Good news may be around the corner for gold bugs, as experts told the world's largest mining convention that prices could breach $2,000 an ounce this year.
Gold's run is far from over, although it may retreat further before powering upward again, said Martin Murenbeeld, chief economist for Dundee Wealth Inc.
"This is not the end of the bull market, that is certainly our view," Mr. Murenbeeld told an audience at the Prospectors and Developers Association of Canada (PDAC) conference in Toronto.
The convention gathers about 30,000 mining-industry players from around the world, collecting in the city's downtown for nearly a week in the first major industry event of the year.
This year the event unfolds as the mining world, and junior exploration companies especially, face a crisis that may see a good number of them disappear if conditions do not soon improve.
It's no wonder the conference is held in Toronto, where mining companies make up 18 per cent of publicly listed companies and oil and gas comprise another 19 per cent.
Of the publicly listed mining companies, 54 per cent are focused on gold.
Mr. Murenbeeld forecast gold prices could rise to between $1,800 and $2,083 an ounce by the end of the year, under the most likely scenarios, driven by factors such as continued global economic turbulence, central bank buying and potentially lower-than-expected mine supply.
Gold is trading below the psychologically important $1,600 (U.S.) an ounce level, 16 per cent below highs of $1,900 in September, 2011.
Mr. Murenbeeld said prices could decrease further still – pointing at corrections of as much as 30 per cent during past cycles – possibly to as low as $1,440 an ounce.
Factors that could weigh on the price include a rise in U.S. interest rates, a stronger U.S. dollar and use of the metal as a liquidity of last resort.
Duncan Hobbs, of Macquarie Capital (Europe), said gold will retreat as the same factors that drove its meteoric rise – economic turbulence and geopolitical unrest – subside.
"On gold we are negative, short-term, medium-term and long-term," he said. "In our view, the insurance value is eroding where the economic climate is improving."
Some base metals also have a less than robust outlook.
Mr. Hobbs said the key to understanding future prices lies in knowing which metals China, the world's largest consumer, has most access to.
"It is important to focus on what China's capability on the supply side may be," he said, citing copper as one of the best performing metals over the past decade.
He had a more neutral view on the metal over the next two years, amid a likely modest oversupply for the key ingredient to China's massive infrastructure growth.