We like to speculate on many things that will happen in the future. Sports bettors have been watching the bowl games to see how their prognostications will make money, and market prognosticators bet the winners and losers of companies.
Prognostication is not something that is pulled out of a hat. Past performance and the environment are some of the information used to make the decisions.
At the end of August, the Accredited Precious Metals Dealers (APMD) predicted that at year-end, gold would close at $1,897, silver $28, and platinum $1,153. The APMD is a professional organization of precious metals dealers with a mission to educate and promote market integrity. These are the people within the market and have the background to understand the nuances.
On the other end of the weekend’s prognostication were the oddsmakers who earn their living predicting the outcome of football games. For the Alabama vs. Cincinnatti Cotton Bowl game, the oddsmakers made Alabama a -13.5 point favorite. For those not aware of sports betting, that means the oddsmakers believe that Alabama would win by 13.5 or more points. If Alabama loses or wins by 13-points or less, you lose the bet.
The Cotton Bowl’s over-under was 57.5 points. If the gambler believes that the game’s combined score would be more than 57.5 points, you will bet the over.
For the Orange Bowl, Georgia was a -7.5 favorite over Michigan with an over-under of 46 points.
Who did better?
In the Cotton Bowl, Alabama beat Cincinnatti 27-6. Although Alabama beat the spread, only those who bet the under won money. The story was similar in the Orange Bowl where Georgia blasted Michigan 34-11, beating the spread and going under the predicted 46 point total.
How did the APMD do? As we check their results, the comparison also includes the London Bullion Market Association (LBMA) consensus prediction is included to compare results. The LBMA is the operator of the London markets that set the worldwide price of precious metals. Using the prices at the close in the New York Metals Market on Friday as reported by Kitco:
|Medal||August 31 Prediction||December 31 Close||Difference (Pct)||LBMA Consensus|
The difference between the markets is that the gambling bookmakers make their living on being right about the odds, and precious metals dealers make money on their premiums on selling coins and bullion.
Bookmakers have to make the correct predictions daily. An incorrect prediction on a big game will cost the bookmakers millions of dollars, and too many bad odds predictions could bankrupt a sportsbook.
Bullion dealers can adjust the premiums as the metals rise and fall, and they have to promote their product and let the buyers come. Bullion inventory usually turns over faster than the changes in the market, limiting the price risks. As long as the dealer is selling within the spread of the spot price and the premium, their incentive to be correct in their metals predictions is reduced.
All investments are a gamble, and the difference amongst the markets is what stake the prognosticators have on the outcome. You would have made more money by betting on Alabama and Georgia to win their games than most precious metals predictions.
Georgia opens as a -2.5 favorite over Alabama for the National Championship in Indianapolis on January 10, 2022. The over/under is 51.5, according to Draftkings, and Sports Illustrated published a trends analysis for the betting line.
It’s your money. Bet wisely.
And now the news…