How To Invest In Gold Stocks In USA – Get Latest Update Strategy Safe And Lucrative Gold Investment in 2015
Wed, Mar 19, 2014
Is Gold Still A Safe Investment
Gold is absolutely a safe investment.
That is, if you’re investing in gold for the right reasons.
If you make an investment in gold as an insurance policy against economic collapse or runaway inflation, you’re in it for the reason. The price changes in gold don’t affect you. It’s a safety net, not a speculation.
Other than that, there’s a much safer gold investment trade to make right now. And it’s already paying off well.
Best of all, it’s set to continue to do well regardless of where gold prices head from here too.
Back in December Contrarian Insights picked out the best, safest, and highly lucrative gold investment you could make in 2014.
It was a trade on the ratio of gold prices relative to the current market value of gold stocks.
Since gold and gold mining stock prices peaked in 2013, they have both steadily decline.
Gold stocks, which are highly leveraged to the price of gold, fell much further than the price of gold.
The problem (and the opportunity) was that gold stocks fell much further than they should have relative to the price of gold.
As a result, gold stocks were super cheap compared to gold prices. And a great opportunity or a low-risk/high-reward gold investment was created.
The chart below which shows the ratio of the SPDR Gold Trust (GLD) to Market Vectors Gold Miners ETF (GDX) to the price of gold is falling:
The decline of this ratio is exactly what we expected and the profits on The Best Gold Investment of 2014 go up as it goes down.
Remember, the ratio is calculated by determining how many shares of GDX can be purchased by one share of GLD.
The recommended gold investment is to sell short GLD and buy long GDX.
As a result, the lower the ratio goes, the more the GDX is moving up relative to the price of GLD.
The trade was recommended when the GLD/GDX ratio was 5.8. Today the ratio is 4.95.
That makes the total profit 15%. A great return for an ultra-low-risk gold trade like this one.
Furthermore, there is still plenty of potential left for this trade to run. The long-run ratio is closer to 2.5 which means even though this top gold investment is up 15%, it can still double from here.
If you’re looking for a great gold investment, this is still the best one. It’s safe and still packed with plenty of potential.
The Group of Big Investors in United States.
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