Last week, the price of gold spiked above $1,400 per ounce, a level that, according to Joe Foster, Portfolio Manager for the VanEck International Investors Gold Fund (INIVX), signals the beginning of a new bull market for gold.
In his latest Gold Market Update, released yesterday, Foster discussed the factors that have been driving gold’s price higher, including recent changes in the U.S. Federal Reserve’s outlook that increase the chances of future rate cuts, the European Central Bank’s comments from earlier this month signaling that further rate cuts may also be a possibility in Europe, falling U.S. Treasury rates and a declining U.S. dollar.
“We have talked frequently about the fundamental and technical importance of the $1,365 per ounce level for gold, which has roughly been the top of its trading range for the past six years,” writes Foster. “If gold holds above the $1,400 per ounce trading level over the course of this week, we believe there is a very good chance that this marks the beginning of a new gold bull market. Given the long-term technical support and fundamentals, this bull market is likely to last several years.”
“Gold stocks are trading at low valuations and many mid-tier and junior stocks are carrying deep discounts,” he adds. “If we are correct in calling for a stronger gold market, we expect the equities to significantly outperform bullion. Gold companies carry earnings leverage to rising gold prices that should receive an additional value boost as positive sentiment returns to the sector.”
Foster will be sharing his views and answering questions on a webinar live this Thursday, June 27 at 11:00 AM EDT.
VanEck’s tactical strategies are also bullish on gold and gold shares, with the largest allocation of the VanEck Vectors® Real Asset Allocation ETF (RAAX) currently being to gold. RAAX is a quantitatively driven real assets allocation strategy that invests across commodities, natural resources equities, REITS, MLPs and infrastructure.
Using a combination of macroeconomic/fundamental, technical, commodity price and sentiment indicators, RAAX seeks to objectively address key volatility considerations across real assets through the ability to tactically allocate to gold and cash. Since its inception, RAAX has averaged a 20% exposure to gold and was allocated entirely to cash and gold in late 2018, which helped it avoid the significant drawdown in commodities.
Learn more about RAAX here: https://www.vaneck.com/etf/equity/raax/overview
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You can lose money by investing in the International Investors Gold Fund (the “Fund”). Any investment in the Fund should be part of an overall investment program, not a complete program. The Fund is subject to the risks associated with concentrating its assets in the gold industry, which can be significantly affected by international economic, monetary and political developments. The Fund’s overall portfolio may decline in value due to developments specific to the gold industry. The Fund’s investments in foreign securities involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, or political, economic or social instability. The Fund is subject to risks associated with investments in Canadian issuers, commodities and commodity-linked derivatives, commodities and commodity-linked derivatives tax, gold-mining industry, derivatives, emerging market securities, foreign currency transactions, foreign securities, other investment companies, management, market, non-diversification, operational, regulatory, small and medium-capitalization companies and subsidiary risks.
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