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My Favorite Way to Play the Gold Market

A “hedge” is an asset that tends to go up when other assets go down.

And historically, gold has been the go-to hedge for traders and investors.

Stock market crashing? Buy gold.

US dollar weak? Gold usually goes up.

Worried about inflation? You guessed it – turn to gold.

Surprisingly, the price of gold actually went down in 2021 despite historic levels of money printing by an inept government that thinks it can spend its way out of trouble.

But the yellow metal is finally showing some strength.

In fact, I believe gold is setting up for a huge move higher over the next several years.

Looking Back

Take a look at this chart of gold showing a textbook “cup-and-handle” pattern over the last 18 months…

Chart of Gold Futures (GC) with Two-Day Candles — Source: TradingView

The breakout from this formation could be massive…

But even though I think gold prices are going higher, the real money isn’t made owning the metal.

The big profits come from gold stocks.

You see, if the price of gold goes from $2,000 per ounce to $2,200, that is a 10% gain on the metal.

But it could translate into a 40%-50% gain in a gold stock.

Here’s why…

Mining for gold is an expensive operation. It is not cheap to get metal out of the earth.

Let’s say the cost to mine an ounce of gold is $1,600. And miners can sell that gold for $2,000 – a profit of $400.

But, when the price of gold goes up just 10%, their profit increases by a whopping 50%!

It costs them the same 1,600 bucks to get it out of the ground. But now they can sell it for $2,200. And their profit goes from $400 to $600.

In other words, a gold stock is essentially a leveraged play on gold.

Here are a few of my favorite ones…

Performance Chart of Gold Futures (GC), Gold Fields Limited (GFI), Royal Gold, Inc. (RGLD) and Newmont Corporation (NEM) — Source: TradingView

As you can see in the comparison chart above, each of these three gold stocks — Gold Fields Limited (GFI), Royal Gold, Inc. (RGLD) and Newmont Corporation (NEM) — have vastly outperformed the price of gold over the last several years.

Today, they continue to show the greatest strength out of the group.

All three stocks are all advancing nicely, and I expect them to continue that trend.

Barrick Gold (GOLD) is another great option. It is one of the largest miners in the country.

This is the stock Warren Buffett’s Berkshire Hathaway turned to in 2020 when his firm was looking for a hedge, although it unloaded the position back in 2021.

Looking Forward

Gold has been stagnant for most of the last decade, so it has lots of catching up to do.

Additionally, inflation is out of control, and gold should be much higher because of it.

As I’ve just shown you, that means gold stocks have a lot of runway left for higher prices.

In recent years, a lot of investors have turned to BTC or other digital currencies, which they believed were the “new gold.”

But they are now learning that is not the case.

Digital currencies have actually lost value during this period of crisis, and investors are once again realizing that gold is the only true hedge against high inflation.

Embrace the surge,

Ross Givens

Editor, Stock Surge Daily

Ross Givens
Ross Givens

I bought my first stock when I was 12 years old. It was Microsoft. I’ve been a registered financial advisor. I’ve worked as a stock broker. I ran a managed fund. I was a Vice President at JP Morgan with Series 7, Series 66 and Series 3 securities licenses. I’ve been featured on Fox Business, CNBC, Bloomberg, and a bunch of other networks. The only thing I enjoy more than making money, is helping YOU make money.

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