Investing.com - Financial Markets Worldwide
Get 40% Off
Get 40% Off
🤯 Perficient is up a mind-blowing 53%. Our ProPicks AI saw the buying opportunity in March.Read full update

Is JNK Worth More Than GLD?

ByMichele Schneider
Published 12/02/2020, 11:52 PM
Updated 07/09/2023, 06:31 AM

Gold-JNK Daily Chart

The market could be showing its own version of the disconnect.

In the past, we have looked at High Yield Bonds SPDR® Bloomberg Barclays (LON:BARC) High Yield Bond ETF (NYSE:JNK) to get a picture of the market's risk appetite.

In general, if JNK moves higher, investors are willing to accept more risk.

Conversely, gold (GLD (NYSE:GLD)) is seen as a less risky play as investors look for safe places to store money throughout high inflationary periods or downward market trends.

Yesterday SPDR® Gold Shares (NYSE:GLD) confirmed a second day over the 200 day moving average.

Its recent gap up from the 166 low proved that investors haven’t thrown in their golden towel, even with market highs close by.

JNK also performed well closing just under last week's high of 107.85.

If both GLD and JNK continue to move higher it could be showing that while the market wants to continue to new highs, it’s also worried.

Whether it’s worried for longer-term inflation, pending geopolitical stress or a renewed market correction is hard to tell.  Watching the correlation between the two’s performance, especially if they diverge further, could be a great tell for the near term.

S&P 500 (SPY) Support 363.12

Russell 2000 (IWM) Support 10-DMA at 181.04 with 185.44 resistance.

Dow (DIA) Resistance 300. 292.20 support.

Nasdaq (QQQ) 300 new support.

KRE (Regional Banks) 51.07 Resistance. Support 47.22

SMH (Semiconductors) All-time high close.

IYT (Transportation) 225.49 resistance with key support 215 key.

IBB (Biotechnology) Doji Day. Sitting in support around 145 area.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

XRT (Retail) 61.40 resistance. Support the 10-DMA at 59.57

Latest comments

CNBC's Bob Pisani also made a highly publicized visit to GLD's gold vault in a segment called Gold Rush: The Mother Lode. GLD's administration organized this visit to show that GLD's gold actually exists. However, the gold bar held up by Mr. Pisani showed a serial number of ZJ6752 which did not show up on the latest bar list during that time. It was later found that this "GLD" bar actually belonged to ETF Securities.
"Conversely, gold (GLD) is seen as a less risky play..." Mish Schneider, I understand gold is traditionally used as an inflation hedge due to its physical properties but paper gold funds like GLD do not share these properties. Isn't it a bit hypocritical to talk about inflation concerns and then turn around jumping into a mass printed paper gold fund? Paper gold GLD claims to be fully backed by physical gold bullion but yet it refuses to give your everyday investors the right to redeem for any of these ‘claimed’ gold bullion. This fact alone would mean GLD shares are nothing more than paper at the end of the day. Furthermore, GLD’s prospectus is chalk full of weasel clauses and legal loopholes that allows the fund to get away without the full physical gold backing. One good example of this is the clause that states GLD has no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this audit loophole.
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.