Analysts forecast only slight metal price increases in 1993

As base and precious metal prices either declined or remained relatively flat across the board, 1992 was a rather dismal year for Canadian metal producers. Most industry analysts are forecasting only slight to modest price increases this year.

Although many analysts are predicting gold prices in the US$350-380 range, a severe lack of investor interest will probably weigh heavily on the price. David James, precious metals analyst for Richardson Greenshields, feels that the strong U.S. dollar will continue to make gold an attractive sell for producers in South Africa and Australia. James predicts an average 1993 gold price of only US$330 per oz. if central bank selling continues. James also says that increasing supplies of silver on the world market will hold prices at about US$3.50 per oz.

In contrast, James Ryan, an independent analyst from Seattle, Wash., believes that a surging platinum market will help to strengthen gold and silver prices in 1993. Ryan is predicting a $400-per-oz. platinum price because of production disruptions in the former Soviet Union, continued political uncertainty in South Africa and increased platinum demand from the automotive sector.

In the base metal sector, most analysts expect only slight price increases since rising production capacity, coupled with substantial London Metal Exchange stocks, will force producers to maintain cutbacks in 1993. However, Ray Goldie, a base metal analyst with Richardson Greenshields, is anticipating sizable price increases for both copper and zinc. Goldie believes that the demand for copper in China will continue to increase and this in turn will cause a surge in the price. Goldie also predicts that there will be a declining supply of zinc due to a lack of refining capacity. Many of the zinc processing plants worldwide are being forced to either close or update their facilities because of environmental concerns.

Analyst Copper Lead Zinc Nickel Gold* Silver* Platinum*

Midland N/A N/A N/A N/A 350 N/A N/A

James Ryan N/A N/A N/A N/A 370 N/A 400

MMRS $0.975 0.25 0.525 3.40 350 4.00 390

Nesbitt $0.90 0.24 0.45 2.55 340 4.00 N/A

Richardson $1.175 0.255 0.64 3.00 330 3.50 N/A

Yorkton $1.05 0.28 0.55 3.00 380 N/A 400

1992 Avg. $1.05 0.26 0.56 3.24 344 3.96 360

US$ per lb. * US$/oz. Data provided by Yorkton Securities