The Results are In: The Price of Gold at the End of 2011

by JDH on January 8, 2011

Last week, in my post on Near Perfect Predictions for 2010 – What’s Ahead for 2011? I provided my detailed thoughts on the price of gold in 2011. I also described the fact that readers of this blog were freakishly accurate in their predictions for 2010, made a year ago. Specifically:

The group, on average, predicted that the Dow would close at 11,667. As it turned out, the Dow closed for the year at 11,577.51 Well done.

The group also predicted that the price of gold would close at $1,418, and where did gold close?


Freakishly good.

So, I assume this year you will all use the "wisdom of crowds" and simply invest based on what the group thinks. The trick, of course, is to not follow any one person’s predictions. Instead, follow the average of the group, because that’s what matters. If you really want to see each individual’s predictions, go to the 2011 Predictions Page, or go to the right hand navigation menu on the right hand side of this page to see everyone’s individual predictions.

Again, individual predictions are irrelevant. What matters is what the group thinks. Here, then, is a mathematical summary (the average) of our Forum members’ predictions for 2011:

The Price of Gold Will Be:

Price of Gold
Date Price per Ounce $US
March 31, 2011
$ 1,463
June 30, 2011
$ 1,567
September 30, 2011
$ 1,558
December 31, 2011
$ 1,621

The DOW will close at:

Date DOW Close
March 31, 2011
June 30, 2011
September 30, 2011
December 31, 2011

The consensus appears to be that gold will continue to increase as the year progresses, and the Dow will continue to erode as the year progresses.

Personally, as I have predicted on the JDH 2011 predictions page, I believe that gold will be higher than the group believes at the end of the year (I’m guessing $2,000), and I believe the Dow will be lower at the end of the year (9,000). Last year I was smarter than the group on the price of gold, and not even close on the Dow. So, if you are stupid enough to follow my predictions (and I hope you don’t), follow my gold prediction, but not my Dow prediction.

It would appear, based on our history last year, that the group is smarter than any individual, so I will be interested to see how the group does this year.

(If you sent me your prediction and I didn’t post it, or if I transcribed your numbers incorrectly, let me know by sending me an e-mailng them to me at 2011 Predictions and I’ll make the correction. If you haven’t sent them yet, sorry, it’s too late, but you are free to comment on the 2011 Predictions Board on the Buy High Sell Higher Forum).

My theory is that the "wisdom of crowds" is smarter than any individual. We each have different viewpoints, so when we combine our unique perspectives, we arrive at the correct answer. That actually makes sense, because of course the market is a collection of individuals. It would appear that you are a good proxy for the entire market.

The weather is great here today, so I’m off to take my boys skiing for the day, so my comments on the market this week will be very brief and to the point:

Yes, the gold and silver market got hammered.

So what?

Gold has pulled back to the $1,350 support level, and may drop to the $1,325 support level. So what? Six months ago it was at $1,150. A correction is healthy and necessary, so take this weakness to add to your holdings. That’s what I did.

When gold is $1,621 at the end of the year (and it will be, because that’s what you have predicted), $1,368, where it closed on Friday, will look like a bargain.

Thanks for reading, and see you next week.

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