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Earlier this week, Moody’s shocked the markets with a US credit downgrade, citing the national budget deficit. With that downgrade, the dollar slipped, and triggered the flight to safety in gold. That’s why gold rallied back to $3,288. That’s also why gold stocks are gaining momentum.
“There’s still a level of uncertainty out in the market. Most notably, the Moody’s downgrade, weakening dollar have supported the precious metals complex overall,” said David Meger, director of metals trading at High Ridge Futures, as quoted by MSN.com.
Helping, Goldman Sachs says gold could rally to $3,700 this year, and to $4,000 by 2026. UBS analysts say gold could rally to $3,500 by December. All thanks to stronger-than-expected central bank demand for gold, which isn’t expected to slow any time soon. In fact, central banks are only accelerating demand. China, for example, just expanded its gold reserves for the sixth consecutive month, adding 70,000 troy ounces in April.
One way to trade the potential for higher gold prices – and collect yield is with the YieldMax Gold Miners Option Income Strategy ETF (SYM: GDXY).
The YieldMax Gold Miners Option Income Strategy ETF (GDXY) is an actively managed fund that generates monthly income by selling/writing call options on the VanEck Gold Miners ETF (GDX).
The fund – which has an expense ratio of 0.99% - is able to maintain that consistent yield by generating monthly income by selling/writing call options on the GDX ETF. Better, all you have to do is buy the ETF, collect its yield, and benefit from price appreciation without ever having to trade or write a call option.
We also have to consider that gold mining stocks don’t just follow gold prices.
They often outpace them.
That’s because when the price of gold rises, miners tend to see wider profit margins and an increase in free cash flow.
In addition, a noted by Capital.com, “Gold miners have traditionally outperformed bullion in bullish markets, due to the way these companies use their operating leverage in order to increase profits, which leads to a boost in share prices. Thus, this is largely due to profit expansion, as miners are able to sell appreciating gold fairly quickly, thus avoiding a decline in prices, whereas their own operational costs rise much more slowly.”
All of which makes GDXY even more attractive.
Market volatility is rising — and one event could shake gold and stocks alike. Millionaire trader Jeff Clark says one stock could soar.
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