After you receive this Alert we will buy 212 shares of the SPDR Gold Trust ETF ( GLD) at approximately 163 per share. This will start us off at a 1% position, as we bring the name out of the Bullpen and into the portfolio.
Gold has been on our radar screen for months due to the rise in global inflation. After a stellar rise earlier in the year the yellow metal has taken a backseat to the U.S. dollar for most of 2022.
The strong dollar is a consequence of other weak currencies around the world, specifically the euro and yen. Gold is a good resource against fiat (paper currencies not backed by assets) currency, inflation and uncertain times/events (like wars).
Curiously, the metal has not rallied much since the spring but we believe it is time for gold to shine. Demand for gold remains robust around the world.
From a technical view, the weekly chart of GLD is constructive here, with the ETF having started a rally off the lower trend line. Admittedly, GLD volume has tapered off a bit and is not catching much interest, but a move above the $170 level (50-week moving average) is likely going to stoke a nice rally up near the $179 area.
Money flow is poor but the relative Strength Index (RSI) is starting to get moving here. We'll be looking for the candles in place to change from purple to pink, which would give us another chance to buy more GLD.
As we begin our position here, we rate the stock a One, with price target of $200.