SPDR Gold Trust (ETF) (GLD) Is a Better Buy Than Stocks

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Gold — as represented by the SPDR Gold Trust (ETF) (NYSEARCA:GLD) — has been one of the better-performing assets year-to-date — even though it has mostly been trotting sideways for three months. The GLD ETF, however, still looks like it’s coiling up for a next leg higher.

Beat the Bell: SPDR Gold Trust (ETF) (GLD)Here’s a look at a great risk/reward opportunity.

When I last discussed gold two and a half weeks ago, I laid out my bull case. But I also made it clear that until a sustainable break out of recent technical consolidation takes place, it’s too early to get optimistic about another major swing higher.

After this week’s round of central bank meetings, most assets rallied. And while stocks continue to see sector rotation, there is increasing selectivity. But gold and silver — as represented by the iShares Silver Trust (ETF) (NYSEARCA:SLV) — are displaying a more orderly incline. From where I sit, this promises more upside than stocks.

GLD ETF Charts

Starting off with the multiyear weekly chart, we see that the GLD through this lens continues to coil and consolidate below the diagonal resistance line from the 2011 and 2012 highs. Ultimately, this will resolve in one direction or another. And as we will see on the daily chart, the intermediate term uptrend should ultimately prevail and push gold past and above the diagonal resistance line.

Many investors have heard that “the trend is your friend.” But most investors that focus on the intermediate- to longer-term don’t adhere to this simple yet effective rule. This in turn leads investors and traders to either over-trade and get into a vicious cycle of confusion, or to just let their investments ride, come hell or high water.

Gold GLD ETF chart multiyear
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On the daily chart of the gold ETF, we see that ever since the strong rally early in the year and the subsequent pullback into the late spring, a well-defined uptrend has formed. This uptrend held support once again at the most recent pullback in the August and September period, which at the time also coincided with the blue 100-day simple moving average.

This week’s post-FOMC rally has pushed GLD back to the upper end of its two-and-a-half-month consolidation phase. While no breakout has yet occurred, the year-to-date uptrend continues to hold.

Gold GLD ETF chart daily
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From a trend following perspective, the GLD ETF remains a buy. From a more near-term swing trading aspect, a break above the $129-$130 area is still needed to confirm a next leg higher into the low to mid-$130s.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/09/spdr-gold-trust-etf-gld-better-buy-stocks/.

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