As I’ve written about in the past, I’m extremely bullish on the medium-term trajectory for precious metals in general and gold in particular.
In this article, I’m going to discuss one excellent way investors looking to gain exposure to gold, assuming a similar bullish position to gold and other inflation/currency hedge needs, can do so in an exchange traded fund (ETF) vehicle.
The VanEck Jr. Gold Miners ETF (TSX:GDXJ) has been a top pick of mine for investors looking for maximum leverage to gold prices, for a few reasons. The junior gold space, for one, is more sensitive to gold prices, as the value of new discoveries tend to increase substantially when gold prices are rising.
Properties with old deposits that may be uneconomical or marginally profitable at $1,700 U.S. per ounce may be wildly profitable at $2,000 U.S./oz, making the junior gold companies that typically engage in the drilling, exploration and early stage development of such mines much more valuable.
Junior miners carry inherently higher levels of risk, and significant downside potential does exist for investors in scenarios where gold prices decline. That said, given the amount of stimulus being pumped into the market by the Federal Reserve, I expect U.S. dollar devaluation to result, providing a near-term floor for gold prices and a bullish outlook even in a low inflation environment for gold investors.
Invest wisely, my friends
