The Year Behind and the Year Ahead - Gold in 2014 and 2015
As investors, we should never allow a year to pass by without extracting the important lessons from the critical movements of money that took place. A look back at 2014 holds great economic learning and offers key, financial wisdom. It was a year of volatility and marked instability but also one of resiliency and measured recovery.
From the start of the year, we were presented with a mixed and scrambled bag of economic indicators and rash, often Pavlovian markets that drooled over every word from The Fed. Wall Street slobbered over good data and dismissed bad data as the markets ballooned in a defiant display of curious denial. It was the best of times and the worst of times, but many only read the byline of the former … as weak job growth was chalked up to bad timing and falling consumer confidence was blamed on bad weather.
Every bold step we took toward our economic recuperation in 2014 was offset by nagging setbacks that made our fiscal healing a study in ambiguity.
The operative word for 2014 was perhaps “kneejerk” as stocks rose and fell with each report on jobs, housing, GDP, and inflation. The year started with a near Shakespearean Debt ceiling drama and ended with the final act of QE. And through the applause and the feigned ovation … the ever-aching Achilles heel of the American economic recovery continued to be vexed by record low Labor Participation Rates and stagnant Wage Growth.
Suddenly America’s storied rise from the grips of the Great Recession became dubbed as “the slowest economic recovery in US History.” After six years of easy money and excessive federal intervention into the markets, we found ourselves asking what normal really looked like and where the dollar would be when it was all over.
2014 was also a year of unfamiliar and counterintuitive concepts like “too-low” inflation, a global banking crisis, ultra-cheap oil, silver rationing, and the dubious rise of the Shanghai Gold Exchange.
Things clearly got more global in 2014 as international events ruffled our retirement holdings more than ever before. Suddenly the values of our IRA’s, Savings and Real Estate holdings became impacted by events in Iraq, Gaza, and Crimea. As the Eurozone failed to get its fiscal house in order, our valuations suffered. When ISIS unleashed its brutality in the Middle East, the markets fell. Unrest in Ukraine, Syria and Hong Kong suddenly hit our pocketbooks and our portfolios.
2014, was also a year of renewed rivalries. We learned once and for all to forget what Russia says and watch what Russia does. China continued to be adversarial by signing a host of international currency agreements in a clear move against the dollar. Both countries bought gold at record levels. And then came the notoriously neutral Swiss. As citizens of the land of cheese and chocolate lined up to vote about a possible return to the gold standard, the barbarous relic found new relevance as a safe, familiar and reliable old friend to all those trying to secure their financial future. Despite the defeat of the referendum, a fresh discussion about the longstanding security of gold was ignited.
All in all … we could not write a better script for the timeliness and global relevance of gold as we look toward the coming New Year.