investing

Best and worst investment ideas for 2015

Gold under pressure
Gold under pressure © Peeradach Rattanakoses/Shutterstock.com

Gold under pressure

Gold dropped to a four-year low of $1,131.24 an ounce on Nov. 7, hurt by the dollar's strength and weak inflation, and Ablin thinks that trend will continue next year.

A strong dollar hurts gold because gold is priced in dollars, making it more expensive in foreign currency terms. Low inflation hurts gold because it is used as a hedge against rising prices.

The dollar climbed to a seven-year high against the yen and a two-year high against the euro earlier this month. Its appreciation stems from the U.S. economy's superior performance compared with other developed economies, such as Europe and Japan. Ablin expects that divergence to continue.

As for inflation, U.S. consumer prices rose only 1.7 percent in the 12 months through September. Gold's current level "still predicts higher inflation, and we don't see much inflation," Ablin says. "And even if there is some inflation, the Fed is ready to tighten."

He expects the Fed to boost interest rates next year. "They seem hellbent on raising rates sooner rather than later." Higher rates hurt gold, as they limit inflation and tend to boost the dollar.

advertisement

          Connect with us
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

Need to invest $3K for the long term?

Dear Dr. Don, What's the best place to invest $3,000 for the long term? I'm interested in earning the best rates with low or no fees. Thanks, -- Cheryl Compounds Dear Cheryl, You've got (at least) three questions to... Read more

advertisement

Blog

Dr Don Taylor

Frugal living to build wealth?

What I'm not sure if we should admire Read for the size of his estate or feel sorry for him because he didn't use his wealth during his lifetime for life goals.  ... Read more

Partner Center
advertisement

Connect with us