Gold is testing $2,000—and could break higher.
Last trading at $1,995, investors are flocking to the metal as a safe haven until the situation cools off. “The conflict in the Middle East is set to lead to heightened global uncertainty, with substantial implications to gold prices if the conflict escalates. Although the initial impact has so far been moderate, its escalation would exacerbate such uncertainty, which would lead to reduced risk appetite as well as lower consumer and investor confidence,” according to the World Bank, as quoted by Kitco.com.
The World Bank’s bullish outlook for gold comes as analysts expect the ongoing conflict to broadly impact commodity markets from energy to agriculture.”
Helping, the U.S. debt problem creates further economic uncertainty. In addition, we have to consider the U.S. fiscal outlook isn’t very attractive. In fact, according to The Conference Board, we could see a short recession next year.
They added, “This outlook is associated with numerous factors, including, elevated inflation, high interest rates, dissipating pandemic savings, rising consumer debt, lower government spending, and the resumption of mandatory student loan repayments. We forecast that real GDP will grow by 2.2 percent in 2023, and then fall to 0.8 percent in 2024.” All could easily send gold prices well above $2,000.
That being said, investors may want to consider buying gold, gold stocks, and even ETFs.
VanEck Vectors Gold Miners ETF (GDX)
One of the best ways to diversify at less cost is with an ETF, such as the VanEck Vectors Gold Miners ETF (GDX). Not only can you gain access to some of the biggest gold stocks in the world, you can do so at less cost. With an expense ratio of 0.51%, the ETF holds positions in Newmont Corp., Barrick Gold, Franco-Nevada, Agnico Eagle Mines, Gold Fields, and Wheaton Precious Metals to name a few.
Sprott Junior Gold Miners ETF (SGDJ)
With an expense ratio of 0.35%, the Sprott Junior Gold Miners ETF (SGDJ) seeks investment results that correspond to the performance of its underlying index, the Solactive Junior Gold Miners Custom Factors Index. The Index aims to track the performance of small-cap gold companies whose stocks are listed on regulated exchanges.
Or, we can even look at a gold ETF such as the SPDR Gold Shares (GLD), which is the largest physically backed gold exchange traded fund (ETF) in the world.