Although gold experienced a notably volatile year, moving from $1,187 to almost $1,400 per ounce in March, the original article reported that it outperformed every other asset class during the first half of 2014. Its year-to-date return was reported as 10.27%. That result exceeded the performance of major indexes and asset classes, including the S&P 500 and the Dow, by a meaningful margin, while also narrowly surpassing strong commodity performers such as oil and silver. At the time of publication, gold and silver had posted solid gains the prior day, chiefly in response to a weakening dollar, which historically has moved inversely to gold and silver prices.
At the time of original publication, the article described the following: The original article suggested several reasons the price of gold might continue performing well through the balance of that year. First, India was entering its wedding season, a period traditionally associated with substantial gold purchasing. The newly elected government in India was also viewed as supportive of gold, potentially helping ease the punitive import taxes then applied to gold purchases. The article also noted Shivom Seth of Mineweb’s recent observation that the import tax may only be cut by 2%, at least at first; the original article therefore described this as a development Atlanta Gold & Coin would continue to watch.
Another basis for the article’s bullish view of gold was inflation, which it said continued to rise gradually and had been reported at 2.1% in May, the highest reading in two years. Historically, gold and silver have often been viewed as hedges against increasing inflation. The article further pointed to the Federal Reserve’s asset base, which was still $4 trillion, representing a fivefold expansion over only six years. In that 2014 context, the article characterized the possibility of higher inflation as an ongoing concern.
Beyond India’s wedding season and rising inflation, the article cited the Middle East conflict—particularly ISIS’s capture of major Iraqi cities, as we previously discussed—as a factor that could place upward pressure on oil prices and potentially disrupt oil production. Oil and gold prices have historically shown a strong correlation. The article also reasoned that, if insurgent forces overwhelmed the Iraqi government, U.S. military involvement would likely push gold and silver prices higher, because these metals were commonly regarded as safe-haven investments.
At the time of original publication, the article described the following: In closing, the article acknowledged that gold can be highly volatile while noting its strong performance after disappointing results in 2013. Based on the factors discussed above, Atlanta Gold & Coin’s original 2014 view remained bullish on gold and anticipated additional upward movement in the months that followed.
