Finance

Is Gold Price Forecasting Reliable?

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Gold has rallied to new heights and everyone is excited by that, however, investors should not forget that this precious metal has its own shortcomings. The price is volatile and changes on a daily bases, so anyone looking to buy or sell bullion Melbourne needs to keep this fact in mind. 

At the moment the gold price AUD is unstoppable. Though, It is still in line with what many predicted last year. Forecasting seems to be on the rise when it comes to gold, however this is not accurate enough to rely on. Most of the time forecasters make predictions based on their own hopes or wishful thinking.

Forecasting is not unique to gold. So-called experts will speculate on prices for virtually every commodity that is out there. Forecasting might sound like some sort of clever scientific economic predictions of the future but the reality is that no one can predict the future regardless of what analytical algorithm and experience one has. 

Forecasting and trying to predict the future of the gold price AUD is done by a lot of stock brokers, fund managers and other financial institutions. Most of these people employ forecasters to support their marketing process and to convince investors to shift their focus from other commodities to gold. Even when the price fluctuates some enthusiastic forecasters will still advocate for gold. 

The truth is: if people could predict the future of gold correctly every time, there would be more billionaires in the world. If you were a broker or you had a broker with an unwavering stance on gold, shouldn’t you wonder why they are still working for a gold dealer when they could be making endless cash working for themselves?  People who have been in the gold industry, who have seen more than their fair share of surprises know that forecasting does not work. Veteran and experienced gold investors know when and why to hold on to their gold or to sell bullion Melbourne. Forecasting might work in conventional stock markets but gold behaves differently, which is why forecasting doesn’t work as well.

Things are different for gold mining shares. Mining companies might use forecasting to draft their budgets and make plans for the future. As forecasted the GDP growth in Australia slowed to 2.3%. That also saw the Australian dollar falling in the forex market which helped push the price of gold up $1830 per ounce.

In 2018, Australian gold miners earned a near record level of $1,700 per ounce. The stock price for two of the largest producers Newcrest and Northern Star also went up despite 31 tonnes of future productions being hedged by gold producers listed on the Australian Stock exchange. 

While most people regard hedging as speculation, a lot of gold miners seem to regard it a way to reduce risk. This is basically what central banks do, they increase their gold to hedge against financial uncertainty and currency problems. With Brexit and the U.S move towards a stricter protectionist economic stance, the demand for gold will keep increasing and so will the price of gold.  

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