Gold Price Bull Market 2015 Annihilated by Strong U.S. Dollar

By: Nadeem_Walayat

Within weeks of the start of 2015, the Gold price had soared to nudge above $1,300 prompting many gold bugs to start proclaiming that the long anticipated resumption of the gold bull market had begun after what had seemed like an never ending 3.5 year bear market that had contained many false dawns which had greatly demoralised many gold bugs and even worse for precious metal stock investors.

However, gold bug mania commentary such as that Apple would soon start buying hundreds of tons of gold, as much as 1/3rd of global gold supply for its new i-watch and thus push the gold price towards new all time highs proved short lived as the January peak of $1,308 was followed by a relentless grind lower to $1,150, that is even lower than where Gold began the year at $1,183.

For the reason why one only needs take a look to the US Dollar which has literally soared into the stratosphere, reasons for which I will take a close look at in a separate article.

Gold Price Forecast 2015

In terms of forecast expectations, my Gold price analysis of last December concluded in the following trend expectation for 2015.

31 Dec 2014 - Gold Price Trend Forecast 2015

Gold Price Forecast Conclusion 2015

My forecast conclusion is for the Gold price to trend lower into August 2015, targeting a low of $1050 before Gold finally makes a low for the year that propels the Gold price to above $1300, probably spiking to approx $1350 during November before correcting during December as illustrated by the below forecast trend graph.

And here's a video version of the analysis:

Current Gold Price Against Forecast Trend Trajectory

The most recent gold price close of $1,152 compares virtually exactly with the forecast trend trajectory for 13th March 2014 of $1,155. Therefore I see no reason to conduct any significant new analysis at this point in time as the forecast trend trajectory strongly implies that the main trend for the Gold price should be one of continuing to trend lower to at least $1050 during July / August 2015.

However, in the short-term probability favours a bounce of sorts so as to unwind the relentless 7 week downtrend off of the $1,130 to $1,150 support area that could propel the gold price back towards $1,200, though probably failing to reach $1190 before once more succumbing to the main bearish trend and thus a BREAK of the $1,130 to $1,150 support area.

In terms of gold investing strategies, I again refer to my original analysis:

31 Dec 2014 - Gold Price Trend Forecast 2015

Gold Investing 2015

The clear investing strategy for 2015 will be for one of accumulating into Gold during first half weakness, as ultimately the Gold price will break out to new all time highs, remember that we live in exponential money printing financial universe, it's just that 2015 or 2016 won't be Gold's years, but who knows 2017 may be the year that the long wait for Gold bugs will finally be over. In terms of exposure, well I have never been a gold bug so my thoughts in terms of exposure are along the lines of 2-3% in a mix of ETF's such as GLD and physical bullion. However that is probably because we have just come through another non Gold friendly year whereas a Gold friendly year, one in which the Gold price soars as many gold bugs hope for would ironically demand greater exposure to gold due to how bad things will have become in terms of holding other assets such as Bonds.

So how much gold to hold is not clear cut and depends on the state of ALL markets. And even then it depends on which assets one already holds i.e. asset classes that are most distant from gold in terms of ability to be printed so if you have virtually all of your wealth in cash in the bank or bonds then you need to own a lot of gold, perhaps 15%, off course if your 100% in cash then it would be wiser to diverse across a range of asset classes rather than plunge heavily into just gold. Whilst if most of ones wealth is in property then 2% or 3% should suffice.

At the end of the day I view gold exposure in terms of insurance for what drives the gold price higher (inflation & uncertainty) tends to be bad for ordinary people. And what tends to result in run away bull runs (financial crisis) tends to be very bad!

So all those praying for a gold bull run to the likes of $5,000 may regret the world they are living in that delivers Gold priced at $5,000. Much as the religiously infected amongst us who crave imminent armageddon so that they may ascend into paradise.

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By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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