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Gold Investment: How to Profit with Gold ETFs - Gold as an Investment - Gold Bullion - Gold 2022 - YouTube
Channel: The Newbie Investor
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Gold prices are high right now and they are聽
expected to stay high for the rest of 2022,聽聽
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even 2023. One of the best ways聽
to benefit from high gold prices聽聽
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is to buy these specific stocks and, in this聽
video, we will talk about exactly how to do聽聽
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that. I want to keep this one short so if you're聽
interested, stick around and let's get started.
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High gold prices are great聽
and, in my previous video,聽聽
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I talked about why I think gold prices will stay聽
high or even go higher. Still, gold has a massive,聽聽
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massive market cap of over $12 trillion dollars聽
and it is hard as hell to move the price. So,聽聽
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if you want to make a really good profit, gold聽
is probably not the asset for you. Instead,聽聽
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you can buy mining companies which specialise聽
in gold, basically gold stocks. Why? Well,聽聽
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those gold mining companies can afford to leverage聽
themselves and benefit a lot more from rising gold聽聽
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prices than you or me. Plus, a lot of these聽
companies have their business models built聽聽
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around gold prices of $1,200 to $1,400 and so on.聽
Right now, we are expecting gold prices to average聽聽
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$2,000 for the rest of 2022. What that means聽
is that those companies will get an incredibly聽聽
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massive boost to their earnings at no cost to them聽
at all. No change of business required! This means聽聽
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increased stock buybacks, increased dividends聽
and increased stock prices. Now, this is great,聽聽
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but it doesn't help a lot if you are not familiar聽
with the gold stocks currently on the market.聽聽
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Luckily for us, there is a way to get around聽
that. How? Simple. Just use an index fund. We have聽聽
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exchange-traded funds like GDX which is the VanEck聽
Gold Miners ETF and RING which is the iShares MSCI聽聽
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Global Gold Miners ETF. If we compare their聽
year-to-date performance to the price of gold,聽聽
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we can see that they have outperformed gold聽
by almost 200%! As of today, 25th of March,聽聽
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gold has gone up by 8.4% year-to-date聽
whereas the GDX ETF has gone up 22.9%!
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Now, it's important to know that the price of聽
gold stocks is not perfectly correlated to the聽聽
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actual price of gold, but there is a strong聽
relationship. The expected future price of聽聽
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gold has a stronger correlation to gold stock聽
performance, but like I said, we are currently聽聽
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expecting high prices of gold in the next 12 to 24聽
months so this is good news for gold stocks. Also,聽聽
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gold stocks are more volatile than actual gold聽
so they go up higher that gold in bull markets,聽聽
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but they also drop lower than gold in bear聽
markets. What you want to do is buy gold if you聽聽
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think that the price is more likely to drop and聽
gold stocks if you expect the price to go up. But,聽聽
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there is an even better way to take advantage of聽
high gold prices and that is by using a leveraged聽聽
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gold miners fund like NUGT which is the Direxion聽
Daily Gold Miners Index Bull 2X Shares. Basically,聽聽
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NUGT is a leveraged fund that tries to聽
double the performance of ETFs like GDX.聽聽
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Again, gold stocks are great in bull markets,聽
bad in bearish markets. When you add leverage,聽聽
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you double the effect. NUGT is amazing during聽
bull markets, but it is also really, really聽聽
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painful during bear markets so be extremely,聽
extremely careful with that. NUGT is best for聽聽
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short-term trades where you see a good bullish聽
potential and you should avoid staying in it for聽聽
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the long term. I've personally made some really聽
good gains with that ETF, but I've also taken聽聽
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an extremely nasty hit when gold prices dropped聽
by almost 5% in a single day during last summer.
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So, there you have it guys, this is how you聽
can make the most of rising gold prices.聽聽
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Gold stocks and leveraged gold ETFs are great聽
tools if you know how to use them, but you need聽聽
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to be very careful because they are a lot riskier聽
than holding actual gold. Make sure you also check聽聽
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out my video on gold prices to know what to expect聽
this year and also leave a like and a comment聽聽
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down below if you enjoyed the video. If this is聽
your first time here, make sure you subscribe聽聽
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to join the newbie investors family! Thanks聽
for watching and I'll talk to you again soon!
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