In a keynote address to the Denver Gold Forum this week, Dundee Capital Markets Chief Economist Martin Murenbeeld outlined bearish and bullish factors for gold for 2014-2015.

Murenbeeld highlighted five bearish factors that will generate headwinds for gold in 2014-2015 including: The Fed must inevitably tighten policy; the U.S. dollar will remain firm; the world economy is sluggish; equity markets will continue to draw investment interest from gold; and investors still have gold for sale.

Bullish factors for gold during the same time period include the fact that the gold ETF supply is down dramatically, signifying that last year’s “orgy of ETF sales” won’t be repeated in 2014-2015.

Murenbeeld also predicted that Asia physical demand will continue to expand. However, he suggested that the world is not yet experiencing a gold supply pressure. While China has driven gold demand, he asserts that India’s growing middle class may soon be in the driver’s seat.

Nevertheless, Murenbeeld also theorizes that China wants more gold to back its quest to make the Yuan the most-used global currency.

He told his audience of mining professionals, institutional investors and mining analysts that he doesn’t see any change in central banks continuing to buy gold.

The obligations of meeting government entitlement programs for a huge population of baby boomers “are killing western economies” through piling up massive global debt, which is a big factor for gold, Murenbeeld suggested.

That massive debt will impact Germany, Japan, Italy and the United States. “Only German will really reduce its debt/GDP ratio in 2014,” he advised.

Murenbeeld counseled that the answer to global debt is likely reflation, when countries devalue their currencies, print more money, and force their citizens to keep their investments at home.

Other bullish factors for gold cited by Murenbeeld are commodity cycles, geopolitical events and the fact that gold is not expensive to acquire.

David Fuller's view

Here is the link to Mineweb.

Gold becomes more interesting for central banks and long-term investors the lower it moves.

(See also Eoin’s charts and comments on precious metals below.)