Too Much Froth in the Market Could Lead to Gold Gains

The stock market when on to reach more record highs on Thursday thanks to a bevy of positive economic data, such as less jobless claims and better-than-expected retail numbers. However, Bridgewater Associates co-chief investment officer Greg Jensen warned of global risks brewing that could spill over into the frothy markets.

Per a MarketWatch report, Jensen, “who helps oversee more than $160 billion in assets for the hedge-fund giant, told the Financial Times that political turbulence around the world along with a widening divide between the rich and the poor will continue to make for a dicey investing climate.”

By Jensen’s account, central banks globally will allow inflation to run, and “there will no longer be an attempt by any of the developed world’s major central banks to normalise interest rates. That’s a big deal.”

What this all means is possible gains for gold-focused funds, but as far as putting a timeframe on when this happens, that’s another obstacle to tackle.

“That could happen quickly or it could happen a decade from now,” he explained in the interview. “But it’s definitely in the range of possibilities. And when you look at the geopolitical strife, how many foreign entities really want to hold dollars? And what are they going to hold? Gold stands out.”

Investors looking for core exposure to gold in 2020 can look at the SPDR Gold Shares (GLD). GLD seeks to reflect the performance of the price of gold bullion, less the expenses of the Trust’s operations–the Trust holds gold bars and from time to time, issues baskets in exchange for deposits of gold and distributes gold in connection with redemptions of baskets.

Traders looking to use leverage can look at the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT), which makes an indirect play on the precious metal via gold miners. NUGT seeks daily investment results, before fees and expenses, of either 300%, or 300% of the inverse (or opposite), of the performance of the NYSE Arca Gold Miners Index.

Silver Options

With gold getting much of the spotlight in the precious metals arena, investors shouldn’t forget about silver if gold is too pricey of a proposition. ETF investors looking to get in on the silver action can look to funds like the iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest ETFs backed by holdings of physical silver.

For those looking for leverage, they can look to ETFs like the VelocityShares 3x Long Silver ETN Linked to the S&P GSCI Silver Index ER (NasdaqGM: USLV)  and the ProShares Ultra Silver (NYSEArca: AGQ).

For more market trends, visit ETF Trends.