Now is the time to own gold.
Gold last traded at $1,400 in early September, 2013.
Here we are, exactly six years later, and gold has finally blasted through $1,400, closing on Friday at $1,529.
That looks like a break out to me.
Next stop: $1,800
There are, of course, three ways to play the rise in gold:
- own physical gold (which is fine, and good if the world goes completely in the tank, but it’s a physical item so you have to arrange storage, security, etc.)
- buy gold stocks (good idea, provided you select the correct stocks)
- buy an ETF, like NUGT.
I like NUGT. Here’s the chart of NUGT, using the same time scale (12 years) as the gold chart above:
As is plainly obvious, NUGT is highly leveraged to the price of gold (specifically to the price of the underlying gold shares), so it is highly volatile.
Gold increased from $1,100 in 2016 to $1,529 today, roughly a 40% increase. Not bad.
During that same period, NUGT bottomed at under $15 and is now over $40. That’s a 167% increase. Even better.
Of course volatility works both ways. NUGT got as high as $125 after the Trump election, and then collapsed below $15, so if the gold market moves against you and you are holding NUGT, you get wiped out.
That’s how it goes.
On it’s present course, I see no reason why NUGT can’t continue in it’s current uptrend channel, and trade at $55 by the end of September:
Is that what I’n predicting?
No, but that’s the pattern it has followed since the start of June, so until the pattern changes, that’s the trajectory.
Governments around the world are buying gold (Russia, China, Turkey, India), perhaps in anticipation of the end of US Dollar dominance, which is inevitable. You can’t print money forever and it expect it to have no impact on underlying value.
Of course inevitable and imminent are two different words, and it’s possible that the US dollar reigns supreme for years to come.
It is also obvious that gold is on the rise, so picking up a few shares of NUGT in the $40 range looks like a good bet to me, and that’s what I did this week.
My largest gold stock holding is EQX.V – Equinox Gold Corp.
I’ve owned it for two years, and it’s still trading below my initial entry price, but I’ve averaged down during that time period so I am now sitting on a nice profit.
It appears that some newsletter writer recommended it this month, which caused a bump in the price. It has pulled back, so I’d put in bids in the $7.25 to $8.00 range to assemble a position, with further tranches at $7 and $6 if you want to take advantage of weakness.
That’s the game plan.
Buy gold.
Now is the opportunity we’ve waited for for 6 years, so grab.
Enjoy the long weekend. More next week.
{ 2 trackbacks }