required beforepalladium demand can recover later in the year.Indeed, we expect auto demand to continue togrow in key palladium consuming regions suchas North America and China in 2013, providinga rmer footing for prices. On the supply side,Russian palladium shipments to Switz erland havealso slowed signicantly in 2012, and althoughnot conclusive evidence of reduced state stockreserves, the trend is certainly supportive.Outside state stock releases, alongside platinum,palladium mine supply looks set to remainchallenging, with the real scope for growth only

stemming from recycling.

Au Ag Pt Pd

Peter FERTIG

Range: $1,525 - $1,975Average: $1,775

Sentiment among many analysts turned negativefor gold in 2013. Also, large speculators reduceholdings of gold futures. This could drive gold downto test last years low. However, the reasons statedwhy gold should head lower are not convincing.

Quantitative easing by the Fed is not a necessarycondition for rmer gold prices. Also a rise of yieldson longer-dated US Treasury notes and bondswould not be a rational reason to switch out ofgold and into xed nominal income assets. Higheryields will probably be the result of a strongerUS economy. This should lead to an increase ininvestors risk appetite, which is favorable for gold.Furthermore, GDP growth in China acceleratesagain. The change of scal and monetary policyin Japan towards a 2% ination target makes golda more attractive investment for Asian investors.Thus, the average price of gold is expected toincrease in 2013.

W

Range: $26.00 - $37.50Average: $33.25

Silver trades even more in line with other risky assetsthan gold. Thus, an improved economic outlookin major parts of the world should be supportivefor silver. The Fed might end or at least slow downoutright buying of US Treasury notes and mortgage-

backed bonds as early as mid-2013. However, it isless likely that the thresholds for an end of the ultraaccommodative monetary policy will already be metthis year. Thus, the Fed Funds rate will probably bekept unchanged at the current level. In the eurozone,the ECB is expected to reduce the repo rate to 0.5%.However, the ECB is also determined to defend theeuro. Thus, the euro might hold quite well against theUS dollar or even rm slightly. Beside support fromthe US dollar, silver is expected to prot also from apositive development of stock markets. Furthermore,a global economic recovery could also lead tosupport for silver via rmer crude oil prices, which areanother fundamental factor for silver.

W

Range: $1,500 - $1,850Average: $1,675

Labour unrests remain one of the risk factors forthe PGMs on the suppl y side. However, even ifmine production in South Africa were to return tothe levels before the unrest broke out last year,the market is expected to remain in a supply

decit. The automotive industry in the eurozoneis being hit hard by the scal austerity dictatedby the troika of EU, ECB and IMF. However, theeconomic recovery in the US, China and otherparts of Asia more than compensate for the woesof car manufacturers in Europe. Thus, platinumdemand is expected to increase and to lead tohigher prices.

W

Range: $625.00 - $840.00Average: $737.50

Palladium is expected to perform better thanplatinum in 2013. For the demand side, the factorsmentioned earlier apply also. Palladium shouldalso prot further from substitution process withinthe automobile sector. On the supply side, the

supply from Russia is the c rucial factor. Industrysources indicate that Russian inventories woulddecline and Russia would export less palladium.Thus, the supply decit is expected to widen, whichshould lead to rising palladium prices this year.

Au Ag Pt Pd

QCR Quantitative Commodity Research Ltd, Hainburg



9/25


10/2510

Tom KENDALLCredit Suisse Securities (Europe) Ltd, London

Range: $1,545 - $1,885Average: $1,740

The 12-year-old US dollar gold bull market is notin the best of health: 2012 was a frequently tryingyear for gold traders and investors, and we think2013 will bring further prolonged periods of rangetrading in a low implied volatility environment.

Our central macroeconomic case is that the acutephase of the global crisis is probably over and thatthere will be a slow improvement in global growththrough the second half of the year. If this proves tobe correct then the relative appeal of gold is likelyto diminish as fear trades fade. Consequently, wethink the current gold cycle is likely to peak thisyear (on a quarterly average price basis we haveprobably already seen the absolute high in USdollars).

Prior to that, however, a resumption of Treasurypurchases by the US Federal Reserve and a battleover tax and spending plans in the US in lateFebruary/early March are expected to drive gold

higher.

Physical demand from China and India is alsoexpected to improve, although there is a riskthat the Indian government may introduce freshpolicy measures to restrict bullion imports in the2013/14 budget.

Gold will continue to have a role in portfoliosthat seek diversication and long-term inationprotection, and central banks will remain netbuyers of the metal in our view, but an increasingnumber of investors are likely to switch theirattention elsewhere this year. One manifestationof that is that we expect platinum to regain itshistorical premium to gold.

W

Range: $27.90 - $36.30Average: $32.20

Silvers reputation as a defensive asset wasdamaged by the prices 40% collapse and spikein volatility during the nal months of 2011. Theprice action since then suggests its image remainssomewhat tarnished.

Fundamentally, the prospects for silver are solid:industrial demand should pick up as global growthaccelerates, aided in no small part by ambitiousChinese targets for new solar power-generatingcapacity. That should help absorb some of theexpansion in mine supply that we expect from bothprimary and by-product sources. But continuedpurchasing by investors is required to keep theprice so far above its long-term historical mean.

The net result this year is likely to be a largelyrange-bound price: we do not expect silver to tradeabove $40/oz this year, nor much below $28/oz.

W

Range: $1,495 - $1,870Average: $1,695

W

Range: $620.00 - $815.00Average: $725.00

Au Ag Pt Pd

We retain our bullish structural view for both platinum and palladium, and expect the latter to moderatelyoutperform over the course of the year. We also prefer both main PGMs to gold, and by the end of this year, weexpect platinum to be trading consistently at a premium to gold.

In the near term, however, we are cautious about the price prospects for both metals, particularly palladium.Hedge funds have recently been noted buyers, both through the back end of last year and again in early

January, anticipating further supply-side cuts and improving demand. So in the short term, positioning andprice may well have overrun the fundamentals. There is a risk that if Anglo American Platinums strategicreview disappoints the market, prices could see a sharp correction, albeit one that we would expect todissipate rapidly.

Industrial and jewellery demand for PGMs was sluggish through most of the fourth quarter of last year, and wethink large automotive users of the metal are, in general, still well hedged for the next three to six months. Inaddition, supply from South Africa should increase sequentially in the rst quarter of this year as productivitycontinues to recover from the strikes of last year, while holders of scrap are expected increasingly to liquidateinventories as prices rise. Consequently, we expect both markets to tighten only slowly in the near term and forprice performance to be stronger in the second half of this year than the rst.



11/2511

Philip KLAPWIJKThomson Reuters GFMS, Hong Kong

Range: $1,642 - $2,002Average: $1,847

At the time of writing, golds recent lacklustre priceperformance together with an excessively bearishinterpretation of the latest FOMC minutes havedepressed sentiment towards the yellow metal. Itmay be, though, that the market is overreactingand that gold will surprise to the upside in 2013.

First, looking at the metals supply/demandfundamentals, these may actually improve a littleor at least not deteriorate any further. Supplygrowth will, at best, be very modest, with only amarginal gain in mine production expected andscrap is set to fall unless prices are a good dealhigher. Fabrication should be supported by abetter tone to the Chinese economy this year and arebound in Indian demand from 2012s especiallyweak performance. In short, at anything close toprevailing gold prices, the surplus in the market isunlikely to grow and may even contract somewhat.Second, economic conditions will encourage ahigh level of net bullion purchases from both theofcial sector and investors. As regards the former,

risks would seem to be stacked to the upside interms of the scope for gold purchases as a meansof reserves diversication. Particularly importantin terms of the outlook for investment this year isthat there is no scope for shor t-term interest raterises in any of the three major currency blocs.Indeed, further loosening of monetary policy isprobable, especially in Japan. And, on the scalfront, progress in reducing decits will be slow andgovernment debt ratios will rise to levels that in thecase of the United States should see it lose its AAAstatus. The market is far too sanguine about thelonger-run implications of that likely development.Gold will be a major beneciary.

W

Range: $29.50 - $43.40Average: $35.60

2013 ought to see silver recover further from itspost-2011 bubble hangover and, before the year isout, trade into the low $40s. An important plank inthis argument is that silver will outperform gold onthe latters move higher. This expectation shouldfoster increased speculative demand for the white

metal. (Indeed, a narrowing of the silver:gold ratiofrom the current 55:1 to comfortably below 50:1 isprobable if prices rise as forecast.) Other positiveswill be little or no supply growth, as the multi-yearrise in global mine production stalls, and a fairimprovement in industrial demand, with the latterassisted by the fact that manufacturers i nventorylevels are thought to be fairly low at the beginningof this year.

W

Range: $1,535 - $1,890Average $1,755

Although beneting from golds positive outlook,the decent recovery in platinum prices forecasthere is largely dependent on c oncrete stepsbeing taken during the course of 2013 to closedown permanently loss-making South Africanmine production. This will eventually provide the

conditions for the platinum market to shift fromgross surplus to gross decit. In the absence ofsuch an expected move from producers in SouthAfrica, the scope for price appreciation this yearwould be severely constrained by the generallylimited prospects for fabrication demand growth.Specically, in spite of a growing but limitedcontribution from HDD, autocatalyst demand willremain bogged down by the key European dieselcar market remaining depressed. In addition, whileexpected growth in Chinese jewellery consumptionis not without signicance, it is unlikely to beenough on its own to change radical ly the overallplatinum supply/demand balance.

W

Range: $646.00 - $875.00Average $753.00

Palladium is the only one of the four major preciousmetals currently in a gross decit and this gapbetween supply and fabrication demand shouldbe broadly sustained in 2013. First, the impact ofsupply growth from autocatalyst recycling may bepartly offset by any long-term cuts to South African

mine production capacity being initiated this year.Second, autocatalyst demand for palladium willrise, albeit more slowly than it did in 2012, dueto a further advance in global gasoline-poweredlight vehicle output and further substitution fromplatinum to palladium, especially in diesel poweredlight vehicles. These solid fundamentals coupledwith rising prices should encourage speculativeinterest in palladium, driving up prices further. And,in addition, Russian State stock sales are expectedto diminish further. A vital question then is, atwhat point do long-standing holders of palladiumbullion stocks decide to sell these and take prots?The answer to that conundrum could well emergeduring the course of 2013.

Au Ag Pt Pd

Mitul KOTECHACredit Agricole, Hong Kong

Range: $1,500 - $1,830Average: $1,650

The path of gold prices will hinge in part on thestance of central banks in two ways. Firstly, continuedbalance sheet expansion and currency debasementwill imply that gold prices remain supported.Secondly, despite the slower pace compared to past

quarters, ofcial sector purchases will still provide aoor to gold prices, especially as they diversify fromthe dollar and euro. Emerging economies, particularlyChina and India, will also play an important role ingold demand given the expected pick-up in growth

in these countries. Given the robust negativerelationship between gold prices and US Treasuryyields, and our expectations that US Treasury yieldswill rise in coming months, we look for a gradualdecline in gold prices. Assuming that the usual

relationship between gold prices and risk aversionreasserts itself, we expect a trend of improving riskappetite to weigh on gold prices into 2013.

Au



12/2512

Bart MELEKTD Securities, Toronto

Range: $1,527 - $2,012Average: $1,895

While we agree that the eventual reversal of the Fedsultra accommodative monetary stance will sufcientlyimpact investment demand to depress gold prices, itis too early to react to this possibility through much of2013. The economic environment around the world

and in the US is still quite poor, implying a greaterchance that central banks around the world, includingthe Fed, are likely to ease policy further.

The Feds $85 billion/month QE programmethroughout the year should prevent the yield curvefrom steepening too much, keeping the opportunitycost of holding gold low. New targeting of higherimplied and actual ination levels by some majorcentral banks, and massive and rising balance sheetpositions, along with rising ination expectations,should help to keep investment demand strong.

Meanwhile, central banks look set to use gold againas a way to diversify their FX reserves, likely buyinganother 500 tonnes in 2013. Growing activity on the

Shanghai Gold Exchange, stronger fabrication activitydemand resulting from improving global economicconditions and relatively muted supply growth areanother set of factors that make us believe goldshould perform very well in 2013.

W

Range: $26.00 - $48.00Average: $40.52

Silver should be a top-performing preciousmetal in 2013. Like gold, it looks set to benetfrom its quasi-money properties and the globalmacroeconomic trends. In addition, silver pricesare projected to be supported by tighter supply/

demand fundamentals as industrial/investordemand outpaces the increase in global supplygrowth. TD Securities expects this metal to bevery near a decit through the ba lance of theyear, with a considerable risk of a shortage. Giventhe metals higher volatility, it should outperformgold with a price materially above $44/oz when itreaches its late-2013 highs.

W

Range: $1,510 - $1,950Average: $1,844

The current platinum price of around $1,600/oz is set to jump higher in 2013. The price needsto rise materially in order to provide incentivesto build new mines, particularly in South Africa,where recently higher currency and higher wages

are pushing the cost s tructure higher. Meanwhile,perceived higher country risk is forcing higherdiscounts on cash ows originating in South Africa,implying the need for higher nominal earnings forany given operation, which implies higher per unitclearing price on the margin.

According to the TDS supply/demand model,it looks like the platinum market may end upin a very signicant decit of some 400 koz inboth 2013 and 2014. This is due to poor growthprospects for the South African mining sector andthe loss of some 600 koz of production in thecountry throughout 2012.

W

Range: $632.00 - $990.00Average: $874.00

Curtailed Russian and South African supply, highproduction costs and better demand are projectedto lift palladium sharply higher towards the latterpart of 2013. The expectations of an increasinglytight market in 2013, and for many years to come,

is the biggest factor behind our optimism. This hasalready attracted greater speculative and investorinterest recently, which has helped to placepalladium prices on a higher trajectory, followinga lacklustre performance for much of 2011. Givenimproved autocatalyst demand in the US, Chinaand across the globe, and higher industrial/fabrication use in 2013, along with supply sideconstraints, the palladium decit looks set to bequite deep over the next several years. As such,the price increase could be considerable as thismarket may need to clear in auction price territory(above the cost curve).

Au Ag Pt Pd

Martin MURENBEELDDundeeWealth Economics, Victoria

Range: $1,475 - $2,025Average: $1,768

We thought 2012 would prove to be a difcultyear for forecasters, and it certainly proved to

be such a year for us. We forecast correctly that2012 would, somewhat like 2008, be a contestbetween recession/slow growth and monetaryreation. But we bet that reation, in response toa likely Grexit eurozone downsizing and furthernancial problems around the world, would win theday for gold. We were wrong; gold went more orless sideways on the back of only modest increasesin global liquidity, instead of averaging $1,835 asforecast.

2013 could see a similar pattern unfold, withrecession/slow growth/disination pulling gold

downwards and monetary reation (i.e. the FedsQE of $85 billion/month) no more than managingto keep gold prices stable. Because we have raisedthe probability of a sideways pattern for gold, ourforecast has come down modestly from that oflast year.

Fundamentally, however, not much has changed inthe outlook other than the likelihood of a eurozonebreakup in 2013 appears to have declined. But

Draghi/ECB will have to make good on the well dowhatever it takes promise in 2013, which together

with an increase of $1 trillion in the Feds balancesheet in 2013 and more QE from the Bank of Japan,should help our global liquidity measures and pushgold prices somewhat higher.

Other positive factors include continued centralbank purchases of gold, ongoing investmentdemand, the quiet transformation of gold intoan acceptable nancial asset once again, strongconsumer demand in China to help of fset some

further possible (policy-induced) deterioration ofgold demand in India, and the rather tepid increases

in new mine supply.

The major negative factors include weak growth anddisination tendencies around the world. But it isprecisely these factors that preclude central banksadopting monetary policy exit strategies in 2013.

Au



13/2513

Eddie NAGAOSumitomo Corporation, Tokyo

Range: $1,450 - $1,800Average $1,600

We expect continued political upheavals, especiallyin countries that have just faced or will face achange of leadership, to push gold up to the yearshigh in Q1, if not Q2. However, in the secondhalf of the year, we expect the global economy tostabilise, led especially by the US and China, andthis will stimulate investors to change their assetallocations. In particular, a rise in real US interestrates will prompt a shift of money from gold andsilver to industrial commodities, equities and realestate, where higher returns can be expected.

W

Range: $23.50 - $34.00Average $28.25

Silver will basically move in line with gold. Wemay see a little further push to the downside inthe white metal for two reasons: 1) there is nocentral bank buying to support the silver price;and 2) a higher portion of ight investment fromthe US has been for silver rather than gold. Asfor industrial demand, the solar cell industry willrecover for sure, but a lot of technology is shiftingto thin lm from thick lm.

W

Range: $1,450 - $1,800Average $1,625

We expect the platinum price to overtake the goldprice in 2013. On the demand side, this will bedriven partly by a further recovery in the globaleconomy, but we also anticipate more investmentdemand for physical platinum in 2013. On thesupply side, there are still concerns as 75% ofsupply comes from South Africa.

W

Range: $550.00 - $900.00Average $725.00

Around 35% of global palladium demand needsto be met from recycling and stock drawdowns.Russian state stocks are presumed to be nearlyexhausted, and Russian ore grades are reducing.This will leave the palladium market increasinglyreliant on South Africa, where the mining industryis struggling severely with cost increases andlabour disputes. On the demand side, we expect arecovery in the auto sector and a further shift fromplatinum to palladium in autocatalysts.

Au Ag Pt Pd

Ross NORMANSharps Pixley Ltd, London

Range: $1,550 - $1,800Average: $1,736

We see the long-term gold bull run remaining very

much intact, but the conviction and patience ofgold investors may be tested in 2013. Againstthe backdrop of an improving macroeconomicenvironment, particularly in the US, we see dollarrmness and a fading of the fear trade providinga drag on rising gold prices. For a market used toa 17% year-on-year gain, a single-digit percentageincrease may feel like a bear market. In essence,we see 2013 looking surprisingly like 2012 that ismodest price gains, declining volatility and extendedperiods of range trading. The caveat to this is the USdebt ceiling issue, which arises in March 2013 afudged outcome could of course generate far higheroutcomes than shown above. The key issues willbe ongoing central bank purchases and growth ininvestment demand, this being partially offset by a

reduction in speculator positions and moderatelylower Indian demand as import duties are raisedagain. Broadly speaking though, gold will continueto be seen as cheap insurance for those concernedwith tail risk and is a high-quality asset that holdsvalue amidst competitive devaluations of currencies.

W

Range: $26.00 - $35.00Average: $31.16

We expect some softness in silver prices during

2013, which after a stellar 10-year run, looksvulnerable as the fear trade evaporates andspeculators look to reduce their positionscommensurately. Silver has consistently been thetop performer within the commodity complex butis looking increasing like an aging rock star alittle past its best. We forecast a weak start to theyear on US dollar rmness before good demandfrom industrial applications as global IP picks up,coupled with re-stocking in the second half. Withits recent history of price spikes, there is a dangerthat sharp rises will be seized upon by producersas an opportunity to sell forward, effectivelycapping the rallies. With primary mine productioncontinuing to rise to new record highs, the onus isincreasingly on the silver bul ls to prove the case.

W

Range: $1,545 - $1,895Average: $1,711

The prospect of further supply-side disruptions

from South Africa from the unions, coupled withongoing robust demand from the auto sector,looks likely to ensure that platinum prices remainrm in 2013. If, as expected, a number of SouthAfrican mines go onto care and maintenance thenthis could potentially exacerbate supply tightnessfurther. With an improving economic backdropgiving rise to higher global IP and in particularthe growth in HDD catalyst demand for commercialvehicles this gives scope for strong demand ina supply-constrained market, setting the scenefor potentially far higher prices than those that wehave forecast here.

W

Range: $675.00 - $820.00Average: $787.00

We expect palladium to move into a supply decit

of about 450,000 ozs in 2013 as productionis mothballed in South Africa, which shouldensure that prices remain rm in 2013. As such,we anticipate that palladium will be the best-performing commodity in the year ahead. The keyissue determining the palladium price outlook, asalways, will be the perennial question over Russianmetal sales from stocks and from production. Inthe case of the former, we think that the stockpileis already much depleted and, for the latter, giventhat margins are already slim, there is a distinctchance that Russian metal may be withheld fromthe market. As with platinum, the price risk is verymuch to the upside as high production costs haveplaced a oor under this ma rket.

Au Ag Pt Pd



14/2514

Frederic PANIZZUTTIMKS (Switzerland) S.A., Geneva

Range: $1,580 - $1,880Average: $1,753

On 31 December 2012, gold closed at $1,664.00/oz, about 4.6% higher than the opening price on2 January 2013, and traded in a $254/oz range.Compared to the previous few years double-digit performance, 2012 resulted in a signicant

slowdown. 2013 is likely to have another single-digit performance. While we still are in a bull trend,we expect the upside momentum to slow down,with the market entering a consolidation phase.The signicant accumulation of physical gold overthe last three years, due to portfolio diversication/protection aiming to reduce credit risk, is likely toslightly slow down in the coming few months as theglobal economic crisis seems to be more or lesscontained.

Possible signs of growth and ination in Q4 seemlikely. Negative real interest rates and monetarygenerosity in the USA and EU, scal austerity, aswell as a cautious attitude toward credit risk-taking

are some of the factors that should help gold togradually move higher over the course of the year.We expect some shift of physical from the West toEast in the coming months on the expectation thatmajor Asian currencies will strengthen, resultingin more buying interest from this region, both bythe private and ofcial sectors. This could result inhigher volatility and interesting gold price action.

Ultimately, all fundamentals remain positive forgold and we expect the yellow metal to again tradeover $1,800/oz.

W

Range: $27.00 - $39.00Average: $34.00

Silver closed $1.17/oz or 4 % higher at 29.95,after having traded in a wide range of $10.5throughout the year; a performance very much inline with gold. As we dont expect any signicantincrease in physical demand, we remain, as in the

past years, just marginally bullish.

In our opinion, silver will trade in line with gold.Possible speculative interest could, from time totime, motivate silver to temporarily decorrelatefrom gold. As in past years, the level in demandfrom China will remain a prevailing and key drivingfactor for the silver price in 2013.

W

Range: $1,520 - $1,750Average: $1,640

Both white metals have performed well last yeardespite the subdued global growth. Platinumclosed 8.16% higher at the end of 2012. The majorstrikes experienced in 2012 and the resultingdisruption in metal extraction caused a temporary

imbalance in the markets. More strikes remainpossible in 2013 but probably on a reduced scale.Increased investors buying interest on the backof more diversied precious metals portfolioscould be one the factors contributing to the upsidetrend in 2013. The expectation of a recovery inglobal growth in Q4 2013 could result in a renewedincrease in industrial demand.

W

Range: $630.00 - $810.00Average: $740.00

Another year of decent performance for palladium(+6.91%), with a close at $699.0)/oz on 31December 2012. In 2013, greater industrialdemand in PGMs can be expected on the back ofa global recovery. Industrial growth during the last

quarter of 2012, especially from the automotiveindustry, should support the palladium uptrendover the year ahead.

Despite its industrial character, we had expectedmore speculative interest and action in palladiumto add some volatility and to gradually push themetal higher.

Au Ag Pt Pd



15/25

15

Thorsten PROETTELLandesbank Baden-Wurttemberg (LBBW), Stuttgart

Range: $1,620 - $1,850Average: $1,745

Last year was the 12th consecutive year with apositive gold price performance, but the rst yearsince 2007 without new all-time high.

Different factors led to this result and they willfurther inuence the gold price in 2013. As a

well-known fact, the economic crisis increased theinvestment demand, which pushed gold priceshigher. But after a surge in 2008, 2009 and 2010,gold demand in Western markets decreasedconsiderably due to saturation. Last year, ETCdemand, as well as physical investment demand,reached lower 2007 levels and I expect them not toresurge in 2013.

On the other hand, the price is well supported bylow interest rates in all major currency areas, asituation which may not change until 2014.

Furthermore, accelerating economic growth inChina will spur gold demand in the biggest market

besides India.

W

Range: $29.00 - $36.40Average: $33.20

Still inuenced by the pric e bubble from late 2010/early 2011, silver was settling during the lastmonths. I expect that silver will tend to the upperhalf of the 2012 price range as modest economicgrowth in all major markets except the eurozonewill increase industrial demand. Decreasing ore

grades in some countries signal that mining mightswing to a lower growth path in 2013, which mayincrease the price, too.

W

Range: $1,410 - $1,790Average: $1,670

Low demand for diesel engines, as well as ongoingefforts to substitute platinum with cheaperpalladium in catalysts for gasoline engines, are twoingredients that would not indicate higher platinumprices in 2013. But the critical factor in this marketis the supply side, as wildcat strikes in South Africa

proved last year. I expect furthermore constrainedsupply from South Africa and Russia this year,which should result in somewhat higher prices.

W

Range: $620.00 - $820.00Average: $745

Last year, palladium demand in the car industrywas twice as high as platinum demand, while in2006, use of both metals was almost equal. Thistrend will proceed. Investors and industry shouldalso consider that the concentration of palladiummining in Russia and South Africa could lead to

constrained supply, which has the potential to spurprices.

Au Ag Pt Pd

Jeffrey RHODESINTL Commodities, Dubai

Range: $1,525 - $1,925Average: $1,727

Perhaps the most striking feature of 2012was the sharply reduced level of price volatilityacross the whole precious metals complex. Therecord-breaking march of gold upwards had seenthe yellow metal post a series of all-time highs in2011, which culminated in a record price of $1,920and a trading range between the high and lowpoint of $610 or 46%. However, 2012 proved tobe much less dramatic as the prevailing universalbullishness dissipated and gold settled into aperiod of quiet consolidation within a relativelynarrow trading range of $268 or 18% betweenthe years high of $1,795 and low of $1,527.Although some will be disappointed with goldsperformance last year, it still managed to post a

year-on-year gain of 7%, with an increase in theannual average price of $6%, matching the gainsposted in the DJIA. The fact that golds annual rateof capital gain last year was well below the annualaverage increase of 18% since the bull marketstarted in 2001 has prompted some long-lost bearsto emerge from the woods. But I remain rmly inthe other corner and view 2012 as a year of solidconsolidation, with the base line of support beingraised to $1,500, providing a platform for anotherpositive year for gold. However, with $1,800 nowproviding a stiff overhead technical barrier thatcould prove tough to penetrate, and gold out of theheadlines, we could well be in for another year ofreduced volatility with the price largely contained

within these parameters. Nevertheless, in my view,any break outside of this range is likely on theupside as private investors keep their trust in goldto build on the 2,380 tons ($126.4 billion) of ETFholdings already accumulated, and non-Westerncentral banks continue to diversify their dollarholdings into the yellow metal. With the plungeover the scal cliff in the US only temporarilyaverted; the problems in the eurozone deferred butnot resolved, and the uncertain global economicoutlook likely to keep interest rates in the Westclose to zero, the search for yield goes on and willkeep gold centre stage as an attractive asset classfor money managers.

W

Range: $25.75 - $50.25Average: $36.25

The gloomy state of the global economy thatprevailed for much of 2012 took its toll onindustrial demand and silver posted a decline ofjust under 12% in its average price, although yearon year, it managed to end with an encouraging 9%gain. Given the fact that the industrial preciousmetal appears to be underpinned by strongtechnical support at $26, and my view on gold ismildly bullish, I would now expect silver (as a cheapsafe-haven proxy for the yellow metal) to probethe key area of resistance on the char ts locatedbetween $35 and $38 in 2013, with a clear breakhaving silver bugs (including me) talking onceagain about a price north of $50.

Au Ag



16/25


17/25

17

Glyn STEVENSINTL Commodities, London

W

Range: $1,386 - $1,744Average: $1,538

Range: $576.00 - $782.00Average: $666.00Pt Pd

Joni TEVESUBS, London

Range: $1,575 - $2,100Average: $1,900

We remain gold bulls. Ongoing uncertainty aroundUS scal issues, together with the view thatmajor central banks will maintain loose monetary

policies for longer, are key supports of our outlook.The avoidance of the scal cliff and expectedback-loading of spending cuts are positive forgold: 1) to the extent that the dollar weakens ondisappointment from those who are hoping formore scal restraint, and 2) given the likelihoodthis will lead to a US downgrade. Continued Fedbalance sheet expansion amid subdued growthplus the ECBs OMT plus further easing by Bankof Japan are all gold price-supportive. A weakerJapanese yen outlook also means that traditionalight-to-quality ows could be redirected to gold.While physical demand may remain sluggish,ofcial sector buying and demand from morestrategic, quality investors will compensate.

W

Range: $26.00 - $47.00Average: $36.80

Silver is set to outperform in the currentaccommodative policy environment, especiallyas risk sentiment remains generally buoyant.

Barring any major risk-off event, we expect thistrend to continue in 2013 against the backdropof persistent QE from the Fed and loose monetarypolicy from other key central banks. In terms ofday-to-day direction, though, silver lacks its owninternal drivers and should continue to look togold for guidance. On the fundamental side, weare estimating a small recovery in demand nextyear, but the risks remain to the downside givenan ongoing subdued global growth environment.Despite downside risks to fundamental demand,it is ultimately i nvestor appetite that drives silversprice action. The price is therefore likely to be morebuoyant than what may be suggested by supp lyand demand fundamentals.

W

Range: $1,500 - $1,875Average: $1,740

Implications of South Africas strike in the secondhalf of 2012, the threat of further suppl y issuesand potential restructuring of unprotable mines

raise platinums price oor and provide upsiderisks in 2013. Mine supply this year is expected tobe broadly unchanged, and remaining constrainedfurther out. The threat of more illegal strike actionlooms large and the bi-annual wage negotiationseason in Q2/Q3 offers signicant risks. A better2013 growth story, albeit still subdued, shouldsupport auto and industrial demand growth. Theintroduction of Euro 6 for HDD this year, and forlight-duty diesel in 2014, will help compensate forongoing weakness in European auto sales. Therate of autocat recycling is a swing factor worthwatching. Unattractive 2012 prices incentivisedcollectors to stock build and this supply will likelybe unlocked by higher prices in 2013. We expectplatinums price to tracks golds, but it shouldoutperform during risk-on events.

W

Range: $560.00 - $850.00Average: $780.00

Of the precious pack, palladium exhibits the mostrobust fundamentals. Relatively better growthconditions should drive autocat demand growth, at

a time when primary supply remains constrainedand Russian state stock sales are estimated to fallto just 200 koz in 2013. While palladiums priceshould track that of platinums, its upside may belimited by: 1) an absence of a China stimulus, 2)the threat of a sharp lift in the supply of stockpiledautocat recycling (more palladium-intensive)and 3) its typically illiquid trading conditions(pronounced during periods of macro uncertainty).Nevertheless, a shift in investor sentiment towardspalladium is helping overcome these constraints particularly as this white metal plays catch-up,after being largely ignored for much of 2012.

Au Ag Pt Pd

A year of consolidation beckons for the platinum group metals. On the one hand, the economic woes of thedeveloped and developing world look set to continue, if indeed worsen. The US may be the one bright light,whereas Europe seems to plunge further into the mire with each passing month. The predicted meteoricrise of the BRIC nations has yet to materialise. On the other hand, producers are operating perilously closeto costs of production, whilst the labour situation in South Africa is far from settled. Further unrest is almostinevitable as social conditions deteriorate and the power struggle both between and within the unionscontinues. The situation is further complicated by the niggling doubt in the back of many peoples mindsas to whether ESKOM will be able to keep the lights on. Given this precariously balanced demand versus

supply scenario, could investment come to the rescue and tip the scales in favour of higher prices? Thefact that both the platinum and palladium markets are beginning 2013 with historically long speculativepositions would seem to preclude this. Hence, the logical outcome in terms of price is a year for the relativestatus quo.



18/25

18

Anne-Laure TREMBLAYBNP Paribas, London

Range: $1,530 - $2,000Average: $1,865

Gold is tightly linked with the expansion of moneysupply, particularly in the US. The expansion ofthe Feds balance sheet through QE3 should besupportive for the metal, at least in the rst half of2013. The outlook beyond that will largely dependon the evolution of central banks monetary

policy and equally, on market anticipations of thatevolution. After a nal rally in the next few months,we expect gold prices to peak in mid-2013. Thedownside will, however, be limited by pockets ofstrength, including physical demand from Chinaand India, and ofcial buying. Tail risks concerninga break-up of the eurozone have declined, butthe ongoing stand-off between Democrats andRepublicans around the issue of the decit mayprompt some safe-haven buying.

W

Range: $25.00 - $45.00Average: $39.05

As a geared play on gold, silver moves tend to besharper than its precious metal counterpart. Asa result, silver has more upside potential in therst part of 2013, but its downside potential isgreater later on. The market has been in surplusover the past several years, and this is expected to

remain so in 2013. A turnaround in golds fortunein 2013 will likely prompt a sharp decline ininterest in silver, and this will be reected notablyby redemptions from ETFs. A moderate pick-up inglobal economic growth should be supportive forsilver industrial demand, but this will not make upfor lower investor interest, in our view.

W

Range: $1,475 - $1,850Average: $1,705

Platinums fate is tied to the evolution of SouthAfrican mine supply. The severe disruptions toproduction subsided towards the end of 2012,but important risks persist, whether from strikes,mothballing of mines or safety-related closures.The market is currently near balance, but any

production losses would tip it into decit. Onthe demand front, we believe that the worst isnow behind us. After a dismal 2012, Europeancar sales are not expected to contract in 2013,although growth will likely be subdued. A highergold price in t he rst half of 2013 should besupportive of platinum investment demand as well.

W

Range: $600.00 - $940.00Average: $780.00

Palladium has strong fundamentals and weexpect the price to reect this state of affairs.Mine supply depends heavily on South Africa andRussia, where there are limited growth prospects.On the demand side, the rate of growth in vehiclesales in the US is expected to slow in 2013, but we

expect a pick-up in Chinese auto sales. Overall, theauto industry is expected to drive demand for themetal higher. The size of the market decit shouldin turn attract investors to this market. Over thecourse of 2013, we believe that the palladiumprice has the most upside potential.

Au Ag Pt Pd

Bhargava VAIDYABN Vaidya & Associates, Mumbai

Range: $1,515 - $1,800Average: $1,670

Gold bull run should slow down due to reducedliquidity. The eurozone debt crisis and US economyissues will at times bring in some volatility. Overalldemand for gold should come down. Supply ofscrap should increase.

In countries such as India, a systematic attempt isbeing made to introduce new paper products andbring out old gold hoardings to reduce gold physicaldemand/imports. These all should have a negativeimpact on price.

Gold will continue to be the most important store ofvalue in all portfolios.

W

Range: $23.50 - $37.00Average $30.25

The poor health of the world economy will affectindustrial demand for silver. The past volatilityof silver has scared off many investors. This willreduce long-term committed funds for this metal.Fabrication demand for silver for silverware andjewellery is also reducing. The relationship withgold will support some investment.

W

Au Ag



19/25

19

Alexander ZUMPFEHeraeus, Hanau

Range: $1,500 - $1,895Average: $1,751

At the time of writing, gold is caught betweena questionable US budget compromise andinitial signals that the Fed might slow down itsquantitative easing programmes sooner thanwidely expected. Cheap money has been one ofthe major triggers behind the metals recent bull

trend. Market players will hence watch carefullyany rumours, data and gures that could implya possible change in monetary policy. Thoughination is currently not of major concern, it willremain at the back of investors minds. If the globaleconomy manages to gain traction, it will increasecredit demand and the velocity of money. Whilethis initially implicates higher ination rates (goldpositive) it also paves the way for higher interest(gold negative!). As long as the environment ofnegative real interest rates persists, gold willremain on the shopping list of investors though.However, it is increasingly vulnerable to lose marketshare against other asset classes. Central banksare likely to diversify further away from the US

dollar into gold. The jewellery industry has recentlybeen less supportive. The weak rupee togetherwith increased duties dampened demand in 2012.This adds to the increasingly volatile gold priceitself. Price swings are characteristic for investmentmarkets; however, physical consumers are notonly price, but also volatility sensitive. While Indiais unlikely to deliver a major positive stimulusbecause of that, we expect China to remain astable and supportive factor. Yet, it is unclearto what extent that demand comes out of theinvestment or the jewellery sector.

W

Range: $29.00 - $35.00Average: $31.50

With no shortage of supply, silver heavily dependson the demand side of the market. While themetal is traditionally overdrawing developmentsof the gold price, it will gain some of its ownstimulus from fabrication demand if globalgrowth accelerates. However, buying interest

from the photovoltaic industry one of the mostrecent physical demand drivers is forecastto be subdued, with the sector remaining inconsolidation mode. After a decade of decline, thedemand from the photography industry will notgo down much further. With fabrication demandunable to absorb the surplus, investment demandwill continue to play a pivotal role. Investors willremain on the buy side as long as gold performswell. However, silver ETF holdings are still neartheir multi-year highs. In an environment wheregold may struggle to move higher, the upsideremains capped!

W

Range: $1,550 - $2,000Average: $1,690

South Africa will dominate the price action onthe platinum market in 2013. The only questionis to what extent potential further labour action,electricity price increases, electricity supplydisruptions and general instability have alreadybeen priced in. Further escalation, combined

with production disruptions can result in anotherround of price spikes. The top of this price actionis hard to predict, especially since it might attractspeculative buying. Rising production costs willweigh on the protability of miners, which islikely to set a oor to the price. However, froma pure fundamental point of view, the upsideis also limi ted. The number one consumer, theautomobile industry, seems to be sufcientlyhedged and stocked especially with the lightvehicle production in Europe being rather subdued.Automobile demand in emerging markets is muchmore focused on petroleum powered cars hencea palladium factor than in diesel engines.Additionally, the trend towards more fuel-efcient

cars, bearing a smaller PGM load, remains intact.Keeping the muted demand picture in mind,we consider a fundamental decit as unlikely.Purchasing from the jewellery industry traditionallyreacts in a price-sensitive way. China and Indiain particular have recently shown good buying onprice dips out of that sector and we expect thisbargain-hunting to persist.

W

Range: $550.00 - $800.00Average: $700.00

We expect palladium to relatively outper formplatinum in 2013 and 2014. With depletedRussian stocks hence being unable to sell inperiods of strong prices South Africa will cometo the fore as number one producing country. Thatleaves palladium vulnerable to the same supply

risks as platinum with the same open question:to what degree is that factor already priced in?Demand out of the automobile industry continuesto be promising, with growth in gasoline-drivenlight vehicle output in emerging markets beingintact. Even diesel-driven engines deliver signalsof becoming a suppor tive demand factor for themetal. The trend towards substitution of platinumby cheaper palladium represents an additionalsource of demand that will continue to a ccelerate.An increasing portion of secondary supply will addsignicantly to the supply side and thus reducerisks of shortage.

Au Ag Pt Pd



20/25

20

The London Bullion Market Association is delighted to congratulate the

winning analysts in the 2012 Precious Metals Forecast (see table below).

The aim of the LBMA Forecast is to predict the average, high and low price for the

year ahead in each metal as accurately as possible. The prediction closest to the

average price wins (based on the average $ daily pm xing price). In the event of a

tie, the forecast range is taken into account.

Many thanks to all the Forecast contributors for another excellent year.

Forecasters correctly predicted price rises in 2012 for gold, silver and platinum,

although they were more bullish in their predictions compared to the actual

average price outturn for 2012. Forecasters were also bullish about the palladium

price, predicting a 12.3% price increase, although the average price actually fell by

1.6% in 2012 (compared to the average price for the rst week of 2012).

Congratulations to the four winning analysts. The most impressive forecast

prediction was by Thorsten Proettel, who picked up the winning prize for silverby predicting a price of $31, which was within 0.5% of the actual average price

for 2012. Next best was Tom Kendalls price prediction for platinum (0.8%

difference from the average price), followed by Ren Hochreiter for gold and

Frederic Panizzutti for palladium, with differences of 1.1% and 2.8% respectively.

Commiserations go to Carl Firman, who was in contention to win in two metal

categories but unfortunately lost out marginally in both.

The LBMA is grateful to PAMP SA for its generous donation of four 1 oz gold bars

which will be awarded to the 2012 winning analysts in each of the four precious

metal categories.

2012 ForecastWinners

Metal

2011

Average

Price

Average Price

in 1stweek

January 2012

Average

Forecast

2012

2012 Year

Average

Winning

Forecast

2012

Forecast

Winners

Company

Gold $1,572 $1,603 $1,766 $1,669 $1,650Ren

Hochreiter

Allan Hochreiter

(Pty) Ltd

Silver $35.11 $28.96 $33.98 $31.15 $31.00ThorstenProettel

LBBW

Platinum $1,720 $1,412 $1,624 $1,552 $1,565Tom

KendallCredit Suisse

Palladium $733.63 $655.00 $735.52 $644.33 $662.50Frederic

PanizzuttiMKS

(Switzerland) S.A.


21/25

21

$1,

300

$1,

200

$1,

400

$1,

500

$1,

600

$1,

700

$1,

800

$1,

900

$2,

000

$2,

100

$2,

200

$2,

300

$2,

400

$2,

500

$2,

600

Adams, William

Brebner, Daniel

Cooper, Suki

Dincer, Bayram

Fertig, Peter

Firman, Carl

Hochreiter, Ren

Jansen, Michael

Jollie, David

Kendall, Tom

Klapwijk, Philip

Murenbeeld, Martin

Nagao, Eddie

Norman, Ross


Proettel, Thorsten

Rhodes, Jeffrey

Savant, Rohit

Smith, Dan

Steel, James


Tully, Edel

Turner, Matthew

Vaidya, Bhargava

Widmer, Michael

Wrzesniok-Rossbach, Wolfgang

Name

Fastmarkets

Deutsche Bank

Barclays Capital

LGT Capital Management Ltd


VM Group


JPMorgan Securities

Mitsui & Co Precious Metals Inc

Credit Suisse Securities (Europe) Ltd


DundeeWealth Economics


Sharps Pixley Ltd


LBBW

INTL Commodities

CPM Group

Standard Chartered Bank

HSBC

BNP Paribas

UBS

Mitsubishi Corporation International (Europe) Plc


BAML

Degussa Goldhandel GmbH

Au$1,603 $1,766

$1,6691st week Jan


Avg Price 2012

Average

HighLow


22/25

22

$5.

00

$0.

00

$10.

00

$15.

00

$20.

00

$25.

00

$30.

00

$35.

00

$40.

00

$45.

00

$50.

00

$55.

00

Adams, William

Brebner, Daniel

Cooper, Suki

Dincer, Bayram

Fertig, Peter

Firman, Carl

Hochreiter, Ren

Jansen, Michael

Jollie, David

Kendall, Tom

Klapwijk, Philip

Nagao, Eddie

Norman, Ross


Proettel, Thorsten

Rhodes, Jeffrey

Savant, Rohit

Smith, Dan

Steel, James


Tully, Edel

Turner, Matthew

Vaidya, Bhargava

Widmer, Michael


Name

Fastmarkets

Deutsche Bank

Barclays Capital



VM Group


JPMorgan Securities





Sharps Pixley Ltd


LBBW

INTL Commodities

CPM Group


HSBC

BNP Paribas

UBS



BAML


$60.

00

$65.

00

$70.

00

AgAverage

HighLow

$28.96 $33.98

$31.151st week Jan


Avg Price 2012


23/25

23

$1,

100

$1,

000

$1,

200

$1,

300

$1,

400

$1,

500

$1,

600

$1,

700

$1,

800

$1,

900

$2,

000

$2,

100

Adams, William

Brebner, Daniel

Cooper, Suki

Dincer, Bayram

Fertig, Peter

Firman, Carl

Hochreiter, Ren

Jansen, Michael

Jollie, David

Kendall, Tom

Klapwijk, Philip

Nagao, Eddie

Norman, Ross


Proettel, Thorsten

Savant, Rohit

Smith, Dan

Steel, James

Stevens, Glyn


Tully, Edel

Turner, Matthew

Widmer, Michael


Fastmarkets

Deutsche Bank

Barclays Capital



VM Group


JPMorgan Securities





Sharps Pixley Ltd


LBBW

CPM Group


HSBC

INTL Commodities

BNP Paribas

UBS


BAML


$2,

200

$2,

300

PtAverage

HighLow

$1,412

1st week Jan2012

Name

$1,624

Forecast Avg2012

$1,552Avg Price 2012


24/25

24

$200

$100

$300

$400

$500

$600

$700

$800

$900

$1,

000

$1,

100

$1,

200

Adams, William

Brebner, Daniel

Cooper, Suki

Dincer, Bayram

Fertig, Peter

Firman, Carl

Hochreiter, Ren

Jansen, Michael

Jollie, David

Kendall, Tom

Klapwijk, Philip

Nagao, Eddie

Norman, Ross


Proettel, Thorsten

Savant, Rohit

Smith, Dan

Steel, James

Stevens, Glyn


Tully, Edel

Turner, Matthew

Widmer, Michael


Fastmarkets

Deutsche Bank

Barclays Capital



VM Group


JPMorgan Securities





Sharps Pixley Ltd


LBBW

CPM Group


HSBC

INTL Commodities

BNP Paribas

UBS


BAML


$1,

300

$1,

400

Average

HighLow

$655.001st week Jan 2012

Name

Pd$735.52Forecast Avg 2012

$644.33Avg Price 2012


25/25

25

As the chart below illustrates, analysts participating in the LBMA Forecast have

an excellent record in predicting the direction of the gold price movement. Indeed

analysts have correctly predicted the direction of the gold price every year (with

the exception of 2004) since the Forecast Survey began in 2001. This is an

excellent record which compares impressively against other forecast surveys. The

gold price has risen four fold in the last seven years and analysts are predicting a

further increase of 5.3% in 2013 (since the rst week of January 2013) to $1,753.

And if forecasters predictions prove as accurate this year as in previous years

then we are all set for a further increase in the gold price during 2013.

Forecast 2013 is published by the LBMA. For further information please contact Aelred Connelly, London Bullion Market Association, 1-2 Royal Exchange Buildings, Royal Exchange, London EC3V 3LF,Telephone: 020 7796 3067 Fax: 020 7283 0030 Email: [email protected] www.lbma.org.uk

Given the freedom of expression offered to contributors and whilst great care has been taken to ensure that the information contained in the Forecast is accurate the LBMA can accept no responsibility for any mistakes errors or omissions or for any action taken in reliance thereon

$200

2012

2013

2011

2010

2009

2008

2007

Forecast average

Key

Average price

First weekof January

2006

2005

2004

2003

2002

2001

$0

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

Forecast2001-2013Review

metal forecast 2013

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