“Right now, the No. 1 thing is quantitative easing,” Lydon says. It’s on the table probably either way whether or not a deal is reached on the fiscal cliff. Additional monetary stimulus from the Federal Reserve would foster more concern over dollar debasement and likely provide a tailwind for gold ETFs such as SPDR Gold Shares (NYSEArca: GLD).
The precious metal is seen as a way to protect purchasing power, Lydon explains. [10 Things to Know About Gold ETFs]
”I think gold probably has more things going for it than not at this point,” he told Yahoo Finance’s Breakout. “We’re all asking, ‘what do I do?’ but there are a lot of investors out there who haven’t invested in gold, who haven’t diversified yet. I think they’re going to step forward and say, if ‘I haven’t done it, maybe now is a good time to do it.'”
Lydon also discusses why he likes miner ETFs such as Market Vector Gold Miners ETF (NYSEArca: GDX). “Right now gold miners really are a value bet,” he concludes.
Watch the Breakout video to see the full interview.
Full disclosure: Tom Lydon’s clients own GLD.