Lawrence Williams | 28 May 2015 14:56
A high powered gold bulls vs bears debate in London did not really raise any new issues for either side.
London’s Association of Mining Analysts (AMA) organised a very well attended gold bulls vs bears debate Thursday evening in which a panel of six (three bulls and three bears) put forward the case for, or against, gold as they saw it. This followed on from a successful similar debate two years earlier which was seen as being won by the bulls – but it was the bears on that occasion who, in retrospect, came up with the more accurate predictions.
Fast forward two years and opinions remain just as divided. Despite the fundamentals of gold remaining broadly the same, although the gold price is now a little lower. The macro picture may have moved on a lot in that time but the outlook remains just as uncertain now as it did then.
Interestingly, this time around, neither side seemed to see any really significant movement in the gold price by much more than US$100 or so over the next year, either up or down – there were no predictions of huge rises or falls. The audience was asked to vote via a show of hands whether they were bullish or bearish on gold at the start and end and in terms of any changes in sentiment as a result of the debate it probably remained a draw – with the great majority voting the same way at the end of the debate as they had at the beginning. However, that was not to say that there were not some compelling arguments put forward by each side in favour of their particular positions. The debate was ably moderated by AMA chairman, Chris Welch.
The Bears:
Robin Bhar – Head of Metals Research, Societe Generale
Izabella Kaminska – Reporter, FT Alphaville
Kirill Kirilenko – Gold Analyst, CRU Group
The Bulls:
Nick ‘Metals‘ Moore – MD of Natural Resources Alpha Strategies, Blackrock
Ross Norman – CEO, Sharps Pixley
Charles Gibson – Director, Edison Research
However, virtually all the arguments presented both for and against gold will already be very familiar to readers of Mineweb. The bullish arguments primarily revolved around the massive global debt position, which puts us into unprecedented new territory and the continuing rise in Asian demand, coupled with an anticipated medium- to long-term decline in newly mined gold production.
The bears looked to the potential rising interest rates scenario being played out in the US in particular, and the continuation of dollar strength, both of which were seen as potentially bearish for the gold price, at least over the next year or so. Various charts were presented and alluded to by the participants in making their respective cases.
Unfortunately perhaps the time allowed for Q&A at the end may not have been long enough to give the audience the chance to interrogate the participants rather more fully. The situation of gold hedging was brought up with the bears, notably Robin Bhar, commenting that hedging was on the increase again after a relatively long period of hedge books being run down and that this indicated a lack of confidence in the future by the gold mining companies. The bulls responded that the level of hedging is still insignificant compared with its heyday. But it was also not alluded to that perhaps those companies which are implementing hedges may in reality be unwilling to enter into such arrangements, but are forced to do so by bankers as a prerequisite for raising necessary finance for new developments and expansions.
The debate took place at the excellent conference facility at London lawyers, Simmons and Simmons, which conducts an important amount of mining-related business. The event ended in a wine-fuelled networking session where many of the arguments both for and against gold were mulled over, but one doubts if many will have changed their positions as a result. Bulls will be bulls and bears bears!
