Get Ready For the Gold Bull Run

The gold bull run has been talked about for years and years, as industry experts continue to raise the ceiling for this commodity, even suggesting that it has no peak. But a short term run could be just weeks away if historical patterns reveal anything. The potential run up in gold will have nothing to do with the rampant money printing by the Fed, inflationary scares, the fact that central banks are buying up the precious metal, or even threats of a collapsing economy. Instead, the momentum for gold for the last two months of the year could boil down to a few lines on a graph [for more gold news and analysis subscribe to our free newsletter].

As far as gold trading is concerned, few stretches are more profitable for gold than November and December. In fact, in most years that momentum has carried all the way into February. Historically speaking, on a 5, 10, and 15 year basis, gold prices have risen in each of the coming four months. The average rise for the latter two months of the year over the past five years falls around 8%, though that figure shrinks to 5.4% over the 15 year period. Still turning in more than 5% in just two short months could be a big win for any portfolio.

Coming out of October, gold investors may feel a bit bearish given the metal’s week performance, but this too follows the historical trend, as October has consistently been the worst month for this commodity in the last 15 years. Other notable downturns come in March where it appears that many sell off or take profits. Should gold stick to its decade and a half long trend, now could be a good time to buy in low and ride out a potential short-term rally [see also Investing In Gold: The Definitive Guide].

How to Play Gold’s Run

Below, we give you several options for taking advantage of the coming gold bull run.

  • iShares Gold Trust (IAU): A physically-backed gold ETF with plenty of liquidity and cheaper than its main competitor, GLD. It should be noted that GLD is a much better option for trading given its active options market and high trading volume.
  • Market Vectors TR Gold Miners Fund (GDX): For those who want to make a play on the supply side of the equation, this fund invests in the largest gold miners around the world. Be warned, however, that South Africa’s current mining strikes cause concern for the short-term future of GDX [see also Three ETFs To Play the South African Mining Strike].
  • Gold Explorers ETF (GLDX): This fund puts another equity spin on gold investing, as GLDX holds the stocks of companies that are primarily concerned with exploring for gold.

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Disclosure: Long IAU.

This entry was posted in Actionable Ideas, Asset Allocation, Commodity ETFs, Commodity Futures, Gold, Precious Metals and tagged , , , , , , . Bookmark the permalink.

Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

7 Responses to “Get Ready For the Gold Bull Run”

  1. [...] “As inflation picks up, the real price of gold goes up.” [...]

  2. [...] reasons for general bullishness in the gold market have been nearly exhausted at this point. But just in cased you have missed the reasoning behind [...]

  3. [...] 2. Market Vectors Gold Miners (NYSEARCA:GDX): This product takes a different approach to gold exposure, as it invests in the companies that mine the metal. As such, GDX will usually be a more volatile play on the metal given the high betas that mining firms often exhibit. The fund holds about 85% of its assets abroad, with Canada accounting for the largest single country allocation. GDX is just shy of $10 billion in assets under management and trades more than 12 million times per day compared to GLD’s average volume of 8.7 million [see alsoGet Ready For the Gold Bull Run]. [...]

  4. [...] reasons for general bullishness in the gold market have been nearly exhausted at this point. But just in cased you have missed the reasoning behind [...]

  5. [...] this precious metal for quite some time, as he has listed off a number of factors weighing into a potential bull run. Among those factors are dollar debasement, a struggling economy, and an approaching fiscal cliff [...]

  6. [...] trading volume, but it is perhaps one of the most practical options available and it has a strong growth potential for the foreseeable [...]

  7. [...] Like many before them, Thimons and PIMCO boasted the use of hard commodities to help protect against coming inflation and what they feel will be a 1.5% drop in GDP growth in the U.S. over the next year. The firm explained that hard assets, along with some other choices, are likely to outperform financial assets in the coming weeks and months [see also Get Ready For the Gold Bull Run]. [...]

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