With Gold Prices Off Highs, Is It Time To Buy Or Dump Gold Stocks And ETFs?

Gold stocks may hold a valuable place in an investor's portfolio, especially in times of high inflation and economic uncertainty. As gold prices have retreated, investors may want to wait for a breakout in the S&P Gold Shares ETF (GLD) to gain exposure to gold.

Gold provides a natural hedge against inflation and is seen as a safe-haven investment during downturns in the economy. Many investors believe gold still has a place in long-term portfolios, although the metal has gone through long slumps.

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Many gold stocks and ETFs started to rally on March 1.

Gold stocks are have fallen from their October peak. GLD Shares climbed to a record high on Oct. 30, before starting a retreat that has resulted in the stock forming a flat base with a 257.71 buy point.

Gold prices went on a run starting March and reached a high of $2,788.54 an ounce Oct. 30. Gold futures climbed 26% in 2024.

That performance beat the S&P 500's 23% gain in 2024. Gold futures have gained about 48% since their Oct. 6, 2023, low.

Why Gold Prices Are Easing

Gold prices have wavered since November, possibly due to a stronger U.S. dollar and rising Treasury yields.

Further interest-rate cuts from the Federal Reserve should lift gold prices, but fewer rate cuts are now expected.

And investors are awaiting what new policies stem from the upcoming Trump administration.

Gold can also be a buffer against a bear market or in the case of an international crisis. The Russia-Ukraine and Israel-Hamas wars are examples.

Gold Prices: A Way To Gain Exposure

The GLD ETF is not the same as gold mining stocks, which can be volatile. The ETF aims to match the performance of the price of gold bullion, as quoted in London.

A gold ETF like GLD is only one way to gain exposure to gold.

Another way is by investing in mining stocks like Barrick Gold (GOLD) or Franco-Nevada (FNV). Barrick Gold is acting weakly while Franco-Nevada is improving.

Barrick stock lost 14% in 2024. The company missed third-quarter earnings and sales estimates on Nov. 7, adding to its sell-off.

And Franco-Nevada is forming the right side of a cup base with a 137.60 buy point. The stock reclaimed its 50- and 200-day moving averages Tuesday — a positive sign.

Other ETFs that invest in gold bullion include the iShares Gold Trust ETF (IAU), SPDR Gold MiniShares Trust (GLDM) and Aberdeen Standard Physical Gold Shares (SGOL). Their charts look nearly identical to GLD and they are in flat bases.

How To Read Stock Charts

Other Gold ETFs Can Help

It's also possible to invest in any of the other ETFs that hold gold as one of many precious metals. Examples include U.S. Global Gold & Precious Metals (GOAU) and Aberdeen Precious Metals Basket (GLTR).

You can also hold a gold ETF that invests in gold mining stocks, such as iShares MSCI Global Gold Miners (RING) or the leveraged Direxion Gold Miners Bull 2X (NUGT), which leverages a gold mining index. Results among gold ETFs have varied during the gold rally, ranging from a more than 25% gain to an 50% gain since March 1.

When trading gold as a commodity, there are several costs involved through the exchanges themselves or through brokers. By investing in mining stocks, investors have to keep in mind that they're investing in a corporation, which requires paying attention to fundamentals and technical analysis and knowing what other products the mining company is invested in.

A Hedge Against The Rest Of Your Portfolio?

In terms of investing in other ETFs that invest in gold bullion, investors have to take liquidity into account. With thinly traded funds, it can be difficult to perform chart analysis. Only IAU, with around $33 billion, comes even remotely close to the $74 billion in market capitalization that GLD has.

Volume has been mostly lower-than-average recently, with NUGT trading an average daily volume of more than 1.9 million shares, while SGOL trades more than 3.9 million and GLDM sees more than 2.8 million shares per day.

If your goal is to invest in gold as a hedge against the rest of your portfolio, or as a tactical investment, then GLD may be a wise choice.

If, however, your interest is to follow the technical signals of GLD's chart, there are indeed good times to buy or avoid the S&P Gold Shares ETF.

Chart Analysis Of Gold Prices

Gold prices have been flattening, causing gold stocks and ETFs to also level out. The GLD EFT pulled back from its record high reached in late October.

Shares are in a flat base with a 257.71 buy point, but most of the base has below the 50-day moving average, a sign of weakness.

The S&P Gold Shares ETF holds a 79 out of a best-possible 99 Relative Strength Rating. As a commodity ETF, it has no earnings and also doesn't pay dividends. GLD has a weak IBD Accumulation/Distribution Rating of D.

S&P Gold Shares can also be used to buy or sell options to generate income. That can be achieved with covered-call options, for example. Gold can be unattractive for income investors because it doesn't have a dividend payment. But using GLD options can enable investors to generate income.

Are Gold Stocks A Buy Or A Sell?

With many leading stocks pulling back from highs, the gold sector is one to watch.

And exchange traded funds GLD, GLDM, BAR, IAU and SGOL are all in flat bases and testing their 50-day lines, so they are not actionable right now. It is a not time to buy gold ETFs and gold stocks. But investors with robust gains may want to take some profits.

And for the best stocks to buy or watch, check out IBD Stock Lists and other IBD content, such as how to find the best ETFs.

Follow Kimberley Koenig for more stock market news on X, the platform formerly known as Twitter, @IBD_KKoenig.

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