Gold Videocast: Gold in 2015 – The State of the Gold Market (Video)

In his first Gold Videocast of 2015, Peter Schiff looks back at gold’s performance on the global markets in 2014 and forecasts where the yellow metal is headed in the new year. Learn why:

• Contrary to bear predictions, gold performed better than almost every major stock market and currency in the world in 2014.
• The collapsing oil price may be a bad omen for the US stock market.
• The US is headed for recession in 2015 – which will force the Fed to keep printing money.

See below for exclusive charts and data Peter says every investor must see.

Follow along with this full transcript:

Welcome to the first Gold Videocast of 2015. Let’s talk a little bit about what happened in 2014, and I will give you my outlook for 2015. First of all, if you listen to all the market pundits talking about gold in 2014, all they are talking about is how the bears were wrong once again and gold was down in 2014. Well, it was basically unchanged. Maybe it was down slightly in terms of US dollars but if you remember how 2014 began, all of the big experts from the big brokerage houses (like Goldman Sachs and Societe Generale) were all looking for a big drop in the price of gold, down to a thousand or maybe lower.

The fact that gold prices were mainly unchanged during 2014, despite the overwhelming amount of bearishness that we rang in the new year with, I would say that the bears on gold were much more wrong than the bulls. In fact, if you measure the price of gold in any currency other than the dollar, gold had a huge year. Gold rose by 10% or more in many, many currencies throughout the world. So it’s only from the perspective of a US dollar buyer that the gold price was flat. But if you were living anywhere in Europe, if you were living in Canada, Australia, New Zealand, Scandinavia, South America, you saw a big increase in the price of gold. In fact, if you cashed in your local currency and purchased gold, you preserved a lot of your purchasing power.

In fact, if you look at all the world’s financial markets in 2014, gold beat just about every stock market on the planet. There were a few exceptions but the vast majority of stock markets, including I think all of the markets on European continent, underperformed the price of gold. So contrary to all the negativity and the skepticism that 2014 began with, it ended on a much better note.

More importantly, look at how 2015 has already begun. You have had a significant increase in the price of gold, [and a] more significant increase in the price of gold mining stocks. In fact, the first week of the new year is probably off to its best start in years – maybe ever – for the first week of a new year. Certainly, if you contrast gold stocks, which are up strongly to the US stock market which is off to a horrible start, you’ve got falling stocks and rising gold stocks despite incredible negative sentiment.

Again, beginning 2015 on bullish sentiment on the US stock market and the US dollar, the US dollar has continued its rise. Making the increase in gold that much more impressive because gold prices are rising despite the fact that the dollar index is hitting new highs.

In fact, if you look at the chart of gold in other currencies (and again, I mentioned that gold has been rising throughout 2014 against the currencies like the euro or the Swiss franc), we have just had major breakouts. At the beginning of the year, there was some significant overhead resistance at 1,000 euros to the ounce as the price of gold and 1,200 Swiss francs. These levels have now been broken out. Gold has smashed through 1,000 euros and 1,200 Swiss francs. These are the highest levels maybe in approximately 18 months, but I think they are very technically significant.

So I think the correction that we had in this ongoing bear market in gold is over in those currencies. In fact, gold has returned to a bull market in just about every currency on the planet with the exception of the US dollar, and I think that a return to a bull market in dollars can’t be far off.

In fact, what has been driving all of the negative sentiment on gold has been all the positive sentiment with respect to the US economy and the US dollar. I think all of that sentiment is going to turn as the recovery fantasy fades. The oil prices dropped significantly in the last several months, and of course gold prices have not. So that’s another commodity against which gold is broken out – oil, because that’s an important relationship. But you have a lot of people wondering whether or not a drop in the oil prices is good or bad for the economy. The more important question is, why are oil prices dropping so precipitously? I think it’s a sign of things to come.

Remember, this phony recovery that the Fed has constructed is built on a foundation of quantitative easing and 0% interest rates. If quantitative easing is over, and the Fed is going to raise interest rates, then the foundation is gone and the recovery that rested on top of it is going to collapse. Because of quantitative easing and 0% interest rates, stock prices went up, the real estate market [went up], real estate prices went up and the recovery was built on the wealth effect associated with rising asset prices and the extra leverage that rising asset prices permitted so that we can have more consumption and more speculation. But also, one of the unintended consequences of QE was that other prices went up, like oil prices. Well, as it turns out, oil prices are now the first to fall at the end of QE and at the hint of rate hikes, but they are not going to be the last.

You are going to see falling stock prices, falling real estate prices and the economy returning to recession as the bloom comes off this recovery rose, [and] as stock markets and the real estate market follow the oil market. If you look at all the economic data that has come out since we got the GDP report on the third quarter, it has all been terrible – below estimates, very weak. We are looking at the fourth quarter GDP at best in the low twos, but it might even come in below two, in the ones. If you see this rapid deceleration of the US economy from 5% GDP to barely two or in the ones, there is no way that Fed is going to be raising interest rates.

In fact, at that trajectory, we could be at a negative GDP by the first quarter of this year which means again, all this rate talk is off the table and QE4 is going to be queuing up. This is going to be a game changer for the dollar, and it’s going to add fuel to this new bull in the gold market.

In fact, look at the exchange rate of the US dollar against the euro. Everybody now is talking about dollar parity, because the euro is now at a nine year low against the dollar. You would think that the euro has been falling for nine years; it hasn’t. It’s been trading sideways and this is the sixth time in nine years that the euro has been about 120 to the dollar. Every time it’s gone down there, everybody has said it’s going to go to parity. Every time it’s rallied – 130, 135, 140, 150. So I think there’s no difference here.

I think the euro is oversold. I think too many people believe that QE in Europe is a 100% certainty, when it’s not. They think that rate hikes in the US are a 100% certainty when they’re not. In fact, we are more likely, I think, to do QE4 than Europe is to do any kind of QE. If Europe does it, it will be on a limited scale, whereas if we do it in America, it will be on a unprecedented massive scale. So I think that the sentiment situation, the markets, the technicals are really poised for a very, very big year up in the precious metals, in gold [and] in silver for 2015 and nobody is expecting this. We had the sentiment completely in the opposite direction. All the bears were piled onto the same side of the boat and now it turns out that they got it wrong. I think they are going to have to scramble to get to the other side.

I’ve said this many times, that I have never seen a bigger disconnect in the markets – the stock markets, the currency markets, the precious metals markets – between reality and perception. What everybody believes is wrong. Soon, these widely held beliefs are going to be questioned in a major way and then abandoned. Just like they were with the housing market and subprime, when those bubbles burst. Just like they were in the dot-com market when that bubble burst, except this is a much bigger bubble. The damage and the fallout in the financial markets will be much greater when this bursts. Therefore, it’s that much more important that investors be properly prepared and part of that preparation is owning gold and silver.

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