Two Factors to Continue Pushing Gold Prices Higher in 2015

Gold Prices Higher in 2015Three weeks into 2015 and gold prices are already up 10% for the year. Gold stocks we have been recommending in our paid-for newsletters had a spectacular start to the year, having rebounded nicely from their oversold levels. Going forward, I expect the gold prices to move higher and with this, gold mining companies should continue to perform well.

The chart below clearly shows the breakout by gold prices from its downward-moving trend that started in March of 2014 (straight black line). Gold prices have moved well above their 200-day and 50-day moving averages (MAs)—this suggests the momentum to the upside is strong.

Gold Price Chart

Chart courtesy of

I believe gold prices will continue to rise because two key economic drivers remain in place: easy money and uncertainty.

Easy Money Keeps Flowing

As it stands today, only the Federal Reserve and the Bank of England (I just came back from London, and I can tell you the economy there is defying gravity) are the major central banks contemplating an interest rate increase. Elsewhere in the world, the situation is completely different.

The European Central Bank (ECB) said yesterday that it will begin printing money—something I have warned about over and over again in these pages. The ECB said it will create 60 billion new euros a month. The central bank of the common currency region says it will continue printing until at least September of 2016. (Source: European Central Bank, January 22, 2015.) That means the ECB is planning to print 1.08 trillion euros! Remember: money printing drives gold prices higher.

And it wouldn’t surprise me if the ECB follows the same path as the Bank of Japan, printing money to buy bonds first, and then eventually moving into buying stocks.

The Bank of Canada also surprised the markets this week and lowered its interest rates to 0.75% from 1.00% (something I had predicted to my inner circle). The Bank of Canada is worried oil prices will slow the Canadian economy in the first half of 2015. (Source: Bank of Canada, January 21, 2015.)

Economic Uncertainty Increasing

Aside from the Fed and the Bank of England, other central banks around the world are scrambling to revive their economies by lowering interest rates or printing money as economic conditions continue to worsen for them.

And the eurozone isn’t the only region of the world posting troubling economic statistics. The International Monetary Fund (IMF) recently cut its global forecast by the most since 2012! The IMF expects the global economy to grow at just 3.5% this year. Previously, the IMF had expected the global economy to grow 3.8% in 2015. The IMF anticipates a slowdown for the eurozone, China, Japan, Latin America, and Russia. (Source: Bloomberg, January 20, 2015.) Let me stress one thing—the numbers from the IMF, as I see it, are still far too optimistic.

The uncertainty in the global economy can be seen in the yields on long-term U.S. Treasuries. Consider the monthly chart of U.S. 30-year bond yields below. The yield on the 30-year bond is at its lowest level in 50 years! When bond yields decline, it suggests investors are becoming risk-averse.

30-Year Yield Chart

Chart courtesy of

What to Expect from Gold in 2015?

So far in 2015, we have seen a solid move by gold prices to the upside. While some profit taking is in order here as gold stocks are up about 30% so far this year, I remain bullish on the yellow metal. The momentum for gold prices is strong as the fundamentals (declining supply, rising demand) and the economic picture (easy money and uncertainty still prevail) suggest gold prices can continue to rise for some time.