With the federal government pulling out all the stops to keep the economy afloat, it might not bode well for safe haven assets like gold. However, in the long term, some market analysts are forecasting that within the next 10 years, gold could actually rocket upwards to $9,000 per ounce.
“It looks like [gold will get]a consolidation on the higher levels, with one nasty, little pullback where all the weak hands are shaken off and then the next wave up towards $1,800 and then the all-time highs of $1,920,” said Florian Grummes, managing director of Midas Touch Consulting. “Once gold sustainability takes out the all-time high of $1,920, it can run easily a few hundred dollars further.”
However, Grummes cited history, the 1970s in particular, as a reference point for gold where a dynamic bull run in precious metals took place.
“If you look at it from a very long-term perspective, and you can only compare it to the bull market of the 1970s. Once the bull market started again in 1976, it went up for four years and it went up basically from $100 to $890, so nearly nine-fold. If you use the same ratio to today’s numbers, we would end up having gold, at some point in the future, $8,000, $9,000 gold, but we’re talking five to 10 years, I think,” Grummes said.
Investors can get gold exposure via exchange-traded funds (ETFs) like the popular SPDR Gold Shares (NYSEArca: GLD) and the more cost-effective SPDR Gold MiniShares (NYSEArca: GLDM). Precious metals like gold offer investors an alternative to diversify their holdings, and like other commodities, gold will march to the beat of its own drum compared to the broader market.
In addition to GLD and GLDM, here are a pair of other gold funds to look at:
- iShares Gold Trust (IAU): seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of gold. The advisor intends to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal.
- Aberdeen Standard Gold ETF Trust (SGOL): seeks to reflect the performance of the price of gold bullion, less the Trust’s expenses. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market.
For short-term traders looking for leverage can use miners to play gold indirectly via funds like the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT), VanEck Vectors Gold Miners (NYSEArca: GDX) and the Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG).
For more market trends, visit ETF Trends.