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The SPDR Gold Trust (NYSEARCA:GLD) is on a hot streak so far this year. The related gold mining stocks and funds such as the VanEck Vectors Gold Miners ETF (NYSEARCA:GDX) are enjoying even greater gains. The GLD ETF is up 13.5% year-to-date, and 35% over the past 12 months. Meanwhile, the GDX gold mining ETF has posted huge returns. It’s up 22% year-to-date, and 75% since last May.
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Naturally, some traders are thinking about taking profits here. It’s been a big move, after all. But don’t miss the forest for the trees. Gold traders are used to the bear market that had been running in precious metals since 2012. Thus, their inclination has been to sell every advance.
But the trend has changed. Gold is in a new expansion phase, and investors should be strapped in for the ride. In fact, precious metals were already in an uptrend even prior to 2020. And now, the novel coronavirus has greatly accelerated that dynamic.
GDX and Gold Mining Stocks: It’s 2008 All Over Again
Even as the financial crisis was already well under way, in 2008, the price of gold soared to an all-time high of $1,000 an ounce. To many investors, that record-high price probably seemed like an ideal opportunity to sell. When other things are plunging, the first instinct might be to sell the asset that has appreciated. But even at $1,000 an ounce, it was as actually a great time to buy. Gold’s price nearly doubled over the following three years and rose to $1,900 an ounce in 2011.
Today’s gold market feels eerily similar to the 2008 version. The price of gold just hit a seven-year high of $1,747 an ounce and is setting up for what I believe will be a rapid double over the next couple of years.
This rally is causing a huge ripple effect in gold mining stocks like GDX. In fact, almost all of my gold stock recommendations have doubled already. But I think they’re just getting warmed up. The current economic crisis has created a perfect situation for the gold mining industry…
Editor's Note: Click here to keep reading.
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