Gold is enduring some weakness at present, but many market observers believe this will be a temporary setback.
Before that happens, investors may want to get acquainted with junior miners and the Sprott Junior Gold Miners ETF (NYSEArca: SGDJ).
SGDJ tracks small cap gold miners, but weighs its components based on revenue growth and price momentum. The ETF focuses on price momentum, which helps identify leading junior gold miners driven by factors like new discovery, mine development, or joint ventures.
“Gold Rush 2.0 could just be getting started, with junior miners, in particular, gearing up for an encore thanks to their unique ability to act as highly leveraged plays capable of multiplying the gains of gold by margins because of the relative significance of a gold discovery for a junior,” reports OiPrice.com.
SGDJ Could Be Ideal for Playing the Long Game
Supporting the case for SGDJ, we may continue to see multiple factors come into play to support the gold market in the coming months. For starters, economic expansion has historically been supportive of jewelry, technology, and long-term savings. Risk and uncertainty could further support safe-haven gold demand. The price of competing assets like bonds, currencies, and other assets may also influence investor attitudes toward gold. Lastly, capital flows, positioning, and price trends may ignite or dampen gold’s performance.
“But there’s much more to it than that, including a Biden Administration that’s about to let loose a $1.9-trillion stimulus package that is trying to make its way through the bureaucratic channels as we speak,” adds OilPrice.com. “The gold moguls are now stockpiling gold assets because they understand that the rally has legs and a growth runway long enough for multi-year gains. So they’re busy now looking for the next big discovery by a junior with major upside.”
It’s difficult to deny gold’s long-standing safe haven reputation.
“Although gold is sitting at multi-year highs – implying higher entry costs for investors – the global macro-environment setup remains highly supportive of the yellow metal thanks to a plethora of catalysts including projections for a weaker U.S. dollar, more stimulus, negative real yields, dovish monetary policies, and rising inflation expectations,” concludes OilPrice.com.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.