Gold prices are about to go gangbusters. During 1Q 2016, gold experienced its largest quarterly price gain in three decades. Expect the same for 1Q 2017.
[Gold prices are about to go
gangbusters. During 1Q 2016, gold experienced its largest quarterly price gain in three decades. Expect the same for 1Q 2017.]
Gold to Go Gangbusters
By Luke Burgess
Written Friday, February 3, 2017
Gold prices are about to go gangbusters.
During 1Q 2016, gold experienced its largest quarterly price gain in three decades. Expect the same for 1Q 2017.
On Wednesday, investors pumped $413 million into SPDR Gold Trust ETF (NYSEArca: GLD) after the Federal Reserve kept interest rates steady. The Federal Reserve previously said it was planning three rate hikes for 2017. And there's no reason to think it will adjust again in the near term.
[GLD Feb 3 2016]
Meanwhile, Donald Trump couldn't be doing any more to help gold.
President Trump will begin work today dismantling regulations enacted following the 2008 financial crisis. The move is almost guaranteed to draw sharp criticism from the left and reform supporters who will say dismantling regulations will create conditions for another meltdown. And it will add fuel to the fire of uncertainty burning throughout U.S. markets.
Add to this the U.S. dollar showing its worst January performance in 30 years, and the immediate future for gold prices is only aimed higher.
Here's how to position yourself for profit right now...
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There's no reason to overthink it... The best gold stocks to own right now are the large-cap gold production majors. I'm talking about production firms like:
- Barrick Gold (NYSE: ABX)
- Newmont Mining (NYSE: NEM)
- Goldcorp (NYSE: GG)
- Agnico Eagle Mines (NYSE: AEM)
Over the next three weeks, all of these companies will be announcing their 4Q and FY 2016 earnings. The market is expecting (rightfully so) downbeat 4Q numbers.
However, it's most likely that when the majors announce earnings, their full-year data will overshadow the 4Q figures with record production levels and revenues. That's because even though the final quarter of 2016 was brutal for gold miners, most of the rest of the year was a windfall.
All of these stocks are in great positions for near-term gains. Reporting begins for this group with Agnico Eagle, which will announce earnings February 8.
Another great way to leverage gold prices rising in the near term is through gold royalty firms. These companies do not actually mine for gold themselves. Rather, their cash flow comes from royalties and streaming agreements they have with miners.
The major upside of gold royalty and streaming companies for investors is less exposure to risk. Projects with high risk can be managed out of the portfolio.
The largest and most well-known gold royalty company in the world is Royal Gold (NASDAQ: RGLD). Royal Gold's financial year runs from July 1 through June 30. So the company just announced its 2Q 2017 earnings that showed year-on-year growth of 55%. RGLD is a great short- or long-term position.
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And one last ETF to watch...
A brand new gold ETF began trading this week: SPDR Long Dollar Gold Trust (NYSEArca: GLDW).
[GLDW Feb 3 2017]
This ETF gives investors a way to go long on gold without the potential negative influence of a strong U.S. dollar. Basically, this is achieved by holding an underlying short position against the greenback, while simultaneously holding physical bullion.
I want to give this ETF a little time to get started. But for day trading purposes, GDLW might become the ideal ETF for trading gold. Keep an eye on it.
The gold market is about to get kicked into high gear. Be prepared.
Until next time,
[luke signature]
Luke Burgess
[[follow basic]@Lukemburgess on Twitter]
In his early 30s, gold and natural resource investor Luke Burgess managed to do something most traders never achieve in a lifetime. After being bullish on gold starting in 2004, he exited all of his precious metal positions just eight weeks prior to the correction in gold prices beginning in October 2011… the exact top of the market. But after watching gold and the natural resource market continue to suffer month after month, Luke jumped back into the game and is more bullish than ever.
As an editor at [Energy & Capital], Luke’s analysis and market research reaches hundreds of thousands of investors everyday. Luke is also the investment director of Angel Publishing’s new Secret Stock Files. newsletter, which helps investors leverage the future supply/demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his [editor’s page].
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