While the U.S. markets seem to push the coronavirus outbreak from the forefront of their worries, China continues to struggle with its effects as more cases of the virus surface and claim more lives. This is pushing precious metal prices like gold steadily higher.
“Gold and silver prices are modestly up in early U.S. futures trading Thursday,” wrote Jim Wyckoff in Kitco News. “The safe-haven metals bulls have stabilized their markets late this week, despite rallies in global stock markets this week, led by the U.S. stock indexes that are at record highs again. February gold futures were last up $5.30 an ounce at 1,568.10. March Comex silver prices were last up $0.148 at $17.745 an ounce. Asian and European shares were higher overnight as traders and investors at least for now have pushed aside the coronavirus outbreak in China. U.S. stock indexes are pointed toward higher openings when the New York day session begins and are at or near their record highs.”
Nonetheless, it’s unclear how the markets will react moving forward, especially as the global effects of the coronavirus continue to haunt investors.
“History proves traders and markets are fickle,” Wyckoff added. “The coronavirus outbreak continues to spread, with over 500 reported dead in China and around 30,000 afflicted in the country. China’s domestic commerce is being impacted, as is global commerce. The big drop in Tesla’s stock price Wednesday is blamed at least in part on the coronavirus out break impacting Tesla’s business in China. Many global companies doing business with China (Remember that China is the world’s second-largest economy.) have been negatively impacted. It will not be surprising to this longtime market watcher to see the coronavirus outbreak back on the front burner of the marketplace next week, or sooner. Such a scenario would be bullish for gold, U.S. Treasuries and the U.S. dollar, and bearish for global equities.”
Trading Precious Metal ETFs
Investors looking to get in on gold can look at funds like SPDR Gold Shares (NYSEArca: GLD) and the 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.
Traders looking for leverage can use 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).
Investors looking at other precious metal alternatives can get in on the palladium action by looking to the Aberdeen Standard Phys PalladiumShrs ETF (NYSEArca: PALL). PALL seeks to reflect the performance of the price of physical palladium, less the expenses of the Trust’s operations—the fund is designed for investors who want a cost-effective and convenient way to invest in palladium with minimal credit risk.
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