Looking back to the most important evolutions of 2014, readers should agree with the fact that the strength in U.S. stocks, as well as the major breakout of the U.S. Dollar are among the key facts. The collapse of oil and decline of most commodities was another important evolution.

Gold, on the other hand, has attracted a lot of negative attention in the mainstream media. But at the end of the day (read: the end of the year), gold has done exactly what it is supposed to do, i.e. retain purchasing power.


The waterfall decline which we saw in 2013 has been replaced by some form of stabilization. Gold investors who bought near the top in 2011 will surely not agree with our point, but gold is not primarily a trading vehicle. It is a store of value over the long run. Also, the peak of 2011 had a slight parabolic character, which is never a good entry point for a purchase.

We came across a very interesting chart from Frank Holmes (courtesy: www.usfunds.com). It visualizes the point we made above. The chart compares the loss of value of 16 major currencies around the globe with gold. Mind that the comparison is made with Dollar gold, and that the U.S. Dollar is not on the chart as it was the obvious winner among the currencies in 2014.

Gold Was An Excellent Currency In 2014

The key takeaway of the chart is that Dollar gold was the best performer among major currencies (apart from the U.S. Dollar). Even more interesting, if we want to have a more accurate picture, we should not only look at gold in U.S. Dollars but also gold in the price of other currencies. That is what the next chart shows (courtesy: www.kitco.com)

gold in major currencies 2014

Gold has gone higher, from 6% to 13%, in all major currencies (except Dollar gold).

Although our expectation is that the price of (Dollar) gold will be volatile in the first half of 2015, we also “sense” that some form of exhaustion and peak pessimism is near. That could be the key driver that will propel gold prices higher in the second half of 2015.