McAlinden noted that he turned bullish on gold about a year ago, marking perhaps the first time in his multi-decade professional career that he’s done so. “The reason primarily is the huge increases that we have seen worldwide in the size of central bank balance sheets,” he said. “I think that at almost any time, gold is going to bottom out and start another big leg up, similar to the one that we had in the first half of 2016.”
While McAlinden believes gold prices could surge to $2,000 per ounce or higher over the next few years, he sees even greater upside in gold mining stocks. To avoid the risks of owning extremely volatile single names, however, he prefers mining ETFs:
I lean toward exchange-traded funds (ETFs) that capture a basket of gold equities because that avoids the idiosyncratic risk of any single issue. Obviously, some of these companies may have more risk than others, and you can avoid that by just getting involved in a basket.
The VanEck Vectors Gold Miners ETF (NYSE:GDX) fell $0.06 (-0.25%) in premarket trading Wednesday. Year-to-date, GDX has gained 13.91%, versus a 1.82% rise in the benchmark S&P 500 index during the same period.