By John Nyaradi
Gold ETFs and gold bullion climbed Thursday as buyers came back into the bullion and gold ETF market while equities swooned and the probability of more central bank stimulus increased.
Gold and gold ETFs continue to be viewed as a safe haven from inflation that could come from central bank monetary easing and it’s also viewed as a solid alternative to paper currencies. Gold and gold ETFs have been on a decade long bull market and many investors expect this to continue.
One noted analyst, Peter Schiff, forecasts gold to be at $5,000 within two years.CNBC
Higher prices are forecast to be driven by central bank buying of gold, monetary easing which is expected to lead to inflation and debasement of paper currencies and the momentum of the ongoing bull market.
chart courtesy of StockCharts.com
In this chart of SPDR Gold Trust GLD we can see how the ETF has been in a recent downtrend while momentum at the bottom panel has been weak but now seems to be turning. The gold ETF remains below its 50 day moving average, indicating short term weakness but above its 200 day moving average which confirms the on going uptrend for gold and gold ETFs.
Gold ETF Update:
Gold Spot Price: $1711.40: +0.46%
SPDR Gold Trust ETF GLD: +0.7%, This ETF reflects the current price and trends of Gold Bullion and so offers exposure to the gold market within a brokerage account. The gold spot price for GLD is determined by the 24 hour global over-the-counter (OTC) gold market. The SPDR Gold Trust ETF GLD is the world’s largest gold ETF and second largest ETF in existence.
iShares Gold Trust ETF (IAU): +0.7%, This ETF reflects the current price and trends of Gold Bullion and so offers exposure to the gold market within a brokerage account. The iShares Gold Trust ETF IAU is backed by gold held in trusts located in London, Toronto, and New York. The gold spot price for the iShares Gold Trust ETF IAU is set by the London PM Fix Price for spot gold as determined by the London Bullion Market Association.
ProShares Ultra Gold (UGL) +1.42%; This ETF tracks daily results that are 200% of the daily price movement of gold bullion according to the daily afternoon price fixing in London.
Bottom line: Many investors, traders and speculators believe that gold will continue its long term bull market and are using this current dip as a buying opportunity as they bet on inflation generated by monetary easing, central bank gold buying and the continued devaluation of paper currencies.
Disclosure: Wall Street Sector Selector actively trades a wide range of exchange traded funds and positions can change at any time.