by Jeff Kerr, Account Executive, Republic Monetary Exchange
As the year 2014 comes to an end, many analysts make their predictions for the New Year 2015 ahead.
While gold did not see the same tremendous gains it witnessed in the decade long bull market run which peaked in 2011, the yellow metal appears to be ending the year very close to where it began.
Warehouse stocks of metal reached dangerously lows levels at the COMEX Exchange in New York due to an unprecedented increase in buyer demand and physical delivery.
The U.S. Mint has set a new sales record for the year for its American Eagle silver bullion coins. In its press release, U.S. Mint officials said that they will continue to sell 2014 silver coins under allocation until its inventory has been depleted, which they added, based on current demand, should be during the week of December 15. The sales record, which was set in 2013, was broken on Monday as the Mint announced that it had sold 495,500 coins during the day. The Mint updates its monthly sales daily. Since Monday, sales have remained strong and as of this past Tuesday, the US Mint had sold 43.051 million silver coins, handily beating last year’s record of 42.675 million coins. Although demand for silver coins has been extremely strong, sales of the U.S. Mint’s gold coins are slightly down from last year.
So what does this mean for 2015?
Capital Economics: Gold Has Long-Term Potential
Commodity analysts at Capital Economics said that gold still has plenty of upside as they expect prices to end 2015 around $1,300 an ounce. Their forecast has remained unchanged since they announced their initial forecast in October. Not only is Capital Economics expecting to see a strong performance in 2015, but they are also expecting that strength to push into 2016. They expect prices to end the year around $1,400 an ounce, also a reaffirmation from their October outlook. “Indeed, given the unfavorable market conditions this year, gold has actually held up remarkably well,” said Julian Jessop, head of commodity research at the research firm. “The downside for the gold price from current levels is surely now limited.”
Commerzbank: Fed Rate Hikes Will Signal Bottom For Gold
Once the interest rate hikes are under way, the pressure on the gold price is likely to abate, as was the case during the Fed’s last series of interest rate hikes between 2004 and 2006,” they said.
Standard Chartered: Tide Will Turn For Gold In 2015
The analysts at Standard Chartered are more bullish on gold in 2015 as they have raised their gold forecast for 2015. They now expect gold prices to average $1,245 an ounce, up from their previous forecast of $1,160. “The current backdrop for gold prices is one of the weakest ever because of the multiplicity of factors supporting a bearish view, overlaid with the current dominance of the long U.S. dollar trade. However, we see the tide turning. We have become more positive on the prospects for gold in 2015, most particularly in the second half of the year when dollar bullishness will likely fade,” they said. The bank also raised their 2016 forecast to $1,330 an ounce, from their precious estimate of $1,220 an ounce.
Citigroup: U.S. Dollar And Oil To Hurt Gold, But Downside Limited
Analysts from Citigroup said that the gold market still has some considerable hurdles, namely a stronger U.S. dollar and weaker oil prices, and they remain neutral on the yellow metal. The bank said that they expect gold prices to average about $1,220 an ounce in 2015. Although prices might be weaker in the new year, they added “there are increasing reasons to think that further downside moves will be limited.” The analysts also said they expect to see increased physical demand in Indian and China in 2015.
Peter Schiff CEO, Euro Pacific Capital
Peter Schiff of Euro Pacific Capital said he expects gold prices to take a “rocket ship back up”.
He is still bullish on gold and says the U.S. economy is not as strong as people perceive it to be. “I think gold is set up perfectly and I think it’s still on that launch pad,” he says. “I do believe you are going to see panic buying in the gold market because it’s really going to be panic selling of the dollar.” Schiff adds that too many people believe in what he called a “phony recovery” and warns that a rude awakening is coming when the Fed, instead of raising rates, launches a QE4 to keep the economy from slipping back into a recession.
“Holding physical gold and silver as an outright purchase or as part of your Retirement Account offers a tremendous way to diversify your portfolio while hedging against unsettling stock market and geopolitical conditions”, says Jeff Kerr. “Even though you may have purchased at a higher level than today’s values, Dollar Cost Averaging (DCA) today can considerably reduce your aggregate overall breakeven price”, he added.
Jeff Kerr is an Account Executive with Republic Monetary Exchange located in Phoenix, Arizona.
Call one of the experts at RME to learn more. Call 602.955.6500 or 877.354.4040