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I usually write to you as a trader, but I want to take a different approach today.
As Daily Price Action members know, I’ve liked XAUUSD higher since April 2020 when it was trading near $1,600.
And my bullish gold bias hasn’t changed.
But instead of treating it as a trade, I’ve favored investing in the junior gold miner stocks, which tend to follow gold’s trajectory.
For one, spot metals are off-limits in the US.
And two, buying mining stocks, especially the juniors, is similar to a leveraged bet without the margin.
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For instance, I started purchasing junior gold mining stocks on April 1st, 2020.
Since then, XAUUSD is up about 16%
The junior gold miners index (GDXJ), on the other hand, is up an impressive 75% despite its recent pullback.
I also have some futures exposure, but the mining stocks offer a way to outperform gold without any leverage.
All of this is just my opinion, as always, and is not financial advice.
The key takeaway here is that I prefer XAUUSD and the gold miners as a longer-term trade/investment with a minimum 12-month time horizon.
I think that’s the best way to navigate gold right now as it allows one to capture the upside potential without the headaches from false starts.
In the short-term, the $1,780 area is key support.
Critical resistance is near $1,930, which is the top of a potential bull flag.
XAUUSD buyers need to clear that $1,930 area on a daily closing basis to confirm the breakout and re-open the door to $2,075.