The price charts for gold (GLD) are approaching a "golden cross," in which the 50-day moving average surpasses its 200-day moving average. That suggests the start of a bull market, but is it a buy?
Joe Terranova of Virtus Investment Partners said "yes" on CNBC's "Fast Money" Wednesday. "I think everyone should own gold, everyone should own silver (SLV). To me, it is the true buy-and-hold asset right now," he said.
But as far as precious metals go, Terranova didn't stop there. "If there is something that I would trade, it would be platinum," he said. "Platinum is a metal that has seen significant short-selling pressure throughout the year. That has been reversed because of the fundamentals we're seeing in South Africa."
Terranova said the platinum ETF (PPLT) was the way to play it. (Quotes courtesy of Bruno J. Navarro, CNBC.com.)
No options are available on PPLT currently. For platinum, investors and traders may utilize other ETFs -- such as UBS Long Platinum ETN (PTM) and First Trust ISE Global Platinum Index (PLTM) -- with a more liquid choice being iShares MSCI South Africa Index (EZA), which holds up to a 25% weighting in platinum miners.
In regard to the gold Golden Cross discussed above, take a look at the daily and weekly charts of GLD seen below. You can see on the daily chart that the crossover of the 50-day and 200-day simple moving averages is imminent. Also note how Percent R is trending higher in a manner that it hasn't throughout the whole time frame covered on this chart -- pullbacks in Percent R should be contained around mid-levels and may be good, low-risk long-side entry points.
On the weekly chart, using the 10- and 40-unit simple moving averages (roughly equivalent to 50- and 200-day), a bullish crossover is occurring this week. There hasn't been a bullish crossover on this time frame since early 2009, which was followed by a 2.5-year strong rally in GLD. Also note that GLD weekly Percent R has peaked into bullish territory for the first time this year.
GLD Daily Chart
Click to enlarge images.
GLD Weekly Chart