Quit Chasing Gold and Buy This ETF

With gold continuing to make new all-time highs, precious metals are all the rage among investors. But before you go chasing shiny things, I want to tell you that there are far better short-term opportunities than gold right now.

It’s true that it would be difficult to find a long-term chart that is stronger or more persistent than that of the gold ETF, SPDR Gold Trust (NYSE: GLD). It is nothing short of amazing (and at the same time scary for the future of the U.S. dollar). That said, even as gold has made new highs in recent days, there is a better place to focus your trading capital: semiconductors.

The semiconductor industry has taken off in recent days, and I expect the move to continue. Here’s a performance chart comparing the headline-making GLD rally and the Semiconductor HOLDRs ETF (NYSE: SMH).

SMH vs. GLD Performance Chart

What’s behind the semis’ strong performance?

It’s certainly not the lackluster outlook from PC manufacturers who continue to see challenges ahead. It was just three weeks ago that Intel Corporation (NASDAQ: INTC) slashed their outlook sending the stock down nearly 4%. Others like Cisco Systems Inc. (NASDAQ: CSCO) have also expressed concern with talk of “unusual uncertainty” in the global economy that could impact sales. 

If these headlines weren’t enough, many analysts also believe Apple Inc.’s (NASDAQ: AAPL) iPad is hurting sales in the semiconductor industry because the chip used is Apple branded and made by Samsung, so the major semi players are not benefiting from this particular increase in chip demand. 

So, what is making semiconductor stocks and SMH move?

In a classic contrarian move, semiconductors shifted into high gear directly after industry leader Intel lowered its outlook. And SMH had one of the strongest ETF trends in September, which I believe it will continue this month. 

To learn more about why SMH is trading higher, watch the video here.

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Article printed from InvestorPlace Media, https://investorplace.com/2010/10/semiconductor-etf-smh-better-opportunity-than-gold-etf-gld/.

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