By taking profits in our gold stocks position quickly, we've got a few options to improve the outcome of our swing trade. The post Improving Outcome For Gold Stocks In A Stock Market Correction appeared first on Investor's Business Daily.
Several economic indicators are raising concerns and investor anxiety about a potential recession. When combined with persistent economic and geopolitical concerns, these indicators are leading investors to seek out safe-haven assets.
The VanEck Gold Miners ETF (GDX) is an exchange-traded fund (ETF) formed during the 2006 gold bull market as a way for investors to gain convenient exposure to some of the largest mining companies in the world.
The GDX underperformed the GLD over the past six months, and that's a major red flag for investors. Risks related to individual names within the ETF, alongside broader risks for the equity market, are likely to continue to weigh on performance. I remain focused on gold as a way to minimize risks related to the current monetary regime, and I am not yet willing to time the market through the GDX.
Gold prices surged in 2024, driven by central bank buying, geopolitical tensions, and potential interest rate cuts, making gold miners an attractive investment. The VanEck Gold Miners ETF offers diversified exposure to gold miners, benefiting from operational leverage as gold prices rise, enhancing profitability and shareholder returns. Key risks include fluctuations in gold prices, problematic mergers, and rising operational costs, but GDX's diversified portfolio mitigates these risks.
The final trades of the day with CNBC's Melissa Lee and the Fast Money traders.
Investing in the Gold ETF (NYSEARCA:GLD) is pretty much like an investment in the metal itself. If gold rises in price, you make money; if it falls, you lose money.
The VanEck Gold Miners ETF (GDX) is poised to outperform due to attractive valuations and improved balance sheets of the underlying companies. Despite recent underperformance and negative investment flows, GDX offers a great risk-reward opportunity with a forward P/E ratio around 12. Gold miners are cyclical, but the current gold price is supported by central bank buying and Asian consumer demand.
Economic uncertainty under President-elect Trump is driving the potential for heightened demand for gold and related mining enterprises, with the VanEck Gold Miners ETF a likely beneficiary. Historical patterns and current market conditions, particularly the end of the Treasury yield-curve inversion in December, suggest a strong outlook for gold in 2025. Gold mining valuations are exceptionally low today, presenting a significant buying opportunity, with examples like Newmont trading far below traditional norms (the largest GDX holding).
GDX has crashed in recent months. I believe this presents a great buying opportunity for long-term investors. I also detail why.
Gold's recent surge is driven by Chinese demand and concerns about monetary stability, but its value is extreme compared to Treasury rates amid quantitative tightening. GDX has declined 14% since September, highlighting gold miners' underperformance compared to direct gold investments due to high production costs and geopolitical risks. Lower oil prices may alleviate cost growth for gold miners, but due to inflation and instability, emerging market operations remain risky and often with less profit growth.