Going for the Gold—Miners, That Is
04/08/2010 2:42 pm EST
I’m adding more gold to the Jubak’s Picks portfolio today, April 8.
After a rally off the February 8 low on hopes that the global economic recovery was gaining steam, I think we’re due for a swing back to fear on disappointing growth numbers from the European Union; on stubbornly high (and perhaps rising) unemployment figures from the United States, as more discouraged workers rejoin the ranks of those actively looking for work; and on worrying growth and inflation data from China. (For more on these macro trends, see these recent posts: A Whole New Brand of Inflation; The Greek Crisis Goes on and on...; and So Yes, We've Got an Economic Recovery, But How Strong Is Still an Open Question.)
The technical charts of many individual gold stocks and the Market Vectors Gold Miners ETF (NYSEArca: GDX) now show that gold mining shares have cleared recent resistance and look like they’re headed higher—for a while, anyway.
I’ve noted a number of times recently that in a market where trends don’t last all that long, investors don’t want to fall in love with any stock. An ETF, since it’s just a vehicle that tracks an index, is somehow less loveable. Which is why I’m picking it here over any individual gold stock. This ETF also holds shares of some silver miners, and silver (as well as platinum) right now is outpacing gold, so this pick gives me a way to gain a little extra lift.
I’m setting a very tight target price of $52 and a very short time horizon of August for this pick. (It traded above $48 early Thursday afternoon.) If and when the ETF hits that target, I’ll re-evaluate.
Full disclosure: I don’t own any shares of any company or ETF mentioned in this post.