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Stock market crash the only factor likely to avoid a boring year for gold hears new Dubai commodity conference

 -- Published: Sunday, 9 February 2014 | Print  | Disqus 

By Peter Cooper

Only a major crash in global stock markets is likely to avoid this being a very boring year for the gold price, according to the precious metals panel that deliberated on the price of gold this afternoon at the inaugural Global Commodities Outlook Conference, held in the Almas Tower in the Dubai Multi Commodities Centre.

DMCC chairman Ahmed bin Sulayem reminded the 250 delegates in an opening address that Dubai handles $70 billion in gold per annum today versus $6 billion a decade ago with around 25 per cent of the world’s physical gold supply passing through the city. Dubai has also become global number three for diamond trading at $40 billion and the world’s largest re-export market for tea.

Static prices?

However, the experts on the panel in the afternoon voted for a range of gold prices from $1,150 to $1,400 for 2014 with an average of around the current price of $1,267. The price decline in 2013 was blamed on a combination of the introduction of high taxes on gold in India and the sell-off of Exchange Traded Products as investors sought higher returns in real estate and soaring global stock markets.

Local market maven Jeff Rhodes spoke for most of the panel in believing Chinese demand for gold had put a floor under the price but would not be enough to revive it. He saw jewelry demand picking up as consumers are ‘feeling good again’ particularly in Dubai but not ETP buying. He preferred Palladium for investment this year due to strong supply and demand fundamentals.

That said if the Chinese choose to announce that their Central Bank gold reserves have risen dramatically then this could ’spark a stampede of demand in China’, admitted Mr. Rhodes somewhat contradicting his own pessimism.

Other commentators alluded to the necessity of a fear of inflation to return to boost gold again, and fretted about the impact of rising interest rates on the cost of holding gold.

Gold as money

Rolf Schneebeli made the argument for the massive money supply growth of recent years eventually translating into a $3-4,000 an ounce gold price. The US monetary base is up from $600 billion in 2000 to $3.6 trillion, and given the relatively fixed supply of gold its price should move much higher as this money comes into circulation.

Still it looks like a major stock market crash is going to be needed to shake gold out of its trading range, if these experts are right. Then again levels of optimism about stocks have not been higher since 1929 so nobody really felt safe in predicting it. Share prices as we know only ever go up, until they come down!

The ArabianMoney investment newsletter was proud to be a sponsor of the new event today, even if we disagreed with some of its conclusions. To keep up with our full analysis and investment recommendations subscribe to our monthly newsletter (subscribe here).

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 -- Published: Sunday, 9 February 2014 | E-Mail  | Print  | Source:

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