3 Reasons to Be Bullish on Gold

Video Transcript

Hi, this is Sean Brodrick for Uncommon Wisdom Daily.

I’ve been watching gold very closely, and three big factors are telling me that the precious metal could soon move much higher.

The first reason for my bullishness is the negative sentiment among other investors. The amount of gold in the SPDR Gold ETF recently fell to its lowest level in nearly nine months, and there is a large short position in the Comex gold market. Eventually, those shorts will have to cover, and when they do, it will produce a big rally.

The second bullish trend I’m seeing is increased money-printing by global central banks. The central banks of Europe, Great Britain, China and Australia, as well as parts of South America and Asia, are all trying to pump up their economies with liquidity injections and/or cuts to their benchmark interest rates.

All that money has to go somewhere, and I believe much of it will go into the gold market. In addition, the creation of paper money makes hard assets such as gold look that much more attractive.

The third bullish factor for gold is seasonality. Take a look at this chart and you’ll see that historically, gold performs much better in the second half of the year than the first.

There are a couple reasons for this discrepancy, including investment trends and festival seasons around the world, in which gold is a popular gift.

For all these reasons, I think gold could be in for a major rally. And gold mining stocks could be even bigger winners. They also tend to perform better during the second half of the year.

You can take advantage of this coming rally with the Market Vectors Gold Miners ETF, symbol GDX. Or you can take your chances with individual gold miners, some of which may post even more dramatic gains.

For Uncommon Wisdom Daily, this is Sean Brodrick. Thanks for watching.