Is This A New Bull Market For The SPDR Gold ETF? (GLD)

From David Dutkewych: A little over a month ago, gold was deeply oversold. So I recommended that you either add to your gold positions or start a new position if you were not yet investing in gold.

Well, almost as if on cue, gold headed straight up. It’s still up 4.6% since then, even after its current pullback.

But, it’s not just me recommending gold:

The manager of the world’s largest hedge fund at Bridgewater Associates, Ray Dalio, also recommends owning gold. In fact, he recently said that investors should place 5% to 10% of their assets in gold.

According to Dalio, it makes sense to own gold as a hedge against current geopolitical risks. Two key ones include:

  • The chance Congress won’t raise the debt ceiling, causing a technical default and leading to a government shutdown. Plus …
  • Dwindling faith in the effectiveness of our political processes.

And I couldn’t agree more.

Gold remains one of the best-performing commodities this year, with its 10%-plus gain. I see gold in the process of forming a long-term base and building energy for a larger move higher later this year.

Ditto for silver, which has also performed well. It’s up almost 5% so far this year.

Political uncertainty has been a key driver behind gold’s rise this year. And I expect that to continue.

Take last week as an example: The escalating tensions with North Korea spooked investors and sent shockwaves across the equity markets. And gold responded, as a safe-haven asset, by surging more than $30 higher.

All told, do these factors mean that gold is at the beginning of a new bull market?

Not yet, but we are getting closer.

Until then, The Edelson Institute’s cycle forecast chart for gold shows volatile times ahead for the yellow metal.

As you can see in the cycle chart above, volatility in gold prices should persist until late November, with an initial downturn in gold prices heading into early September.

That will be followed by a short and sharp rally into the beginning of October, then another leg down heading into the holiday season.

So, I remain cautious on gold, and the rest of the precious metals, in the nearer term.

The multitude of catalysts that I mentioned above should keep gold traders on their toes throughout the third and fourth quarters of the year.

That said, gold is in the process of bottoming.

And, as we get closer to year-end, we will see an excellent long-term buying opportunity in gold as well as silver, platinum and palladium.

Remember, buying ETFs is one of the easiest ways to gain exposure to gold in your portfolio. So, while I expect more volatility in gold prices in the nearer term, it makes sense to continue adding to your gold positions on dips throughout the second half of the year. You can do this by buying ETFs like the SPDR Gold Shares (GLD) or iShares Gold Trust (IAU).

The SPDR Gold Trust ETF (NYSE:GLD) rose $0.63 (+0.51%) in premarket trading Friday. Year-to-date, GLD has gained 11.75%, versus a 9.76% rise in the benchmark S&P 500 index during the same period.

GLD currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 35 ETFs in the Precious Metals ETFs category.


This article is brought to you courtesy of Money And Markets.