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Are Billionaires Driving the Gold Rush?

06/10/2016 9:06 am EST


Michael Berger

President & Founder,

After two world renowned billionaire investors said they see value in gold as stocks are overvalued, most gold and gold mining stocks and funds rallied; Michael Berger, Associate Editor of highlights catalysts that could drive the price of gold higher over the next twelve months and stocks and funds he likes.

Fear and greed are the two emotions that drive the market and right now the amount of fear in the market is driving the price of gold higher before next week’s Federal Reserve meeting and the Brexit vote later in the month.

The price of gold has rallied more than 5% off of its June 2016 low and gold futures for August hit a three-week high on Thursday, just below its $1,275 resistance level.

Yesterday, we recommended three gold and gold mining stocks after billionaire investor George Soros said he thinks stocks are overvalued and increased the amount of money he has invested in gold-related stocks and funds.

Catalysts Can Drive Gold Prices Much Higher

Gold has a lot of catalysts over the next twelve months and we see further upside to the current price of this precious metal.

Last week, gold rallied after a weak jobs report cast doubts on whether the central bank can raise rates at all this year, as the Fed's forecast for rate hikes this year decreased from four to two.

Gold has also moved higher as the dollar pulled back, a phenomenon impacting other commodities. The dollar weakened as the likelihood of additional interest rate hikes decreased.

More Reasons to Buy than Sell

The market faces a number of questions this year and this gives investors more reasons to buy gold, and to not sell it.

Interest rates and the dollar are not the only two factors affecting the price of gold. Uncertainty around the US presidential election is also a reason for investors to buy gold related stocks and funds.

Another major catalyst for the rush into gold is the United Kingdom’s vote on whether to leave the European Union. Analysts have said that the move in gold is clearly tied to the United Kingdom’s referendum, as the euro is weakening against the safe haven Swiss franc as well.

Stocks and Funds to Buy

We continue to see value in owning shares of gold-related funds and shares of gold mining companies as we anticipate weakness in various markets over the next twelve months.

Some of the stocks and funds we would take a look at are:SPDR Gold Trust (GLD)

  • Barrick Gold Corporation (ABX)
  • NovaGold Resources Inc. (NG)
  • Direxion Daily Gold Miners Bull 3X ETF (NUGT)
  • VanEck Vectors Gold Miners ETF (GDX)

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