Gold bulls & bears deliver price predictions

Resources Corner

Commodities had a tough run in 2013 over the same period global markets rallied. While Australia’s benchmark S&P/ASX 200 index gained 15.1 per cent the mining sector was the worst performer with a 3.7 per cent fall. 
 
Australia's export commodity prices dropped to a three and a half year low at the end of 2013. The Reserve Bank of Australia's reported the biggest contributors to the drop were declines in gold, iron ore and coking coal prices.
 
The price of gold was one of last year’s biggest casualties with an annual loss of 28 per cent. The precious metal snapped 12 years of annual gains which saw the price of the precious metal surge more than 600 per cent. 
 
Commentary
 
Tangent Capital Senior Managing Director, lawyer, economist, investment banker and author - Jim Rickards told FNN in December 2013, “Ultimately I see gold much higher, I see it at $US7,000 or $US9,000 an ounce, possibly higher – Based on fundamentals and based on loss of confidence in the existing international monetary system.”
 
Mr Rickards recommends investors fill their portfolios with 10 to 20 per cent in gold or other precious metals, based on the belief the fundamental price of gold will be "much, much higher". To watch more of the interview click here
 
AMP Limited’s (ASX:AMP) AMP Capital Investors Head of Investment Strategy and Chief Economist, Dr Shane Oliver told FNN in January 2014, “My feeling is that we are probably looking at a lot more downside [in 2014]. I wouldn’t be at all surprised to see it [the price of gold] fall below $US1,000 an ounce.”
 
“I think gold is going to remain under pressure. It had a great run over the last decade, up until a couple of years back and that was on the back of the commodity boom generally and of course all the money printing that was occurring… We can see the end point to that in the US and I think over the years ahead the money printing will start to fade as an issue globally,” Mr Oliver said. To watch more of the interview click here
 
Australian gold stocks sink in 2013
 
Silver Lake Resources Limited (ASX:SLR) has claimed the wooden spoon as the worst performing stock on the Australian Securities Exchange in 2013. The West Australian focused gold mining company’s stock fell 83.9 per cent to $0.535 over 2013. 
 
Gold miners also claimed the second and third worst performing positions with Resolute Mining Limited (ASX:RSG) dropping 66.2 per cent over last year and Newcrest Mining Limited's (ASX:NCM) stock sinking 64.8 per cent. 
 
Rounding out the top five - mining services provider Forge Group Limited (ASX:FGE) fell 64.7 per cent and gold and silver miner Evolution Mining Limited (ASX:CAH) fell 64 per cent in 2013. 
 
M&A activity bounces back in 2013
 
Australia’s mergers and acquisitions (M&A) bounced-back in 2013. Dealogic has reported the value of total Australian M&A came in at $101.1 billion in 2013, jumping 16 per cent from the year before but still below 2011’s peak of $155 billion worth of deals. The financial markets tracker also showed global M&A volume rose 9 per cent over the year to almost $3 trillion with investment bank Goldman Sachs leading the global M&A advisor ranking.
 
China's December data disappoints
 
The first week of 2014 has produced a series of disappointing reports from the world’s second largest economy, China. While the figures have remained above the 50-mark which indicates expansion, the pace of growth slowed at the end of last year.  
 
On the first day of 2014 China’s government reported factory activity eased more than expected at the end of 2013. The National Bureau of Statistics reported the official Purchasing Managers’ Index (PMI) slipped to a four month low of 51 in December. The following day the final HSBC/Markit PMI confirmed a read of 50.5 - in line with the preliminary read showing factory activity expanded at the slowest pace in three months.
 
Across the services sector activity also pulled back at the end of last year. China’s government showed the official non-manufacturing PMI fell to 54.6 in December from 56 in November 2013. The HSBC/Markit services sector also showed the pace of growth eased with the PMI down to 50.9 in December from 52.5 in November 2013. 
 
Mining IPOs
 
Valence Industries Limited (ASX:VXL) started trading on Monday 6 January 2014. The miner is focussed on the exploration, production, processing and sale of graphite floated with an issue price of $0.20, opened at $0.20 and closed at $0.20 on its first day of trade.    


- Lelde Smits