STRATEGIES

Gold has been one of the top places to invest as the probability of multiple interest rate hike looks unlikely according to Michael Berger, Associate Editor of Moneyshow.com, who highlights three exchange traded funds that are levered to the price of gold.

The price of an ounce of gold broke through the $1,300 level for the first time since January 2015 and the market is watching where the price of the precious metal will go from here.

Gold has been the greatest beneficiary of the Federal Reserve’s slower approach to further interest-rate increases and is up more than 20% this year.

During the last three years, the price of gold declined every year. This year, though, has been a completely different story. The slower approach by the Federal Reserve coupled with a weakening dollar has once again made gold an attractive investment during turbulent times.

Many Ways to Invest in Gold

Gold’s rally during 2016 has made the precious metal an extremely attractive place to invest and we want to highlight three of the top exchange traded funds (ETFs) that are levered to the price of gold.

Direxion Shares Exchange Traded Fund Trust (NUGT): Up more than 390% during 2016

This non-diversified fund creates long positions by investing at least 80% of its assets in the securities that comprise the NYSE Arca Gold Miners Index and other assets that provide leveraged and unleveraged exposure to the index. The index is very volatile and it is a comprised of publicly-traded companies that operate globally in both developed and emerging markets and are involved primarily in mining for gold and silver.

SPDR Gold Shares (GLD): Up more than 22% during 2016

The fund reflects the performance of the price of gold bullion. GLD holds gold bars and issues baskets in exchange for deposits of gold and distributes gold in connection with redemptions of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses in the event the trust terminates and liquidates its assets or as otherwise required by law or regulation.

Market Vectors Gold Miners ETF (GDX): Up more than 88% during 2016

This non-diversified fund seeks to replicate as closely as possible the price and yield performance of the NYSE Arca Gold Miners Index. The fund normally invests at least 80% of its total assets in securities that comprise the Gold Miners Index. The index is primarily comprised of publicly traded companies involved in mining for gold and silver.

Is $1,400 Next for Gold?

Now that gold has broken through its $1,300 psychological resistance level, the market is eyeing the $1,400 level. With a June interest rate hike pretty much off of the table, the price of gold will be supported by a weakening dollar and we see further upside to ETFs levered to the price of gold.

Although gold has had a significant run during 2016, we believe that the precious metal still has legs left and the price could still run significantly higher. If you are not currently investing in gold, we recommend taking a look at the funds listed above.

Tickers Mentioned: Tickers: GLD, NUGT, GDX

Post a Comment