It’s only been 3 months since gold broke up through 1200, and just this week gold popped up through 1500. And now here we are pushing up toward 1600 just 2 days later.
Your friendly Gold Enthusiast feels like he’s given you all the reasons gold should go up. In case you weren’t following closely, they are insecurities in the global markets, high levels of debt making investors nervous, the US-China trade war, Brexit, and the EU’s inability to get their economy working well.
Which all lead to the biggie: Too few investors actually in the gold space, meaning there were lots of possible new entrants coming into gold, bringing lots of new money. Even Cramer said gold should spike if everyone rushed in all at once.
So now we’re starting to see lots of new money flowing into gold. In trading terms that’s fantastic, as long as (a) you’re on the long side of the trade, and (b) you keep your eyes open for signs of a rush to the exits.
So far the naysayers only have 2 arguments against gold, neither of which carries a whole lot of weight (in this observer’s opinion). One, Bitcoin “should” be taking gold’s place (despite all the problems with non-transparent exchanges and even outright thefts). And Two, gold is overbought right now (which happens with almost every stock breaking up through its a 52-week high to set a new high, which has only happened about a billion times during this long bull market).
So your Gold Enthusiast is watching money flows now, looking for signs that new money is slowing into the gold sector. For now, we’ll just say no sign of that yet.
DISCLAIMER: No specific securities were mentioned in this article. The author is long the gold sector via positions in NUGT, JNUG, a few junior miners, and covered calls on parts of the NUGT and JNUG positions. He may be making small, non-market moving trades over the next 72 hours for reasons discussed in the article.
The SPDR Gold Shares (NYSE:GLD) (GLD) fell $0.22 (-0.15%) in premarket trading Wednesday. Year-to-date, GLD has gained 17.57%, versus a 7.80% rise in the benchmark S&P 500 index during the same period.
GLD (NYSE:GLD) currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #1 of 33 ETFs in the Precious Metals ETFs category.