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Wednesday, December 19th, 2018 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

Better Days Ahead for Junior Gold Miners

In the midst of the chaos surrounding yet another deadly terrorist attack in Russia (this is the unfortunate norm), the central bank announced plans to increase its gold reserves by 13% this year (last year, the country’s holdings climbed 23.9%).

But looking at the moves in gold so far this year, not everyone shares Russia’s enthusiasm (as evidenced by moves into inverse gold funds). And last week, Seabreeze Partners’ Doug Kass told CNBC’s Fast Money that he expects gold to touch $1,050 this year, after an earlier call that it will be one of the worst asset classes in 2011. I’m not so sure.

After touching a record $1,432.50 in early December, gold has hit a speed bump…not a roadblock. And looking at a gold proxy, SPDR Gold Trust (GLD), we’re still seeing a long-term positive trend. Within the past couple of weeks, the fund has broken below both the 50 and 100-day EMA (and breached last year’s relative strength low), but it’s trading well above the 200-day EMA.

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For an indirect play on gold, I like Market Vectors Junior Miners (GDXJ). Granted, miners (particularly junior miners) see more volatility than physical metal. And that has proven true year-to-date with the juniors down 12.58%, while Market Vectors Gold Miners (GDX) has lost 10.36%.

But, in spite of this pullback, “the strategic, long-term investor is still very much part of the gold story”, according to ETF Securities’ Will Ryan. The gold bull market still has legs, and after this correction, junior miners will benefit from rising prices, and potential acquisitions (and volatility will work in their favor on the upside). The fund ended the day up 4.74% on above-average volume (and it’s trading above the 200-day EMA).

Disclosure: I am long GDXJ.

The original article is published at

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