Tuesday, June 05, 2012 12:21:47 AM
There's gold in them hills
The web has been all abuzz about gold mining, lately. The general consensus is that the gold mining ETFs may offer greater opportunities over the shorter term than the hard metal itself.
A recent article by Olivier Ludwig and Cinthia Murphy of IndexUniverse entitled Best/Worst Weekly ETF Returns: Gold Miners Shine notes that of the top ten performing ETFs during one recent week in May, four of them were gold miners, namely GLDX, GDX, GGGG, and RING. If you care to count SIL, the Global X Silver Miners, fully one half the list is populated with miners of one of the two more precious metals. (Silver has historically lagged somewhat behind gold, but has generally followed gold's overall trend over the longer term).
In a thoughtfully constructed article on Seeking Alpha entitled The Miners Are Forming A Major Bottom, the author explains that “miners are forming a major bottom, and will likely outperform both gold and silver in the next bull market phase.” The article is replete with charts, as well as a great deal of relevant information with respect to gold itself as a commodity, and gold mining as a potentially more lucrative investment at this juncture.
In a universe that is overpopulated with ETFs, there is no shortage of vehicles to trade. According to the Gold Miners ETF List at ETFdb, your options include GDX, GDXJ, NUGT, PSAU, RING, DUST, and GGGG. All have similar charts, some having triggered Renko buy signals (according to my interpretation as previously described here) while some others would appear to be poised to generate them. I would encourage one and all to take a close look at this play.
Finance.Yahoo.com is always a handy place to start, but there are other places that can provide a more comprehensive list of each individual ETFs component companies. The two least expensive ones are NUGT, which closed today at $13.26 on volume of 3.3 million shares traded, and GGGG, which closed out the day at $10.92, but on what may best be described as thin volume of only 13.5K shares. As a budget conscious investor, I'd prefer to pay the premium for NUGT because of the greater liquidity that comes with the higher volume.
Here is the Renko chart for GGGG:
Here is the chart for NUGT:
All things being equal, I think this may be a safe investment as it is hard to imagine the bottom dropping out with so many scared investors buying gold as a hedge against losses. Indeed, for the bottom to suddenly drop out from under it, a global economic catastrophe of proportions well beyond Greece dropping out of the Eurozone will have to occur. Indeed, it is the bank-created crisis and the subsequent crash that have have largely provided the impetus for gold's rise in value.
The web has been all abuzz about gold mining, lately. The general consensus is that the gold mining ETFs may offer greater opportunities over the shorter term than the hard metal itself.
A recent article by Olivier Ludwig and Cinthia Murphy of IndexUniverse entitled Best/Worst Weekly ETF Returns: Gold Miners Shine notes that of the top ten performing ETFs during one recent week in May, four of them were gold miners, namely GLDX, GDX, GGGG, and RING. If you care to count SIL, the Global X Silver Miners, fully one half the list is populated with miners of one of the two more precious metals. (Silver has historically lagged somewhat behind gold, but has generally followed gold's overall trend over the longer term).
In a thoughtfully constructed article on Seeking Alpha entitled The Miners Are Forming A Major Bottom, the author explains that “miners are forming a major bottom, and will likely outperform both gold and silver in the next bull market phase.” The article is replete with charts, as well as a great deal of relevant information with respect to gold itself as a commodity, and gold mining as a potentially more lucrative investment at this juncture.
In a universe that is overpopulated with ETFs, there is no shortage of vehicles to trade. According to the Gold Miners ETF List at ETFdb, your options include GDX, GDXJ, NUGT, PSAU, RING, DUST, and GGGG. All have similar charts, some having triggered Renko buy signals (according to my interpretation as previously described here) while some others would appear to be poised to generate them. I would encourage one and all to take a close look at this play.
Finance.Yahoo.com is always a handy place to start, but there are other places that can provide a more comprehensive list of each individual ETFs component companies. The two least expensive ones are NUGT, which closed today at $13.26 on volume of 3.3 million shares traded, and GGGG, which closed out the day at $10.92, but on what may best be described as thin volume of only 13.5K shares. As a budget conscious investor, I'd prefer to pay the premium for NUGT because of the greater liquidity that comes with the higher volume.
Here is the Renko chart for GGGG:
Here is the chart for NUGT:
All things being equal, I think this may be a safe investment as it is hard to imagine the bottom dropping out with so many scared investors buying gold as a hedge against losses. Indeed, for the bottom to suddenly drop out from under it, a global economic catastrophe of proportions well beyond Greece dropping out of the Eurozone will have to occur. Indeed, it is the bank-created crisis and the subsequent crash that have have largely provided the impetus for gold's rise in value.
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