Long term gold forecasting factors

Implications: Long term gold precious price forecasts are generally non-published phenomena, so it is interesting to see Merrill Lynch's longer term opinion.

Reasons for longer term gold include investor sentiment, fabrication demand

The author suggests several other longer term factors are also at play

Analysis: The article, whilst not providing much commentary, does provide an indication of long terms thoughts.

The gold forecasts maintain a positive view of investor sentiment from fabrication.

Not mentioned and supportive of these sentiments, is a possible undersupply of gold relating to a general lack of exploration in the low price phase of the late nineties Gold exploration budgets globally are expecting to rise from ~US$1bn in 2002 to in excess of 6$bn next year. Few major finds are now starting to filter done the pipeline, and larger projects require less robust economics (i.e. a higher gold price) to be profitable. Additionally, the gradual run-down of economic reserves and some of South Africa's major mines has tightened supply.

On the demand side and additional to ML's comments, it is worth noting that trade deficit related dollar weakness, will be supportive of gold as investors move from stocks to commodities.

I believe strength factors such as these will lead to central banks stocking, rather than destocking, of gold, and continue to provide support.

Would gold survive a 'commodities bubble burst'? Gold would most likely survive any potential bursting of a general commodity bubble, as investors would turn to it in the associated times of economic stress. 

Thus the signs are bullish on both demand and supply and a positive forecast, perhaps moreso than Merrill's, is certainly arguable.