SPDR Gold ETF (GLD)

XGD-T vs HEP-T vs GLD-N. XGD-T is global, primarily Canadian gold stocks. HEP-T is based on futures contracts, a more pure play. GLD-N holds physical gold. Not bullish on gold, but will trade it seasonally.

It's a diversifier for an equity portfolio. Combination of lower rates and lower dollar means that gold will keep going. We can do 1600 on gold, just not sure of the timeframe.

He does not generally buy ETFs. Gold producers have a long history of messing up their own good fortune. There are often operational disconnects between the share price and bullion prices. He would prefer to play gold with GLD-N. He feels doing so creates a good hedge against other asset classes. If we head into recessionary pressures, holding GLD-N could play well. Don't hold more than 5-6% of your portfolio in gold.

Between July - October, gold strengthens. But he's not a gold bug at all. It's dead money, and a tax issue in the States. If there's a strong USD, then why buy gold? Maybe, just maybe, play gold as a very short-term play, but no more than that.

What influence does the US$ have on gold, and are the producers moving? There is a pretty strong correlation with the US $. When gold was strong, the dollar tends to be weak, and vice versa. At some point, all correlations kind of break. He expects to see some sort of bottom in bullion in December. The chart has been very choppy and has really been going nowhere, but some of the producers have been moving much higher. (See Top Picks.)

It is in a longer term upward trend. Seasonal strength is from July to Mid-October. This year we have seen a nice little pickup. Technically it looks good as well. There is a good chance that we will see it break the $300 level by Mid-October.

Gold through an ETF? The most popular way of doing this is through GLD-N, the big gold bullion ETF. If you are looking at buying underlying commodities, and you have a reason why you want to speculate on the commodity itself, don’t use an ETF structure. It is easier to use the futures market.

(A Top Pick Oct 3/16. Down 3%.) You have to own gold all the time. It’s a form of currency and a proxy to the US$, which he thinks is bottoming out. Has reduced his gold exposure materially, but always has some on.

(A Top Pick June 1/16. Down 4.71%.) President elect Trump is behind this. Gold was having a great run. He believed it was going to try $1600 when it was trading at $1280. He likes gold in here, because he thinks the markets are going to cool off a little, and the oversold gold sector might have a nice little pull back up again.

Gold had a pullback from $1350, and there was quite a bit of frothiness in the commodity itself in terms of the open interest. It is still quite elevated, but going into this quarter and the foreseeable future, this is something he just feels he has to own. He would typically trade gold through options. Feels this has to be a core in everybody’s portfolio.