Government analyst’s price forecasts consistently accurate (The

This month, we’ll look at Anders’ long-term forecasts on metal prices and see whether they have stood up to the acid test of time.

His first mineral forecast for the government came in late 1973, during the global oil crisis. Anders predicted that — in spite of then- fashionable forecasts that said oil would hit $40(US) per barrel or even $80 — the oil price, in “constant” or “real” dollars, would actually never exceed about $12-13 per barrel, and that it would then float back to about half that level.

Both of these predictions have held to date, about 16 years later.

For base metals, Anders predicted in Ontario Mineral Policy Paper No 14, published October, 1981, copper would range from 18 cents to 30 cents per lb in constant 1967 dollars. Its value was 24.93 cents in 1987 and 27.44 cents in 1988, well within the range.

For zinc, the forecast was 12-16 cents per lb (constant dollars). The price was 13.62 cents in 1987 and 18.82 cents in 1988, the latter a little higher than the long-term range.

Aluminum was given a range similar to copper. Its 1987 price was 23.81 cents per lb. The 1988 price spurted to 35.08 cents but has now settled back to around 23.4 cents , all in constant dollars.

He gave nickel a range of 50-90 cents per lb, which remained valid during 1981-87. In 1988, the metal rose to $1.95, but it has since dropped back to about $1.45. Anders predicts that by 1990, nickel will be back within the long-term forecast range.

One should point out that in making a major long-term prediction, one never rules out temporary short- term breakouts on the up side or down side.

Gold, in contrast, is another animal. By a different route, Anders happened to arrive at a conclusion similar to Paul Einzig, who wrote the 1974 book The Destiny of Gold.

The projection was of a long- term equilibrium price for gold of $140 per oz in constant 1970 dollars. This figure would translate into about $374 today, which has been about right for most of 1989.

It is my opinion the Anders metal price forecasts have held up remarkably well for the last eight years. He feels the upsurge in “current” metal prices during the last couple of years must be viewed as a temporary aberration, and not as the start of a long, upward movement duplicating the 1947-74 period.

He also feels that during the next year or two, real metal prices will return to their long-term, “flat-to- slightly-declining” trend in world markets. Unfortunately, there is no room here to describe his methodology.

His work is used by the minerals industry, government agencies in several countries and by banks.

A government tends to focus on the long run, as opposed to short- term trends which are so vital to trading in metals. A government’s feeling is usually that the latter do not greatly affect mine employment levels and the mineral community’s prosperity.

Understandably, a government’s reaction time to outside events is slower than that of world metal commodity exchanges (many changes each hour), and so short- term interest in mineral markets would be wasteful for the administration.

It is the long-term price trend projections which permit governments to develop and improve the positive effects and cushion the negative ones well before they happen.

Industry performs similar exercises but theirs are more geared to the short term, naturally.003 T. P. (Tom) Mohide, a former president of the Winnipeg Commodity Exchange, served as a director of mining resources with the Ontario Ministry of Natural Resources prior to his retirement in 1986.

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