From Senior Economic Advisor, Jeffrey Nichols:

From day to day and week to week, short-run fluctuations in the price of gold have, of late, been driven almost entirely by expectations of prospective Federal Reserve monetary policies, particularly with respect to short-term interest rates.

In turn, these expectations have been driven by the flow of economic data and the somewhat opaque and contradictory comments by one or another Federal Reserve official.

Here’s what’s going on: signs of an improving economy lead the gold and financial markets to expect the Fed will begin raising interest rates sooner rather than later – a negative for gold and a plus for the U.S. dollar.

And, signs of a weaker economy lead the markets to believe the first tightening of Federal policies and initial increase in interest rates – a plus for gold and a negative for the dollar – will be postponed until the Fed sees sustainable recover down the road.

Thus, the decline in the price of gold a few weeks ago reflected signs of an improving economy . . . and the bounce back in the price of gold in the past few trading sessions reflects more recent indicators of a weaker than heretofore expected economic growth and employment.

Judging from the financial press, it seems that most business and government economists – including those at the Fed – anticipate healthy rates of economic growth in the next few months and, indeed, years.

Under such a rosy scenario we would expect continuing measured increases in the Fed’s short-term policy rate. This is the interest rate at which banks lend funds among themselves and borrow from the Fed itself – and presumably this key interest rate reverberates through the entire interest spectrum.

Such an environment of persistently rising rates would, at least for a while, constrain gold’s inherent urge to appreciate – an urge dictated by the physical market’s seemingly insatiable appetite to acquire more gold.

But wait, that’s not the end of the story: In my view, the U.S. economy remains anemic – and proponents of the rosy scenario are likely to be disappointed.

As I see it, the economy will continue to underperform for a very long time to come, suffering from what some economists have labeled “secular stagnation.” The household sector cannot fund a recovery in consumer spending because it remains overly indebted, underemployed, and emotionally depressed (or at least prone to more cautious behavior) while much needed government spending is politically impossible as long as Washington remains gridlocked.

A number of recent economic indicators – including industrial production and manufacturing, retail sales, and housing starts – support this view . . . and economists are beginning to cut back their forecasts of economic growth for the current year. Moreover, the U.S. economy is facing weaker export markets, and it is now suffering from the stronger dollar, which makes American exports less competitive.

A reassessment of economic prospects and reassessment of Fed policy in the months ahead could be just the turn of events that will support a springtime recovery in the price of gold.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Los Angeles, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of buying gold, numismatic gold coins, silver, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Request more information or please contact us.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

AUDIO: Rosland Capital’s Senior Economic Advisor, Jeffrey Nichols, speaks with GoldSeek Radio and host Chris Walktzek.

Rosland Capital’s CEO, Marin Aleksov, recently appeared on GoldSeek Radio in an interview with host Chris Waltzek.

Marin Aleksov Interviews with GoldSeek Radio

The latest from Jeffrey Nichols, Senior Economic Advisor to Rosland Capital –

Although I expect gold prices to rise sharply by the end of the year, possibly even testing gold’s all-time high near $1,924 an ounce, I’m the first to admit that short-term forecasts are highly uncertain.

I’m much more confident about the long-term prospects for gold. Indeed, looking out towards the end of the decade and beyond, I believe the metal’s price will rise to a multiple of the currently prevailing price.

As the Indian and Chinese economies continue to expand, creating new wealth and growing middle classes, demand for gold in these and neighboring countries will surely expand. At the same time, official demand from a growing number of central banks will also continue to grow as central bank reserve managers look for alternatives to the U.S. dollar and the much-tarnished euro.

As physical demand for gold rises, would-be buyers will find that much of the world’s above-ground inventories are in very strong hands, available to the market only at much higher prices.

Meanwhile, in the days, weeks, and months immediately ahead, gold remains susceptible to U.S. dollar prospects and U.S. interest-rate expectations.

In any event, the markets will keep an eye on the flow of U.S. economic indicators. Hints of a stronger recovery would raise expectations that the Fed will switch gears sooner than later – and could lead to a further near-term appreciation of the greenback.

Alternatively, it is quite possible that the economic news will disappoint those predicting a robust economy – raising expectations of longer-lasting reflationary monetary policies and prompting an earlier recovery in the price of gold.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of buying gold, numismatic gold coins, silver coins, platinum, palladium, and other precious metals. Rosland Capital also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following comments today:

Having failed in its attempt earlier this month to move above $1,300 an ounce, gold is once again looking for sustainable support under the technically and psychologically important $1,200 level.

How quickly things can change in world financial markets: just a few weeks ago, it looked like gold might breakout on the upside on the back of bullish geopolitical and global economic developments – and establish a new floor price around $1,300 an ounce. But, having failed in its attempt to move up, we now wonder (along with what must be a majority of gold-market analysts and participants) if gold can indeed move higher anytime soon . . . or if it is destined first to sink further before reestablishing its bullish long-term uptrend.

How gold performs in the days and weeks ahead may have significance in determining the direction of the market over the next few months. Our technical trading models suggest that a reflexive bounce could bring us back to $1,300 fairly quickly – while a breakdown below $1,200 an ounce could trigger even more selling and a further price retreat all the way back to $1,080.

But, importantly, gold’s near-term performance has little to do with the yellow metal’s long-term multi-year direction. As we have written in recent Rosland Gold commentaries, we expect the price of gold will move to new historic highs in the next few years as more people and institutions around the world have the means and desire to hold more of their wealth in gold.

Perhaps the most powerful gold-price drivers so far this year have been the performance of the U.S. dollar in world currency markets and the performance of equities on Wall Street. Historically, gold has been the preeminent “safe-haven asset” and currency of “last resort.”

Meanwhile, gold has ignored geopolitical and global economic developments, the sort of which have in the past supported a bullish price trend. The civil war in Ukraine, the crisis in the Middle East, the possible withdrawal of Greece from the European Union, the pace of global monetary creation – any of these might once have been enough to trigger significant safe-haven demand for gold.

But, lately gold’s traditional role has been surpassed by the appreciating greenback, whose strength in world currency markets has been fueled by increasingly stimulative monetary policies virtually everywhere but in the United States. As the dollar has appreciated, gold denominated in U.S. dollars has depreciated – a tendency that has been exacerbated by the pull of higher equity prices and the flow of funds from under-performing gold to over-performing stocks.

This situation can’t and won’t continue forever. Eventually, markets must reflect realities. The U.S. dollar may be the most attractive (or least unattractive) runner in today’s currency derby – but, fundamentally it remains unhealthy.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of buying gold, numismatic gold coins, silver coins, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

Rosland Capital, a leading precious metals asset firm, donated $92,871 to local and national charities through money raised by the company and its employees during 2014. With the purpose of matching Rosland Capital’s company and customer values with non-profit partner goals, Rosland hand-picked organizations to focus on throughout the year.

“Outside of our daily business activities, the tie-in with the local veteran community has always been and will continue to be an important focus for Rosland Capital and its employees,” said Marin Aleksov, chief executive officer of Rosland Capital.

Over the course of eight months, Rosland Capital forged partnerships with the American Red Cross– Los Angeles and national chapters, United Way of Greater Los Angeles, Fisher House Foundation and New Directions for Veterans, among other non-profits, and participated in month-long promotions and one-time special fundraising events.

“The American Red Cross of Santa Monica Bay is grateful for Rosland Capital’s generous support of our Service to the Armed Forces programs,” said Julie Thomas, executive director of American Red Cross of Santa Monica Bay.

Rosland Capital remains committed to serving the local Los Angeles community through ongoing charitable activities in 2015.

About Rosland Capital LLC

Rosland Capital is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of buying gold bullion, numismatic gold coins, silver, platinum, palladium and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio.For more information, contact us.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital had the following comments today:

Gold-price volatility so far this year has been a reflection of short-term speculative activity by a relatively small group of hedge-funds and other institutional traders taking relatively large positions in “paper” markets.

In paper markets, no physical gold actually changes hands. Instead, trading of futures and forward contracts, as well as IOUs between large dealers and traders, governs much of the short-term day-to-day (and even more so much of the intraday) price fluctuations.

Meanwhile, “physical” demand continues to grow over time — with buying from the gold-friendly Asian markets and from a number of central banks continuing apace. While total global physical demand may be up in one quarter and down in the next, its long-term trend continues inexorably higher thanks to rising personal incomes and growing middle classes in China, India, and elsewhere in the region.

However, it is important to remember, much of the recent “sound and fury” signifies little with respect to the long-term multi-year outlook for the yellow metal.

So far this year, despite its recent losses, gold could continue to outshine returns on U.S. and global stock markets. If gold’s relative strength vis-a-vis equities continues in the weeks and months ahead, fund managers will begin shedding equity holdings for both “paper” gold and some (i.e. central banks as well as retail investors) will go for the real thing, “physical” bullion.

Indeed, in recent weeks, we have seen sizable growth in gold ETF holdings presumably by a few hedge funds restoring positions taken up prior to the September 2011 all-time gold-price high. This could be a sign of things to come.

This year’s gold-price volatility — both up and down — has largely been a reflection of speculative activity triggered by a series of market developments:

• First, the uncoupling of the Swiss franc from its peg with the euro and its subsequent sharp appreciation against virtually all currencies — including even the U.S. dollar and Chinese yuan, produced a sharp rally in gold.

• Next, fueling more bullishness for gold, came the announcement of Quantitative Easing (QE) by the European Central Bank, following in the Fed’s footsteps, raising anxiety among traders over how this would “pan out” for the European experiment with a single currency — and its ultimate inflationary consequences.

• This was followed by rather hawkish news from the Federal Reserve, raising expectations of an early rise in interest rates — and sending gold prices sharply lower.

• Finally, this past Friday’s news that economic growth in the last quarter of 2014 (as indicated by the downward revision in U.S. Gross Domestic Product for the fourth quarter) was lower than financial markets heretofore believed sent gold prices quickly higher, while Wall Street took a bath.

Most gold analysts at the major banks and brokerage firms, along with much of the financial press, expect the metal’s price will likely average somewhere in the $1100 to $1200 range with a possible low near $1180.

I’m considerably much more bullish than the consensus: Stock market volatility, especially on the downside, attracts bullish long-term gold investors and short-term speculators . . . and this could very well be the fuel that sends gold much higher this year and beyond.

About Rosland Capital

Rosland Capital LLC is a leading precious metal asset firm based in Santa Monica, California that buys, sells, and trades all the popular forms of gold, silver, platinum, palladium and other precious metals. Founded in 2008, Rosland Capital strives to educate the public on the benefits of buying gold, numismatic gold coins, silver coins, platinum, palladium, and other precious metals. Rosland also helps people who wish to protect their wealth by including a gold or precious metal-backed IRA in their asset portfolio. Click here for more information or contact us.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following comments:

2015 could be the year for gold to shine. Having recorded its all-time high above $1920 an ounce in September 2011, the metal has been in decline now for nearly three and a half years and, consequently, its allure as a reliable hedge asset and store of value has been tarnished.

But while gold has been scorned by many Westerners – principally American and European institutional investors and short-term speculators – it has remained in favor most everywhere else.

Long-term investors and savers across much of Asia – especially China and India, by far the largest and most significant national markets for gold – have remained true to the metal, buying most of the metal sold by Westerners along with much new mine production and old gold recovered from industrial scrap and recycled jewelry.

Moreover, a number of central banks have taken advantage of gold-price weakness in order to diversify official holdings and minimize their exposure to the U.S. and European currencies.

As I have written at length in past commentaries, much of the selling has occurred in paper markets with traders exchanging highly leveraged IOUs rather than simply selling physical metal.

Western investors have also sold the real stuff, physical bullion, much from liquidation by gold exchange-traded funds (ETF). But it has been the sale of gold derivatives – futures, options, and other “promises to deliver” in dealer and other over-the counter markets – that has been most responsible for the steep three-plus years of declining prices.

Importantly, much of the selling action has been triggered by persistent negative sentiment, downward momentum, and other technical indicators – along with computer-generated “program” trading that facilitates short-selling of gold at key chart points where price weakness is likely to engender even more selling!

Two of the most significant bearish drivers of gold price in the past few years have been the long-lasting bull markets in both equities and the U.S. dollar. Together, the ascent of stock prices on Wall Street and the appreciation of the dollar in world currency markets have been tough competition for gold — compelling investors around the world to increase their “long” positions in these other asset classes at gold’s expense.

But, so far this year, the relative performance of equities has been in gold’s favor, and the yellow metal seems to be shaking off its inverse correlation to the dollar with both assets benefiting from their “safe-haven” status.

We expect these trends to continue over the course of the New Year – with gold recovering from three years of underperformance, as it resumes its long-term uptrend.

About Jeffrey Nichols

Jeffrey Nichols, Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital, has been a leading precious metals economist for over 25 years. His clients have included central banks, mining companies, national mints, investment funds, trading firms, jewelry manufacturers and others with an interest in precious metals markets.

“Following an initial engagement in 2009, Rosland Capital – a leading Los Angeles based precious metal asset firm – returned to H+K Strategies in 2014 for help leveraging opportunities for CSR communication through partnerships with local non-profits tied to veterans and homelessness in Los Angeles.

Beginning in April, a team based out of H+K Strategies Los Angeles worked to match Rosland Capital’s CEO, company and customer values with non-profit partner goals and handpicked ideal local organizations for optimal community engagement in the form of month-long promotions or one-time special fundraising events. Over the course of eight months, partnerships were forged with the American Red Cross (Los Angeles and national chapters), United Way of Greater Los Angeles, Fisher House and New Directions for Veterans, among others.”

Read the rest of the Rosland Capital article on the H+K website.