by Alasdair Macleod, GoldMoney:
Building on our proprietary energy-proof-of-value gold price framework, we
a) present an improved gold price model;
b) provide an in-depth analysis of the energy exposure of the cost structure in gold mining and;
c) give an outlook for the gold market.
Our improved framework confirms our previous findings that energy is an important building block to understanding gold price formation. The in-depth bottom-up analysis here explains why. Given our positive forecast for longer-dated energy prices and our negative long-term view on real-interest rates, we believe that the outlook for gold prices is skewed strongly to the upside.