“The unresolved European debt crisis also adds uncertainty to the world economic outlook. Given that gold is seen as a good inflation hedge and a ‘safe haven’ when the U.S. dollar is weakening, investors have been flocking to gold and gold ETFs,” writes Howard Arnn at Wall Street Window. “As a testimony of the investors’ bullish sentiments about gold, the precious metal hit 6 ½ week highs last Thursday, following the Fed’s announcement.”
The large-cap Market Vectors Gold Miners was up 11.1% year to date as of Jan. 27, according to Morningstar.
“Given the current climate of extremely low interest rates, which are likely to stay this way for the next two years, analysts are bullish on gold mining companies, which can make use of the low rates to increase capacity by building up local mining infrastructure,” Arnn noted. “Nonetheless, technical analysts believe that after such a sharp upward spike, investors are likely to sell to lock in some profits.”
Market Vectors Junior Gold Miners
