International banker Credit Suisse Standard Securities gold analyst Dr David Davis says that the gold price has not been immune to the global fin-ancial crisis, but it has outperformed other commodities.

He says that the key question arising from the credit crisis is what the extent of its effects on the fundamental gold supply and demand dynamics will be, which will affect the gold price. Credit Suisse Standard Securities believes that the fallout from the credit crisis will mostly be felt on the demand side of the gold market.

Davis says that the slowdown in global gross domestic product and growth will probably affect fabrication demand, gold jewellery, electronics and other industrial components, in particular.

The bank does not believe, however, that the demand for exchange-traded funds or coin fabrication will be affected. It also believes that the supply side of the gold market, which includes mine supply and central bank supply, will decline, which does not differ from previous supply forecasts. He says that Credit Suisse Standard Securities’ calculations indicate that there will be a neutral supply-and-demand equation for 2009.

He adds that the company believes that the upward pressure on the gold price associated with a large supply deficit is now likely to be eased. Its gold price forecast has been revised down to reflect its projected downturn in demand in 2009, which has changed from $980/oz to $900/oz.

Davis says that Credit Suisse Standard Securities continues with its outlook that the supply and demand fundamentals will remain intact for a long-term upswing in the gold price.

Meanwhile, online financial management services provider Vestact CEO Paul Theron comments that the safe haven of gold seems to be an outdated concept. He says that the gold price would be higher if this was true today, as the current credit crisis is the type of global financial climate where gold could prove itself. He adds that Vestact has been sceptical of gold companies on account of their erratic earnings record.

“Surely, the credit crunch of 2008/9 qualifies as the sort of global financial drama that the gold bugs have been waiting for?” asks Theron.

He says that concerning gold demand, supply and future prices, central banks are “the elephants in the room that nobody ever talks about”, and he says that no one knows if these will be net sellers, holders or buyers in the years ahead.

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