In 2014, the gold market was nothing like it was in 2013. Last year, gold prices remained stable and gold mining companies showed resilience.
For 2015, I expect the gold market to be stellar. I wouldn’t be surprised to see gold prices move sharply higher from their current levels and gold mining companies to show solid returns by year-end. My gold price outlook for 2015 is bullish because I see the fundamentals of the yellow metal improving; central banks continue to buy gold, there’s demand from consumers, and supply is restricted.
There are other factors at play that are positive for gold, too, including volatility in the currency market, a shift in U.S. monetary policy, and the overall deteriorating health of the global economy.
Central Banks Are Buying Gold
In November, the central bank of Russia bought gold for the eighth consecutive month in a row. Russia is now the world’s fifth biggest holder of gold bullion. (Source: Reuters, December 23, 2014.)
There are many other central banks that continue to add the yellow metal to their reserves, too. For the 15th consecutive quarter, world central banks have been net buyers of gold bullion.
And it’s not just central banks that are after the yellow metal.
Gold Forecast Bullish for 2015-2016 by Michael Lombardi
Consumers Want Gold, Too
India, one of the biggest gold bullion–consuming countries in the world, imported $5.61 billion worth of gold this past November. In November of 2013, India imported only $835.83 million of gold. This represents an increase of more than 571% year-over-year! (Source: India Department of Commerce web site, last accessed December 24, 2014.)
In 2013, the government of India put restrictions on the importation of gold to curb strong demand for the metal from consumers. Those restrictions are slowly being removed, increasing demand for gold bullion among consumers once again.
Demand in China for gold bullion is strong, too.
When gold prices were falling in 2013, I heard mainstream economists say buyers of gold bullion will slowly walk away and gold prices will fall further. They were wrong.
Demand for gold bullion from buyers has remained strong. At current prices, consumers see gold at a discount, so they are rushing in to buy more.
What to Expect from Gold Bullion in 2015
As it stands, there’s still too much negativity towards the yellow metal. I see today’s low gold prices as an opportunity for investors to increase their gold-related holdings.
When it comes to mining companies, in 2014, they reduced their costs to “stay in the game.” With lower product prices and marginally profitable gold mines closed, if gold prices work in their favor, the stock prices of mining companies could soar in 2015.