Gold May Trade Higher Than Expected, Copper to Suffer: Fairfax

Gold may trade higher than forecast by Fairfax IS, said John Meyer, the No. 1 ranked analyst for U.K. smaller mining companies by Extel for each of the four years until 2009. Industrial metals, including copper, will suffer. He commented at the Investing in African Mining Indaba conference in Cape Town today.

Gold:

“We’re pretty cautious and modest about our forecast but actually we think that we’re going to see price spikes ahead of that so we’re looking for $1,700 or $1,800 an ounce as a price average.

“If anything, we might lift that forecast. We’re looking for a lot of speculative money to come back into this market and probably some ongoing new capital investment out of China and India as the Indian market gets used to these price levels again.

“It does look as if a lot of money that was taken out of gold just before Christmas is beginning to move back into this market.”

“And that will come in through ETFs and physical gold purchases. And in the meanwhile we’ve got this ongoing move into gold, particularly in China where government has been stimulating personal gold holdings of physical bars.”

Copper:

“Copper is going to just suffer a bit. May see some better performance in the short term, but the prices are likely to come off again just on less copper consumption by manufacturers and a cautious outlook.”

Industrial Metals:

“Maybe the industrial metals, copper, aluminum, nickel and zinc will suffer on the eurozone crisis, the slowdown in economic activity in Europe and the pullback in China as well, where the government is reining in on capital spending and some of the bigger excesses of the boom they’ve been seeing there.”

To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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