• 2 days The Gold Rally Has Finally Run Out Of Steam
  • 2 days Citibank Analyst Predicts $300k Bitcoin By End Of 2021
  • 5 days Bitcoin Lives Up To Its Safe Haven Status In A Big Way
  • 5 days 14 Million People Will Lose Unemployment Benefits On December 31st
  • 7 days Why 12 Million American Millionaires Isn’t Good News
  • 8 days Big Oil Is Paying The Price For Investing In Renewables
  • 9 days The Banking Industry’s $35 Billion Gravy Train Could Disappear
  • 10 days Did Amazon Just Democratize Prescription Drugs?
  • 11 days The Private Space Race Just Got Very Real
  • 13 days Short Sellers Are Willing Big In This Turbulent Market
  • 14 days SpaceX Gets Go-Ahead To Send Humans Into Space
  • 15 days Saudi Arabia Lost $27 Billion In Oil Crash
  • 16 days China’s Big Tech Takes A Hit As Regulators Crack Down
  • 17 days Black Friday Could Be Retailers’ Only Hope
  • 18 days Why You Should Not Dump Your Stay At Home Stocks Just Yet
  • 19 days The Real Reason Why Uber And Lyft Stocks Have Soared Nearly 50%
  • 21 days Bitcoin Heads Towards $16,000 And No One’s Cashing In
  • 22 days Elon Musk’s $250 Tesla Tequila Is Already Sold Out
  • 23 days Will The San Francisco Wealth Tax Spark An Exodus Of The Rich?
  • 24 days The Fin-Tech IPO Of The Century Just Got Crushed
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Arkadiusz Sieron

Arkadiusz Sieron

Writer, Sunshine Profits

Arkadiusz Sieron is a certified Investment Adviser. He is a long-time precious metals market enthusiast, currently a Ph.D. candidate, dissertation on the redistributive effects of…

Contact Author

  1. Home
  2. Markets
  3. Other

Gold Price Declined and Simultaneously Rose in 2015

The U.S. dollar price of gold declined in 2015, but the same year gold advanced in many other currencies. What can we learn from this behavior?

The London spot price of the shiny metal, in U.S. dollars, declined 9.56 percent from $1172 to $1060 last year, marking its fourth full year in a bear market. It also fell from the perspective of the Swiss franc, British pound and Japanese yen. However, gold prices quoted in other major currencies show a different picture.

Let's look at the charts below. Investors who bought gold with euros at the beginning of 2015 can sell it for about the same amount now. Actually, the price of gold in euros has been showing a bullish pattern since December 2013.

Chart 1: Gold price expressed in euros in 2014-2015
Gold price expressed in Euros in 2014-2015

When expressed in other currencies, gold performed even better. For example, the yellow metal gained about 7 percent in Canadian dollars and slightly less in Austrian dollars. Gold advanced also in the Brazilian real, Mexican peso, Russian ruble, South African rand, Turkish lira, or Ukrainian hryvnia.

Chart 2: Gold price expressed in Canadian dollars in 2014-2015
Gold price expressed in Canadian dollars in 2014-2015

Chart 3: Gold price expressed in Australian dollars in 2014-2015
Gold price expressed in Australian dollars in 2014-2015

Chart 4: Gold price expressed in Brazilian reals in 2014-2015
Gold price expressed in Brazilian reals in 2014-2015

What does the divergence in gold prices quoted in different currencies imply? First, the decline in the U.S. dollar price of gold in 2015 simply reflects the strong greenback. It proves that the yellow metal may be considered as a bet against the U.S. dollar.

Second, one of the biggest drivers of the gold price in 2015 was the monetary policy of central banks. The shiny metal lost in Swiss francs as the Swiss National Banks removed its peg to euro, and declined in British pounds as the Bank of England heralded its plans to raise the interest rates.

Third, gains in many currencies were driven by high inflation and economic instability. Therefore, the shiny metal acted in 2015 as a safe-haven in countries experiencing economic turmoil. It is no coincidence that gold gained mostly in currencies of countries slowing down or even mired in recession (like Brazil, Canada, Russia, Ukraine).

Summing up, the gold price movements are relative to the currency in which they are measured. Gold lost in the U.S. dollar and some other major currencies (due to the relatively hawkish monetary policy and appreciation of the U.S. dollar), but it performed quite well in many other currencies, including the euro, acting as an inflation hedge and a safe-haven against the depreciation of those currencies.

Thank you.

 


If you enjoyed the above analysis, we invite you to check out our other services dedicated to the precious metals investors. We invite you to join our gold newsletter today - you'll also gain 7-day trial of our premium Gold & Silver Trading Alerts. It's free and if you don't like it, you can easily unsubscribe.

 

Back to homepage

Leave a comment

Leave a comment