{"id":18071,"date":"2013-01-28T08:15:22","date_gmt":"2013-01-28T13:15:22","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=18071"},"modified":"2013-01-28T08:15:32","modified_gmt":"2013-01-28T13:15:32","slug":"confessions-of-a-gold-analyst-its-all-my-fault","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2013\/01\/confessions-of-a-gold-analyst-its-all-my-fault\/","title":{"rendered":"Confessions of a Gold Analyst: \"It's All My Fault\""},"content":{"rendered":"

Common sense dictates that when you need information or advice on something you're unfamiliar with, you consult with a professional. That's what people do, whether refinancing a home, choosing an insurance product, or fixing a broken heater. While professionals certainly have their own agendas, they still know more about their products or services than others, and can at least help them make more informed decisions.<\/p>\n

Bank and brokerage analysts know their products, too. But when it comes to helping you make an informed decision about where the gold market is headed, they have, as Rick Rule is fond of saying, a record unblemished by success.<\/p>\n

Every year major banks and brokerage houses provide their four-year forecasts for the gold price. The following chart documents the average price projection of 25 top analysts over the past seven years, many of whom specialize in the resource industry. I might suggest pushing away from your desk so that when your jaw drops it doesn't hit the keyboard.<\/p>\n

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You can see that every year since 2007, bank and brokerage analysts have as a group predicted that gold would fall, sometimes dramatically, over the next four-year period. For example, in 2007 the consensus of all estimates was that gold would decline from $656 to $523 by 2011. Instead, the price rose 140% to an average of $1,572 that year.<\/p>\n

Similarly, they predict this year that gold will fall from $1,665 to $1,515 by 2017. Even if they thought gold would move higher the first year, their best guess was that it was ultimately headed lower. So far they've been wrong every time.<\/p>\n

For the most part, these are analysts who do nothing but study the resource markets all day long. It's their job. No one gets it right all the time, but this kind of track record is embarrassing.<\/p>\n

The obvious lesson is for investors to ignore price predictions from the major banks and brokerage houses \u2013 they just don't get it. I'm sure most readers of this publication already know that.<\/p>\n

However, there's a much bigger implication of this data that may not immediately come to mind\u2026<\/p>\n