Can Gold Capitalize on the Recent Tech Sell-Offs?

A post-Labor Day sale appears to be happening in the technology sector. Shares of tech equities are selling off, causing investors to feel that the market was overheated, which could help gold capitalize on its status as a safe haven asset.

It could be a volatile ride for investors, according to a recent MarketWatch report. A confluence of factors could shift the tide back and forth for gold prices.

“Continued U.S.-China tension, the upcoming U.S. presidential elections, the pandemic, and ‘currency dislocation are adding to reasons for gold buyers to add on bigger dips in prices, said George Gero, managing director at RBC Wealth Management, in a daily note,” the report noted.

“President Donald Trump on Monday said he intends to ‘end reliance on China once and for all, whether it’s decoupling or putting in massive tariffs like I’ve been doing already,’” the report added. “Gero said he continues to expect silver to eventually climb to $30 an ounce and for gold to climb back to $2,000 ‘as more sellers rush to cash.’”

^BAUS Chart

^BAUS data by YCharts

As opposed to trading gold funds, ETF investors can also use miners as sort of a backdoor play on gold prices. A few funds to look at include:

  • 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.

For more market trends, visit ETF Trends.