Gold Price Forecast 2015: The gold price looks like it will end 2014 down, rounding out three years of weakness for the metal. That makes the outlook for gold in 2015 even more anticipated than previous years...
The biggest questions around gold's direction in 2015 include: Is gold finally done consolidating? When will it regain its bullish trend? Is gold a good buy today?
Let's take a look at all the factors to consider...
How the U.S. Dollar Will Affect Gold Prices in 2015
One of the biggest headwinds for gold prices this year has been the U.S. dollar. So far this year, the U.S. Dollar Index is up from 80 at the beginning of July to about 88.5 right now. That's a 10.6% move in just five months - huge for any currency.
Now the U.S. dollar is at a level not reached since July 2009, in the immediate aftermath of the financial crisis.
A stronger dollar means fewer of them are needed to buy the same quantity of gold. The gold price can still rise simultaneously with the dollar, but it's more difficult.
We could see the U.S. dollar continue to strengthen into 2015. The most influential central banks across the globe are aggressively printing money and either keeping interest rates low or actively lowering them. Japan, Europe, and China are all battling to weaken their currencies.
Overall, though, I don't expect the dollar to continue to weigh too much on gold's advance, because central banks will be desperate to get inflation going. And at some point the dollar's rise will be problematic, so expect the U.S. Federal Reserve and U.S. Treasury to start "talking down" the dollar before too long, which should help the gold price.
Asia's Surging Demand Will Move Gold Prices in 2015
Another big support for gold is demand, especially from Asia.
Chinese gold demand has been strong and growing rapidly, especially since 2008. According to the China Gold Yearbook, it has nearly doubled from 1,141 tonnes in 2012 to 2,199 tonnes in 2013. What's more, it's expected to grow nearly 50% to more than 3,100 tonnes in 2014.
And then there's the wild card:
China's next central bank gold reserves announcement.
When China last reported in 2009, gold reserves stood at 1,054 tonnes. Many estimate current levels may well be past 5,000 tonnes already. An announcement along these lines could cause a spike in gold prices.
In 2013 India trailed China as the largest gold consumer in the world. Its second-place ranking was due in large part to import restrictions in India, supposedly put in place to help ease the country's current account deficit.
But India re-took the top spot from China on Nov. 13. Indian jewelry demand increased nearly 60% in the third quarter. The country bought 225.1 tons of gold jewelry, coins, and bars in Q3.
India scrapped its highly restrictive gold import laws on Nov. 28, which will likely unleash even stronger demand from India.
I expect gold has a little while to go in its current basing pattern before returning to rising price action.
But the factors I outlined here in my gold price forecast 2015 should steadily push gold back into the $1,400 to $1,500 range by the end of next year.
The Best Ways to Add Gold to Your Collection Right Now
With gold either having bottomed or very close, it's time to stock up on holdings. Here are a couple ways to do that.
Coins: Gold coins offer a convenient and cost-effective way to add physical gold to your portfolio. The 22-karat American Gold Eagle currently runs about $1,250 for 1 oz., $650 for ½ oz., $330 for ¼ oz., and $135 for 1/10 oz. The Canadian Maple Leaf is .9999 fineness but contains the same amount of gold, and coins of the same denomination will run about the same price.
Bars: If you prefer bars over coins, you'll get slightly more for your money. And the larger the bar, the better the value. Try to stick to "Good Delivery List" bars, which are recognized worldwide and likely to facilitate any future sale. Some "Good Delivery" refiners include Pamp Suisse, Johnson Matthey, The Perth Mint, The Royal Canadian Mint, Heraeus, and Umicore.
The denominations for bars differ somewhat from coins. A 1-oz. bar currently runs about $1,230; a 100-gram bar (about 3-oz. equivalent) costs about $3,940, and a 5-oz. bar costs $6,140. If you're looking to spend more, the 10-oz. bar costs about $12,175, while the 400-oz. bar will top out near a cool half-million at $480,000.
But don't let these prices scare you off. Even if your budget is small, you still have options. The 1-gram gold MapleGram25 Coin produced by the Royal Canadian Mint only runs about $47 at recent gold prices.
More on Gold Investing: Gold prices have taken a beating in recent months, tumbling to four-year lows. But love it or hate it, gold is a smart way to manage risk in your portfolio. Our Chief Investment Strategist Keith Fitz-Gerald shared the perfect strategy for gold investing in moments like this. Use his test to determine if you own the right amount of gold in your portfolio - then, use this tip for the best way to buy more...