The quiet bull rally in gold is the market’s best-kept secret. Gold prices topped $2,000 last week. Gold investors earned 10% in July, the best return since February 2016. What exactly is driving the yellow metal to new highs?
The gold market is no longer ignoring the Fed’s insistence in pumping stock markets and doing whatever it takes. Bitcoin is also up sharply because the U.S. currency is losing its purchasing power. If the world were not intolerant of China’s communism, the Yuan could have replaced the U.S. dollar as the world’s reserve currency. Investors have a better alternative: holding gold.
The Fed and the U.S. are not the only culprits hurting their currency. The European Union has a big stimulus package in place, the second one this year. With no way of paying the funds back, currency investors will want a hard, physical asset instead.
Gold is once again a store of value.
Investors may hold Gold Index (GLD) or a gold miner ETF (GDX). GLD is a preferred play because it will not fluctuate with operational costs gold miners face. Silver (SLV) is a compelling investment too. If silver prices, currently at below $23, rises to $40 - $50 (50% return), it has higher return potential than gold at $3,000 (33% return).
