Gold and metals ETFs are stabilizing on Wednesday after crashing below $2,000 an ounce on Tuesday, in what was its biggest single-day fall in over seven years, as investors piled into stocks and sold out of the precious metal.
After gold recently surged to record highs, driven by hopes that US lawmakers will approve another trillion-dollar stimulus bill to buffer the economic fallout from the coronavirus pandemic, which could result in rampant inflation, the lustrous metal dropped over $200 from its high in just a few days.
Gold was up about 1.6%, at $1,954 an ounce, on Wednesday morning, having plummeted to lows of $1874.20 earlier in the session. On Tuesday, the gold market sunk by nearly 6%, or over $100, its biggest one-day loss since June 2013, as silver also plummeted. Despite the fall, however, gold is still nearly 30% higher in 2020, and analysts are expecting the uptrend to resume.
“Every other fiat currency is being printed around the clock with reckless abandon and total disregard for savers, gold is the only currency that cannot be printed,” said Bryan Slusarchuk, CEO of the mining firm Fosterville South Exploration.
This gold price correction is simply consolidation in the context of a bigger picture uptrend, according to pundits like Joe Foster, portfolio manager of the VanEck International Investors Gold Fund, who maintains a $3,400 an ounce price target.
“We’ve been looking for a pullback in the gold market. Nothing goes straight up forever. We had a very strong run, well over $2,000 an ounce, so we were expecting to see some consolidation in the markets and I think that’s what we’re seeing today,” Foster told Kitco News
However, some analysts feel that if Joe Biden is elected president in the US or if there an early rollout of an effective coronavirus vaccine, that that might upset gold’s surge.
Meanwhile, ETF investors can get gold exposure on a pullback using the SPDR Gold Shares (GLD) and other gold ETFs, or via miners ETFs like:
- VanEck Vectors Gold Miners (NYSEArca: GDX): seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE® Arca Gold Miners Index®. The index is a modified market-capitalization weighted index primarily comprised of publicly traded companies involved in the mining for gold and silver.
- Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG): seeks daily investment results, before fees and expenses, of 200% of the daily performance of the MVIS Global Junior Gold Miners Index. The index includes companies from markets that are freely investable to foreign investors, including “emerging markets,” as that term is defined by the index provider.
- Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT) : seeks daily investment results, before fees and expenses, of 200% of the daily performance of the NYSE Arca Gold Miners Index. The fund invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, and securities of the index, ETFs that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index. The index is comprised of publicly traded companies that operate globally in both developed and emerging markets, and are involved primarily in the mining for gold and, in mining for silver.
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