Three Ways to Trade the Potential for $3,500 Gold

Gold is rocketing higher.

That’s because investors are jumping back into safe havens – especially with trade war uncertainties. All after President Trump signed an executive order that modified reciprocal tariffs on dozens of countries, with updated duties ranging from 10% to 41%.

“The US president’s executive order on Thursday announcing the tariffs said they were designed to reduce America’s trade deficit with many countries, which it described as an ‘unusual and extraordinary threat to the national security and economy of the United States,’” as quoted by the Financial Times.

If other countries respond negatively with increased tariffs, markets could easily drop even more, adding to uncertainty.

In the process, it could send gold prices significantly higher.

Analysts at CIBC expect for the metal to test $3,600 an ounce in the second half of this year. All thanks to expectations for lower interest rates, geopolitical uncertainty, and central banks. Goldman Sachs and Bank of America say the metal could test $4,000 by 2026.

With those catalysts, we do expect for gold stocks and related ETFs to rally to higher highs.

Here are just a few of the top ways we’d look to trade gold.

YieldMax Gold Miners Option Income Strategy ETF (GDXY)

While investors can always buy gold ETFs such as the VanEck Gold Miners ETF (GDX), or even gold stocks, such as Newmont (NEM), they you can gain exposure to gold and receive a monthly yield of 2.77% with the YieldMax Gold Miners Option Income Strategy ETF (GDXY).

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.

Just so you know, writing call options involves selling the right to buy as asset at a fixed price in a set time frame. It also helps generate income through premiums received.

That’s a lot of technical jargon. But it’s what allows the GDXY to pay its dividends.

All you have to do is buy the ETF, collect its 3.38% yield, and benefit from price appreciation without ever having to trade or write a call option.

VanEck Vectors Gold Miners ETF (GDX)

One of the best ways to diversify at less cost is with an ETF, such as the VanEck Vectors Gold Miners ETF (GDX). Not only can you gain access to some of the biggest gold stocks in the world, you can do so at less cost.

With an expense ratio of 0.51%, the ETF holds positions in Newmont Corp., Barrick Gold, Franco-Nevada, Agnico Eagle Mines, Gold Fields, and Wheaton Precious Metals to name a few.

Even better, shares of mining stocks often outperform the price of gold. That’s because higher gold prices can result in increased profit margins and free cash flow for gold miners. In addition, top gold miners often have limited exposure to riskier mining projects.

There’s also the Sprott Junior Gold Miners ETF (SGDJ).

With an expense ratio of 0.5%, the SGDJ ETF seeks investment results that correspond (before fees and expenses) generally to the performance of its underlying index, the Solactive Junior Gold Miners Custom Factors Index. The Index aims to track the performance of small-cap gold companies whose stocks are listed on regulated exchanges.

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