LBMA 2024 in Miami: Hot Topics in the Subtropics
Tuesday, 10/08/2024 13:00
Hurricanes hit Miami, gold and silver prices...
The GOLD and SILVER industry's premier event gets under way this weekend,
writes Adrian Ash at BullionVault, ironing his shirts for LBMA 2024 in Miami.
Platinum and palladium players will be there, too. Follow us on
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X.com and on
Gold News to get news, views, charts, gossip and updates live from the London Bullion Market Association's
annual conference...
...Hurricane Milton
permitting.
Even for those delegates too busy to attend the conference's actual presentations because of business meetings (and/or bailing out their hotel rooms), the No.1 topic of chit-chat will still likely start with a sigh, if not a gasp:
How in the hell did gold prices get here?
Every year, the London Bullion Market Association asks conference attendees where they think the gold price will be trading at the time of the LBMA's next annual event.
Like any forecast survey, the average reply offers a guide to group-think.
And just like most other such forecasts, the LBMA conference's crystal ball for gold prices is almost always wrong.
Only 3 times in the past 16 years, in fact, did LBMA delegates come within 5% of where the gold price got to 12 months later (the bear market low of 2015, the upturn of 2019, and the rising-rates-defying jump of 2023 as it happens). And as our chart shows, that's because...
...like with any survey of price forecasts...
...people tend to report what they have just seen, projecting either a flat price or the same kind of move into the future, rather than offering any insight into how upcoming events might impact the gold market.
(Just shift the forecast's red dots by 1 year back
to see that at work.)
On top of this, however, you would hope that the LBMA's industry players do also add a few bucks (or subtract them) to their forecasts to account for what they learn by attending the conference.
Most importantly, they will also add (or subtract) a couple of hundred bucks based on how busy their own business has been, plus how that activity squares with what friends, competitors, suppliers and customers say they are seeing over a beer or two.
"Tumbleweed!" for instance was the summary from most attendees at
LBMA 2023 in Barcelona when asked "How's business?"
Hence the very gently bullish outlook for gold given by the average attendee. The price of gold was trading at $1910 per Troy ounce this time last year. That marked a record high for October, just pipping autumn 2020's Covid lockdown price of $1900 when the conference met online.
But the vast bulk of attendees couldn't understand it, because they serve consumers and physical investors, not central banks or hot-money traders in Comex or Shanghai futures and options. So hardly anyone felt that gold would shoot higher like it has done...
...outstripping the LBMA forecast by a record 33% at $2650 per Troy ounce...
...rather than rising only 4% to $1990 as the average delegate expected.
Why so gloomy on gold? Very plainly, the dreadful events of 7th October didn't figure in anyone's thinking when the LBMA met a week later in Barcelona. Prior to Hamas' attack on Israel, the price of gold was in fact dead-flat for 2023 to date, and it rallied only a little in the immediate aftermath.
Large investment flows into gold were meantime negative (ETFs had shrunk for 3 years running) while retail bar and coin demand had evaporated, completely upending the bullish chit-chat and forecasts given by mints and dealers one year earlier when the LBMA had met in Lisbon.
Back then, in 2022, the premiums charged to retail investors by those mints and dealers were so huge, way up at 100% for US silver Eagles, that the
conference in Lisbon predicted silver bullion prices would jump by 52% over the following 12 months.
But while silver did rise to October 2023, it 'only' gained 18%...
...while premiums on silver coins sank as demand for gold coins and small bars also melted away in the heat of rising interest rates on cash in the bank.
Cue not a little shock among coin dealers attending the 2023 event. Dazed and confused barely describes German attendees in particular (and
their pain has only grown worse). So while conference stayed bullish for the following 12 months...
...forecasting, oddly, a repeat of the prior 12 months' 18% rise with an average prediction of $26.80 for the more industrially-useful precious metal...
...next weekend's event will find silver has risen more than twice as fast, up close to 37% to trade around $31.50 at this autumn's event.
Conference was, in short, wildly wrong yet again last year, but for very interesting reasons. So what news, moods and prejudice might influence the tone and discussions at LBMA 2024?
First, and with the big political powers of the West increasingly pitched against the Rest, "Gold still matters to central banks" as an LBMA session title for next week puts it. Thanks of course to the precious metal's famous "stability, returns and liquidity".
But can this decade's post-WW2 record for central-bank gold demand keep running?
Second, the 2024 surge in gold prices really took off when Chinese consumers and investors piled in this spring. Cue everyone everywhere to declare that
China now leads the market, and it no longer just swallows whatever trading in London and New York says is the price...
...but cue
Chinese gold demand to evaporate since June (along with People's Bank gold buying, at least
on the official data). That begs the question which another panel session will address:
Just what is Asia's impact on precious metals prices?
Third, silver gets a starring role at next week's conference too (the PGMs get a 'reasons to be cheerful' session all to themselves as well) thanks not only to
silver's fast-growing use in 'green' energy, military and AI technology but also thanks to its fast-slowing mine output growth.
So might deficits of supply vs. demand send the silver price soaring?
Fourth and leading the debate, however, we clearly live in "Turbulent Times"...the title of next Monday's investment panel discussion.
Like I say, conference last year missed the impact and importance (if not the horror) of Hamas attacking Israel. But while gold and silver prices have soared since then as Israel's bombardment of Gaza and now its war with Hezbollah in Lebanon threatens to become outright confrontation with Iran, crude oil has not risen (
well, not yet) while global stock markets have like gold jumped to new all-time highs.
Is gold really the most ghoulish investment? Might its price sink if peace breaks out?
Turbulence, in other words, isn't hitting gold, silver, equity and energy prices like you might have expected. Here's hoping it doesn't hit flights to Miami too badly and that the awful forecasts for Hurricane Milton hitting Florida prove as wide of the mark as last year's gold and silver conference price outlook.
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Gold News.
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