Premier gold industry conference badly wrong a year ago...
WILL the gold industry never learn? asks Adrian Ash at BullionVault.
This weekend kicks off the London Bullion Market Association's 2018 conference, held this year in Boston, Massachusetts.
LBMA Boston will be the 6th such event in a row to find gold trading below a $1300 handle.
Yet in 3 of the last 5 years, delegates have – when polled on the second and last day of the LBMA conference – forecast that gold will trade above that level by the time of the following year's October event.
In Barcelona last year they doubled down, forecasting $1369 by today even after missing October 2017's gold price by $85 per ounce with a call for $1347 gold at LBMA 2016 in Singapore.
If anyone is trying to build a business on such bullishness, their inevitable bankruptcy hasn't yet dented attendance at the LBMA's annual conference so far.
Another 700-odd delegates are making their way to Massachusetts this year, matching if not beating the record numbers at Barcelona 2017.
Most of those refiners, bankers, vaults, insurers and dealers were too busy doing business to attend all the formal conference sessions. So it was those left in the room who
forecast gold prices rising 6.6% above that day's afternoon London benchmark of $1284.75 – a forecast that has now missed today's outcome by more than 10%.
Away from last year's half-empty conference room however, LBMA Barcelona was
more muted on gold. Stock markets were too strong, and rising rates wouldn't help, said pretty much everyone over coffee, beer or dinner.
What if that changed, as it has over the last 3 weeks?
For us here at BullionVault, this month has marked a clear break with 2018's pattern of bargain-hunting and then profit-taking among private investors in gold. Because even as prices have risen, net demand on BullionVault has risen 126% from its previous 12-month average, totalling a quarter-of-a-tonne (224kg) and taking client holdings to a new record above 39 tonnes.
We haven't seen such a positive response to a strong rise in gold prices since Trump's election followed the UK's Brexit referendum shock in 2016.
What changed? In a word, equities, because the stock market slump has finally spread from emerging markets to Western-world shares. The flight from risk is benefiting both gold prices and gold demand. The switch in private-investor behaviour says people are suddenly anxious that this correction could flip into a crash.
People tend to predict more of what they've just seen, of course. So will this month's rebound in gold prices color the LBMA conference's 2019 outlook?
