Until The Fed Raises Interest Rates The Positive Bias Should Continue In The Gold ETF
“After Friday’s big sell-off and this morning looking like a repeat of the dismal performance, the anti-Gold investors were abuzz with comments like the “the gold bubble is popping” and “the gold trade is over.” But after a little reassurance from Federal Reserve Chairman Ben Bernanke that the easy money policy will remain for an “extended period”, Gold rallied hard into the New York close as the dollar weakened,” Insiders’ Blog Reports From Street Insider.
“Bernanke tried to quell inflation fears though, which kept a lid on gold. Bernanke said the Fed is committed to keeping inflation low and inflation appears likely to remain subdued for some time. ETF SPDR Gold Shares (NYSE: GLD) is down 0.5% to $113.18 after trading down to $111.44 earlier. Market Vectors Gold Miners ETF (NYSE: GDX) is down 2.35% to $49.50 after trading down to $48.80 earlier,” Insiders’ Blog Reports.
“Today’s action in gold shows investors that the trade is not over for a long shot. Until the Fed shows that it has the courage to raise interest rates, the positive bias in gold will likely continue,” Insiders’ Blog Reports.
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The investment (GLD) seeks to replicate the performance, net of expenses, of the price of gold bullion. The trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the trust terminates and liquidates its assets, or as otherwise required by law or regulation.
The investment (GDX) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the AMEX Gold Miners index. The fund generally normally invests at least 80% of its total assets in common stocks and American depositary receipts (ADRs) of companies involved in the gold mining industry. The fund is nondiversified.
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