Global Gold Outlook For 2013

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This article is based on the Outlook Report from Global Gold in Switzerland, written by managing director Claudio Grass. It provides a fundamental view on gold, not a short term price forecast. It is widely known that short term prices are suppressed on a regular basis in a counterintuitive way, just like today (January 4th).


We don’t claim to have a crystal ball. In this article we bring our view on the expected direction of the political and economic developments. We use our common sense, and we refrain from using complicated models which no one understands. For each scenario, we indicate how likely it is to happen and what the impact would be on the gold price.

Scenario 1: Status quo

Under our “status quo” scenario, governments will continue essentially as they have so far, delaying any real problem solving. They will continue to  “moderately” inflate currencies, bailout banks etc. Furthermore real economic growth rates will stay low.

Probability (estimate): 80%. We think that this scenario is the most likely for the coming months and years. Governments can’t and won’t tackle any real problems; they will follow their “muddle through” policy as they have done so far.

Impact on gold: As in recent years the current policies of governments positively impact gold prices.

Scenario 2: Back to “normal”

In this scenario central banks worldwide abandon their current monetary policy and return to a more prudent approach. This is coupled with higher real economic growth in the world.

Probability (estimate): 10%. Due to the very high debt levels in western economies we hardly think that central banks can return to their normal monetary policy. The lack of any real growth impulses leads us to believe that this scenario is not a very realistic one for the foreseeable future.

Impact on gold: A “back to normal” scenario would probably impact gold prices negatively. Historically gold has tended to perform negatively when real short term interest rates have exceeded 3%.

Scenario 3: Crisis

Crises can take on many different forms, such as a complete collapse of the financial and monetary system, a world war, civil unrest or many others.

Probability (estimate): 10%. Political developments in most parts of the western world are alarming. We think that our current financial and monetary system is not sustainable. We don’t, however, see the tipping point on the horizon quite yet.

Impact on gold: In a crisis scenario the price of gold would likely dramatically increase nominally. In real terms, gold should be an ideal medium to store value over the long term.

Global Gold’s conclusion

The only scenario which could have a negative impact on gold is a return to normality. As we deem this scenario to be relatively unlikely at the moment, we remain bullish on gold for 2013. Every price dip because of short term price fluctuations should be considered as a buying opportunity.

Global Gold Switzerland Outlook Report No 1

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