Gold’s 12-year bull market is over as U.S. economic growth means investors will switch focus to precious metals that benefit from expansion, the top forecaster in the London Bullion Market Association’s 2012 poll said.
Prices will average $1,600 an ounce this year, down from a record $1,668.75 last year, Rene Hochreiter, a director and chief executive officer of Johannesburg-based Allan Hochreiter (Pty) Ltd., said by phone last week. The high will be $1,700, below the record of $1,921.15 set in 2011, he said.
“I think America will sort itself out and the economy will start moving again, positively,” Hochreiter, 55, said from Inhambane, Mozambique. “As gold declines, as the world economy improves, so will the industrial side, and platinum, palladium and silver will start to pick up.”
Hochreiter forecast an average $1,650 for gold last year. Bullion for immediate delivery was at $1,646.39 by 3:30 p.m. in London today. Allan Hochreiter does corporate finance in mining.
Silver, platinum and palladium exceeded gold’s 7.1 percent gain last year. Industrial demand from solar panels to batteries and film accounts for about 53 percent of silver demand, the Washington-based Silver Institute estimates. Platinum and palladium are mainly used in catalytic converters in automobiles and other industrial applications.
Holdings in gold-backed exchange-traded products were at 2,623.2 metric tons on Jan. 4, 9.3 tons below the record set Dec. 20, data compiled by Bloomberg show. They rose 12 percent last year, compared with increases of 9.4 percent for silver products, 16 percent for platinum and 11 percent for palladium.
“Platinum may take another year or so before it beats gold,” Hochreiter said. “Then it’s going to stay above gold for the next upward cycle, which could be five or six years.”
Revived demand for gold jewelry will be insufficient to keep bullion climbing because prices are more dependent on investments, according to the CEO.
“The price is made because of the insurance, because of what the dollar is doing, not what physical jewelry demand is doing,” Hochreiter said.
The LBMA awards the top forecasters with a 1-ounce gold bar. Hochreiter said he won’t be selling.
“Unless you really have to sell, you don’t sell it,” he said.