Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following comments on the current gold-market situation and outlook:

It won’t take a collapse of the dollar or some doomsday scenario to catapult the price of gold well above its September 2011 all-time high of $1,924 an ounce.

A decline in the greenback’s value and international prestige may be in the cards. So, too, might troublesome inflation, a collapse on world equity markets, or another financial crisis of some sort. But these are not necessary prerequisites for gold to resume its long-term price ascent.

Indeed, not withstanding the possibility of further gold-price weakness in the next year or so, I am confident China’s insatiable appetite for the metal can single-handedly lift its price well above its historic high.

Private gold investment was banned in China and the domestic market was tightly controlled for more than five decades following the Communist Party victory and ascension to power in 1949. But, ever since the legalization of private gold investment and the gradual liberalization of the market beginning in 2002, China’s appetite for gold – reflecting both pent-up demand and rising prosperity – has been growing steadily year after year.

In recent years, China’s central bank, the People’s Bank of China, has very likely also been a significant buyer of gold. A few years ago, in April 2009, the PBOC revealed it had purchased some 454 tons (about 14.6 million ounces) over the preceding six years – an average of about 75 tons per year.

Since then, there has been no official data or hard evidence of additional acquisitions – but we believe the central bank has continued buying regularly from domestic mine production and scrap refinery output perhaps as much as 50 to 100 tons or more each year.

Over the past few years, we have repeatedly expressed the view that China’s actual gold-mine production, secondary supply from old jewelry and industrial scrap, jewelry consumption, investment, imports and central bank purchases have each been more than indicated by the available statistics or generally believed by analysts of the gold scene.

The China Mining Association (CMA) estimates the country’s gold production may reach a record 430 tons this year, up about seven percent from their 2012 estimate of 403 tons. Meanwhile, total gold consumption is expected to rise at least 20 percent from 832 tons last year to over 1,000 tons this year, according to the China Gold Association (CGA).

However, we believe mine production and supply from other domestic sources has year after year run well ahead of these “official” estimates – and this year’s total domestic supply will total well over 500 tons, possibly as much as 550 tons or even more.

The bottom line is we really don’t have any idea what supplies from all sources add up to. All we know is that total supply is significantly higher than generally believed! And, since every ounce of this metal must go somewhere, total gold demand must also be higher than indicated by the available, but incomplete, data.

Even if the recent pace of demand – and the high level of monthly imports – proves unsustainable, Chinese gold accumulation will have a long-run bullish consequences that are not fully recognized by most other gold-market analysts and commentators.

Simply put, China’s private- and official-sector gold purchases – whether sourced domestically or internationally – are unlikely to flow back into the world gold market any time soon . . . even if prices rise to stratospheric levels. Indeed, Chinese investors, unlike many of their American and European counterparts, have exceptionally “strong hands” and are unlikely to sell their gold holdings, except under the most dire of economic or political circumstances.

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 investing in gold bullion, 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.

NEW YORK (November 26, 2013) – Jeffrey Nichols, Senior Economic Advisor to Rosland Capital (www.roslandcapital.com), had the following comments on the current gold-market situation and outlook:

With the Dow topping 16000 and the S&P500 index reaching 1800 – both psychologically important levels – gold continues to be an innocent victim of the frenzy on Wall Street.

Trading around $1245 an ounce the metal’s price is off some 25 percent from the start of 2013 and is 35 percent below its September 2011 all-time high.

Reflecting the super-stimulative monetary policies currently pursued by the U.S. Federal Reserve, the Bank of Japan, and the European Central Bank, U.S. and world equity markets are achieving new all-time highs as more and more investors jump on the stock-market band wagon. And, rising equity markets are, in turn, sucking investment dollars out of gold for redeployment in dividend-yielding stocks.

In particular, many hedge funds and other institutional investors who are judged by their own quarterly performance feel compelled to be where the action is – so they’re dumping gold, much held in the form of exchange-traded funds in favor tech stocks and other strong performers.

How much longer can gold suffer? Perhaps we should look to equity markets for an answer. As long as easy money keeps stock prices rising, even gold bulls want to bet on the winning horse.

Sooner or later, when the bubble bursts (or merely deflates), equity investors will really lose their heads . . . and gold stands to benefit, if not at first, certainly as the dust settles on Wall Street.

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 investing in 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. 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.

NEW YORK (December 12, 2013) – Jeffrey Nichols, Senior Economic Advisor to RoslandCapital.com had the following comments on the current gold-market situation and outlook:

A number of bearish forces have contributed to the downward trend in gold price during the past couple of years. One important, but not generally recognized, factor has been the large-scale proprietary trading activities of a handful of bullion-dealing banks in both futures markets and over-the-counter markets.

Now, with the recent approval of the Volcker Rule by the U.S. financial regulatory agencies, U.S. banks are prohibited from engaging in speculative trading activities – that is, acquiring or taking positions as principal for the bank’s own account any security, derivative, option, or contract for the sale of a commodity for future delivery for the purpose of selling the security or position in the near term or otherwise with the intent to resell in order to profit from short-term price movements.

This means that U.S. banks are now prohibited from trading gold – including forward, futures, and options contracts – except on behalf of customers and not for their own short-term speculative gains.

We should not under-estimate the influence of this trading activity – both up and down – on gold prices during the past few years. Known by a variety of names – program trading, high-frequency trading, momentum trading, and algorithmic trading – the intent is often manipulative with large strategically timed selling, at key chart points, intended to beget more selling and the opportunity for these players to close out positions soon thereafter with attractive trading profits.

When prices are trending lower, as they have during the past year and a half, this selling exaggerates the downward trend – and contributes to prices falling beneath their fundamental equilibrium level. And, when prices are in a rising phase, large-scale buying at key chart points, exaggerates the bullish trend as it did in the 2011 run up to gold’s all-time high near $1,924 an ounce.

But now the jig is up. With the advent of the Volcker Rule and an end to proprietary trading by the big banks, gold’s underlying bullish supply/demand fundamentals should matter more.

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 investing in gold bullion, 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.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital (, had the following comments on the current gold-market situation and outlook:

The Fed’s latest change in monetary policy has been no gift for gold investors.

Gold prices have been under pressure in recent days following last week’s announcement by Federal Reserve Board Chairman Ben Bernanke that the Fed would commence “tapering,” – that is, cutting back its monthly bond purchases by a relatively modest $10 billion in January – and continuing its withdrawal of monetary stimulus in subsequent months “in further measured steps” if the economic recovery stays on track.

Once again, a small number of institutional traders and speculators, acting independently, led the way, cognizant that their large-scale sales would likely drive prices lower – allowing them to close out their short positions at tidy profits ahead of the crowd.

Although near-term gold prices look vulnerable, I believe the market’s reflexive response to the commencement of tapering has been exaggerated. In my view, even if prices dip further on technical trading, gold will, before long, begin a sustainable recovery.

The Fed’s decision to taper was intended to communicate an optimistic economic assessment and forecast – to reassure us that the economy is in a sustainable recovery mode on the principle that if we believe it so, it will be so.

When the economy finally gets going, whether in one year or five, all those cheap dollar bills, trillions of them printed by the Fed, will likely find their expression in a worrisome acceleration of price inflation. Fed policymakers may now be genuinely concerned about disinflation or, worse yet, actual deflation, but the bigger risk down the road is a resurgence of worrisome inflation.

So far, all this liquidity resulting from quantitative easing has fueled rising global equity prices and, to a lesser extent, global real estate prices – bubbles that will deflate one way or the other.

Just as important to precious metals markets as is the start of tapering next month is the Fed’s promise to hold short-term interest rates near zero for an extended period of time well beyond the end of quantitative easing. After all, cheap money can be a gold bull’s best friend.

From a technical perspective, the short-term outlook for gold remains uncertain. If the gold price manages to hold above its recent low point just under $1,180 an ounce, institutional traders and speculators may cover their short positions and begin moving back to the long side of the market. On the other hand, a breakdown below this level could trigger another wave of institutional selling before prices stabilize and begin to recover.

Moreover, other market fundamentals – aside from Fed policy responses to the unfolding U.S. economic situation – may have a say in the matter: Indian and Chinese gold imports; U.S. fiscal policy and the still-uncertain budget and debt debate now taking place on Capitol Hill; the performance of equities, bonds, and real estate; gold exchange-traded fund liquidation or resurgence; world central bank demand; and the outlook for the dollar in world currency markets.

Any of these factors may have much to do with which way gold prices go from here. Unfortunately, we’ll have to wait and see.

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 investing in 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. 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.

NEW YORK (January 14, 2014) – Jeffrey Nichols, Senior Economic Advisor to Rosland Capital (www.roslandcapital.com), had the following comments on the current gold-market situation and outlook:

It’s been a rough few years for gold investors – but despite the yellow metal’s fall from grace, I remain solidly bullish on gold’s long-term prospects. In my book, the metal’s price will, more likely, reach $3,000 or even $5,000 an ounce in the years ahead than sink beneath $1,000 an ounce.

That said – and despite gold’s recent resiliency – the short-term risks most certainly abound. In other words, gold is not out of bear country just yet.

Gold tumbled some 30 percent last year, its worst annual performance since 1981. From its historic high in September 2011 to its 2013 low point, the metal is off nearly 40 percent – and, recently its been trading around 35 percent below its all-time high.

With losses of this magnitude, it’s easy and maybe appropriate to label the last 28 months a bear market.

Nevertheless, – and not withstanding the very real possibility of further short-term declines – I remain solidly bullish.

In fact, the case for gold and the reasons for maintaining or increasing one’s core gold holding within a diversified investment and saving program are as strong as ever.

I advocate investors maintain a long-term core position in gold – physical gold in bullion coins – of five to 10 percent of one’s investment assets and maybe more for some investors. Today, with gold off so much in the past couple of years, it certainly seems sensible to take advantage of dips to rebalance one’s portfolio holdings, reducing appreciated equity assets and rebuilding depreciated bullion holdings.

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 investing in 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. 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 on the current gold market situation and outlook:

Over the past few years, as the broad equity-market averages moved from one high to the next, institutional investors – seeking higher quarter-to-quarter returns – moved out of physical gold and into stocks – at least, that is, until very recently.

Importantly, the global gold market remains tiny compared to world equity markets. As a result, the influx of institutional investors into gold had an extremely bullish price effect on the yellow metal, especially as gold ran up to its all-time high near $1,924 an ounce in September 2011 . . . and the subsequent exodus of institutional investors from the gold market had a very bearish impact.

Now, in early 2014, all that may be changing. Indeed, so far this year, U.S. and global equity markets have sold off sharply while gold has been a strong performer.

Equity Market Valuation

By my reckoning, U.S. stock-market valuations are pricey – and cannot be justified by past, current, or projected corporate earnings.

One popular indicator of stock-market valuation – the price-to-earnings ratio (the P/E) on the S&P 500 stock-market index – is currently near 16. This is well above the five-year and ten-year averages – and solidly in historical bubble territory.

Even if increased bubble-talk is premature or misplaced, it is hard to imagine an imminent return to economic prosperity and “boom” times sufficient to justify today’s lofty stock-market valuations.

Indeed, few stock-market strategists and business economists expect earnings growth in the next year or two sufficient to justify ever-higher equity prices – such that equities would continue to outperform gold, as they have in the past few years.

A Turning Point for the Fed

After its mid-December FOMC policy-setting meeting, Federal Reserve Chair Ben Bernanke announced the central bank would taper its program of bond purchases beginning this January – and odds are the Fed will continue shrinking its program of quantitative easing in the months ahead.

Fortunately, for gold investors, the Fed’s policy options present a win-win: If the economy falters a postponement of tapering would likely be greeted favorably by gold traders and investors.

On the other hand, if the economy shows signs of strengthening, a continuation or acceleration of tapering could be a plus for gold as inflation expectations begin to rise and increased credit demand boosts interest rates and short-circuits world equity markets. In fact, judging from recent stock-market and gold-price performance, this scenario may already be underway.

Moreover, even if the Fed further curtails its program of quantitative easing, reducing its bond purchases by an additional $10 billion each month, it will nevertheless have increased its balance sheet (which is the electronic version of printing money) by $900 billion during the 2014 calendar year – and, in the five years since the 2008 financial crisis, the Fed will have expanded its balance sheet by some 400 percent.

If this isn’t inflationary, I don’t know what is! Eventually, these birds will come home to roost.

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 investing in 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. 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 on the current gold-market situation and outlook:

So far, 2014 has been a year of recovery for gold. Trading recently near $1,320 an ounce, the metal is already up some 10 percent from its 2013 year-end price of $1,201.50 in the London bullion market.

Gold’s improvement was apparently quite a surprise to many of the most prominent analysts and investors who, forecasting the price through a rear-view mirror, expected prices to head further south. With gold possibly on a sustainable upswing, they are now busy jacking up their gold-price targets.

Although gold has recovered smartly in recent weeks, an uninterrupted upswing to progressively higher levels is hardly assured. Indeed, the yellow metal may have a steep uphill fight, very likely with occasional setbacks that are mistakenly taken as signs of further weakness and deeper setbacks ahead.

In part, this rag-tag recovery is a reflection of the uncertain and ambiguous economic circumstances here in the United States and abroad . . . and the changing expectations for prospective monetary policies in the major economies.

For sure, monetary policy prospects in the United States will continue to be a key driver of the gold price in the year ahead and beyond. But Federal Reserve policy is not the only factor likely to push gold higher this year.

For one thing, we expect disinvestment by professional and institutional investors has mostly run its course if only because most of the metal in weak hands has already been shed. This wave of disinvestment – amounting to a staggering 880 tons in 2013 – was perhaps the most negative factor underlying last year’s nearly 30-percent price decline. This year, there’s just not that much left to sell . . . and most of what was sold is now in strong hands.

For another, we expect China’s appetite for gold to remain ravenous regardless of the macroeconomic and financial market situation in that country. And we expect Indian gold imports and domestic hoarding demand to recovery with a relaxation in the government’s anti-gold policies.

Returning to prospects for the U.S. economy and Federal Reserve policy, we believe the economy is weaker than generally perceived and in danger of stumbling badly. Despite all of the talk to the contrary emanating from a number of “hawkish” Fed officials, a worsening economy could force the Fed to slow down or postpone altogether its policy of tapering and, perhaps, adopt additional stimulative measures. As in the past, indeed throughout thousands of years of history, “easy money,” even at times of economic distress, is the elixir of gold.

Expectations of continued economic recovery are wishful thinking by economists wearing rose-colored glasses. U.S. economic growth as measured by gross domestic product (GDP) expanded by 1.9 percent last year, slower than the 2.8 percent pace recorded in 2013 – and it looks like GDP could slow still further this year.

Already, the January indicators are disappointing with industrial production off, capacity utilization falling, business inventories rising (a sign of weaker-than-expected consumer spending), softer home sales and durable goods orders. Many economists, including those at the Fed, excuse these signs of stagnation as weather-related – but the data is seasonally adjusted and downward revisions to earlier data suggest there is more than a few snowstorms at play.

As news of a stumbling economy gains credence, gold stands to gain . . . and investors in the yellow metal will be rewarded.

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 by Marin Aleksov, Rosland Capital strives to educate the public on the benefits of investing in gold bullion, 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.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following comments on the current gold-market situation and outlook:

Russian saber-rattling sent gold over $1,350 an ounce earlier this week, its highest price in four months. But, contrary to many press reports, it was neither safe-haven demand nor physical buying that fueled gold’s short-lived price advance.

Instead, it was institutional speculators and short-term traders – among them the trading desks at some of the gold-dealing banks – who rushed reflexively to buy gold futures and other “paper gold” derivatives . . . and then sold quickly to take profits as the crisis seemed to abate.

Meanwhile, buyers in China and India, the two largest physical markets in the world, continued to dance to their own market fundamentals, virtually ignoring the geopolitical drama unfolding in Europe.

It was the risk of war and the possibility of Russian troops storming into the Ukraine that triggered the rush into paper gold . . . and it was Russian President Vladimir Putin’s assurance that there would be no imminent invasion that led to swift profit-taking and a quick price decline back to the $1,330 area.

If Russia resumes its saber-rattling, the Ukraine situation may continue to drive the gold price in the days immediately ahead.

We are reminded just a little bit of gold’s glory days when the metal’s price served as a barometer of global geopolitical anxiety – but, so far, the rise in anxiety has been rather muted . . . and so, too, has been the past week’s rise and fall in the gold price.

There is certainly the potential for the crisis in the Ukraine to flare-up again – bringing with it, another round of dramatic gold-price action.

But typically, geopolitical developments tend to have a short-lived impact on the price of gold – and we’d expect this to be the story once again, unless, of course, the proxy war between Russia and the West over Ukraine’s future takes an unlikely, more confrontational, turn.

Asia has its own geopolitical hot-spot with China and Japan at odds over their opposing territorial claims to a handful of uninhabited islands in the South China Sea. Naval operations in nearby waters by both countries could, even unintentionally and unpredictably, escalate tensions with implications for gold.

Assuming that Russian forces continue to stand down, the market will soon return to its former state of affairs . . . with Chinese and Indian gold demand, the U.S. economy and monetary policy prospects, and institutional investment interest most likely to call the tune in the months ahead.

Most of all, institutional traders and short-term speculators will have their eyes on the upcoming U.S. economic indicators for more definitive evidence that the economy is – or is not – enjoying a pick-up in business conditions.

In my book, the data will be disappointing to all of us wishing for a robust economic upswing . . . and increasingly difficult to blame on the weather! Sooner or later the stumbling economy – and persistently weak employment indicators – will call into question the Fed’s policy of incremental tapering. This, not the Russian scare in Eastern Europe, could be the catalyst to drive gold much higher.

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 investing in 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. 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. Read more news pieces by Jeffrey Nichols.

Jeffrey Nichols, Senior Economic Advisor to Rosland Capital, had the following comments on the current gold-market situation and outlook:

I’ve been surprised by the recent decline in the price of gold. I expected a stronger finish to the first quarter with gold somewhat higher – possibly even breaking out above the $1,400 an ounce level by the end of March – but this will now have to wait.

Two recent developments shifted trader expectations and triggered the recent round of selling:

First, Russia’s annexation of Crimea failed to provoke any serious response from the West. Neither the United States nor the European Union reacted with any serious economic or political sanctions . . . and the outmanned Ukraine military has stood down, avoiding a shooting match with Russian forces.

Second, expectations of future U.S. Federal Reserve policy also shifted. The Fed’s announcement following its late-March policy-setting meeting that it would continue to “taper” its monthly bond-buying program with another $10 billion reduction in April purchases was widely anticipated.

However, the suggestion from Fed Chair Janet Yellen that the central bank might begin raising short-term interest rates as early as mid-2015 was a big surprise – one that strengthened the U.S. dollar and pulled the carpet out from under gold.

Having done their damage to the gold price, I think there’s a good chance we will see these two factors become more supportive and positive for gold during the next few months.

Looking forward, much depends on the flow of geopolitical and macroeconomic “outside-the-market” news, the price sensitivity of physical demand, especially from China, and the possible softening of anti-gold import policies by the India government.

The assertion by some reporters and market commentators that investors are backing away from gold is just a lot of hooey from people who ought to know better. Here’s my reading of recent gold demand trends:

• The Chinese are continuing to buy gold like there’s no tomorrow. One indicator of Chinese gold demand is the net export data from Hong Kong to the Mainland reported by the Hong Kong Census and Statistical Department. Data through February show strong demand in the first two months of the year – and anecdotal reports from a number of major Chinese gold-market participants indicate continued buying, especially in the jewelry sector, through late March.
• Indians also want more of the yellow metal. Gold has been in short supply in India owing to the imposition last year of import policies aimed at restricting the flow of gold into the subcontinent. Our Indian friends say we should expect an easing of anti-gold import restrictions sometime this year, if not before the April-May national elections, then soon thereafter. Importantly, there is much pent-up demand that could prompt a surge in local gold buying with important implications for the world price.
• At least until the last few days, hedge funds and other institutional investors have been buying gold exchange-traded funds (ETFs) again after two years of net selling.
• My friends in the retail gold business tell me small-scale investors in the United States are continuing to buy bullion coins and small bars from their local coin shops and national telemarketers.
• Moreover, central-bank gold accumulation continues with net official purchases of 74 tons in the first quarter based on the most recent reports. For its part, Russia purchased almost 20 tons so far this year and Iraq has just announced purchases of some 36 tons in March. Importantly, I believe that China’s central bank (the PBOC) – and possibly a few others – continue to buy gold without counting the acquired bullion as official reserves and without reporting these purchases in their published accounts.

In conclusion, though I’m disappointed in gold’s recent price action and would not be surprised to see further weakness ahead, I feel confident that the years ahead will be rewarding times for gold investors.

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 investing in 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. 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.