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Gold Volatility Breeds Equity Opportunities: Mike Niehuser

20.05.12

The Gold Report: What was your prediction for gold prices in 2011 and how did last year’s investment ideas work out?

Mike Niehuser: Depending on how you want to spin it, we were a little conservative in some respects, but for year-end 2011, we nearly hit it right on the nose. Our forecast for 2011 included the price of gold ranging from $1,300/ounce (oz) to $1,500/oz with the potential with some catalyst to go over $1,600/oz by year-end. In reality, gold traded up to $1,500/oz for the first half of the year making us look smart, then exploded to $1,900/oz and retreated back to where we thought we would end up at year-end at $1,600/oz.

So very close on price, but, more important, we missed the mark on the catalyst, which is the story of the year. We thought the catalyst would be the accelerating deterioration of the U.S. dollar in combination with typical seasonal demand late in the year, but this was blown out by the debt crisis in both the U.S. and Europe, with a wildly different impact on metal and stock prices. Understanding the difference could be very important to making it through 2012.

Source: Jutia Group