You would never guess that gold, measured in euros, is +9% YTD, given the extent of the bearish sentiment on the precious metal today. Of course, many folks focus on the USD price of gold, which is only +1% YTD but for euro investors, it is the euro price of gold that is relevant. The USD has appreciated strongly versus the euro in 2014 and USD denominated assets have benefited. You can see the difference in euro gold (black line) and USD gold (grey line) in the chart below. Of course, after 13 straight years of price appreciation, gold was hit in 2013 by -30%, which has put investors on edge.

There aren't many asset classes that offer solid long term return potential in the current climate. Equities have doubled over the past five years and are now expensive relative to historic norms; bonds have been in a 30+ year bull market and yields are trading at multi-decade lows; property has been quite a volatile asset class in recent times but has also recovered during the most recent economic cycle. Gold is one of the few asset classes today that remains attractively priced. 

Gold investors are getting a nice Valentine's Day gift today, as the precious metal continues to act like the 2.5 year bear market is now in the past. Gold successfully re-tested the $1,180 June 2013 lows in December 2013, and hasn't looked back since. Today gold is trading at $1,315, over $100 off those bear market lows. Recent market action is significant. If the bear market in precious metals is over, then the bull market is back and gold should move to recapture the all time highs in the not too distant future. However, there is still work to do. We first need to see a weekly close above $1,525 to confirm the bull trend. After that, $2,000 should fall quite quickly. Patience will be rewarded.