* Norman tops gold forecasters over 12-year bull run
* GFMS' Klapwijk also ranked in Top 10 eight times
* As prices climbed, 'art overtook science' in forecasts
* Outlook less bullish for 2013, Sharps' Norman says
By Jan Harvey
LONDON, Jan 8 Ross Norman of bullion broker
Sharps Pixley has been the most accurate London gold price
forecaster throughout the metal's 12-year bull run, data from
the London Bullion Market Association (LBMA) show.
Norman, owner and chief executive of Sharps Pixley, was
among the top 10 forecasters in eight of the last 12 annual
polls conducted by the LBMA, which will publish its 2013 survey
of predictions next week.
That record of eight Top 10 finishes was matched by Philip
Klapwijk of Thomson Reuters GFMS, who like Norman also provided
the outright best prediction of the gold price in two of the 12
years. However, a Reuters analysis of the LBMA data showed that
Norman's average ranking in the polls was the higher of the two.
Both men stressed the complexity of predicting a market
where both supply and demand are influenced by many factors;
Norman said the bull run which drove gold from an average
$271 an ounce in 2001 to an annual average of $1,668 last year
also saw forecasting shift to be more of an art than a science.
"Twelve years ago, it was a time when people ran giant
macros that looked at things like mine supply, expectations of
jewellery supply, expectations about the dollar, et cetera,"
Norman told Reuters. "Those forecasts were very driven by data."
"But progressively the markets have changed. It has gone
from a situation where you could measure demand by certain
metrics to something very different. To get a full sense of
where the market is going now is less of a science and more of
an art. It seems to be driven more by sentiment than hard data."
The global financial crisis sparked heavy buying of the
precious metal by investors keen to diversify their portfolios,
while rock-bottom real interest rates cut the opportunity cost
of holding gold and central banks turned from big sellers of the
metal to buyers - all factors that have driven prices higher.
Klapwijk said he had no simple formula for forecasts:
"There's no black box, no model for forecasting gold prices, and
I don't believe in simple relationships, like gold and the
dollar, or that it's a risk-on, risk-off thing," he said.
"Those are very simplistic views. They may operate for
periods, but these correlations come and go."
Frederic Panizzutti, global head of marketing and sales at
MKS Finance in Switzerland, and Martin Murenbeeld, chief
economist at Canadian asset manager DundeeWealth, also emerged
as leading forecasters, appearing among the top 10 forecasters
in the LBMA poll six and seven times respectively.
Rene Hochreiter of South African corporate finance boutique
Allan Hochreiter was last year's top forecaster in the LBMA's
survey of 26 participants with a price view of $1,650 an ounce
against an actual 2012 average, based on the LBMA afternoon fix,
of $1,669 an ounce.
Consistency is hard to achieve. The analysts who provided
the two most accurate price forecasts in 2010 did not make it
into the top 10 in any other year studied.
Ross Norman himself did not quite make it into 2012's top
10, having forecast an average LBMA afternoon fix of $1,765, 5.6
percent above what turned out to be the reading.
Next year, Norman is less bullish on prices than in previous
years, citing prospects for a stronger dollar, investor fatigue
and softer Indian demand:
"People seem to be universally bullish, but the price isn't
moving," said the 52-year-old, who previously worked at
TheBullionDesk.com, Credit Suisse and Johnson Matthey. "To us,
that's an indicator that the market may be topping out.
"I don't think we'll see gold lower, but I think we may have
to get used to a single-digit growth rate."
Gold prices posted their worst quarterly performance in more
than four years in the final three months of 2012, dipping just
over five percent as a more positive tone to U.S. economic data
trimmed expectations for further monetary easing measures and as
demand from major market India remained sluggish.
GFMS forecast last year that gold prices would peak in 2013
before starting a decline. Klapwijk said he remained positive on
gold prices given continued political wrangling over U.S. debt
levels and the expected scale of further monetary easing in the
United States and elsewhere:
"I think gold is going to be one of the assets that people
will seek to hold as protection against competitive currency
depreciation and higher rates of inflation in future," he said.
Firm prices will always be good news for the LBMA
forecasters in one sense - the gold traders club rewards the
winner of the prediction contest with an ounce of the metal.
Following is a Reuters ranking of analysts who have entered
the annual LBMA gold price survey from 2001 to 2012. The most
accurate forecast was credited with 10 points, the second nine
points and so on down to one point for the 10th most accurate:
NAME INSTITUTION POINTS
Ross Norman Sharps Pixley 64
Philip Klapwijk Thomson Reuters GFMS 46
Martin Murenbeeld DundeeWealth Economics 34
Frederic Panizzutti MKS Finance 34
John Reade Paulson & Co 29
Rene Hochreiter Allan Hochreiter 18
Kevin Crisp Deutsche Bank 16
Rhona O'Connell Thomson Reuters GFMS 15
Tom Kendall Credit Suisse 14
Matthew Turner Macquarie 13
Edel Tully UBS 13
Jon Bergtheil Citigroup 13
(Reporting by Jan Harvey; Editing by Alastair Macdonald)