Mid-February, we made an argument for $3,000+ gold.
We also highlighted two exchange-traded funds as a way to trade gold upside.
Today, with the metal now up to $3,033, those two ETFs are rocketing higher. All thanks to safe haven buying, central banks, tariff fears, inflationary concerns, and a potential recession.
One of those ETFs was the VanEck Vectors Gold Miners ETF (SYM: GDX), which ran from $41.50 to a current price of $45.23. 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.
The other ETF was the Sprott Junior Gold Miners ETF (SYM: SGDJ), which ran from $39 to $42.42 so far. 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.
Helping, Goldman Sachs says gold could climb to $3,100 by year end.
“As well as stronger central bank demand, Goldman Sachs Research anticipates a boost to the gold price from increased purchases of gold ETFs as declining interest rates make gold a more attractive investment,” the firm added.
And while it’s easy to argue for gold bulls, we also need to be cautious.
For one, gold is wildly overbought and could see near-term profit taking. Two, if we take a look at charts of the above-mentioned ETFs, we can see they have also become technically overbought. Plus, the bull side of the gold trade has become too crowded. While we’re not arguing for a massive drop in gold prices, we are arguing that a healthy pullback is overdue.
Related Reading: The Dirty Secret About Gold Mining Stocks…
Here’s something most gold analysts won’t tell you:
90% of gold mining companies actually destroy shareholder value over time. Even as gold prices rise.
Take Coeur Mining. In 1995, their stock was $200. Today? Just $2.75.
But here’s the opportunity most miss: The other 10% of miners capture nearly ALL the profits in the industry.
I’ve spent 20 years learning how to identify these rare winners. It comes down to one critical metric that most analysts completely overlook.
Right now, I’ve found 4 miners showing the exact same pattern as previous 100-baggers.
Here’s a hint…It has everything to do with these two data lines you see below and how they relate to each other, and no these aren’t the gold price and gold stock ETFs…
