A week ago, the price of gold broke out to a three-month high of $916.30. For the week ending Thursday, Jan. 29, the spot price of gold rose 6% to $908.65. The move to gold for wealth preservation shows a lack of faith in the future value of the U.S. dollar and other currencies. That's happening as governments worldwide rev up their printing presses to spend billions of dollars to stimulate their flagging economies.
In comments from the World Economic Forum in Davos, Switzerland, Barrick Gold (ABX) Chairman Peter Munk predicts gold will top $1,000 an ounce this year as frightened investors seek protection from uncertain markets. A trade above $1,032.70 would break the high point set on March 21, 2008.
For the five trading days under review, the average precious metals fund we track gained 6.7%, excluding inverse funds that sell short metals miners or futures contracts linked to gold bullion.
Demand for gold as an investment has never been higher, with the SPDR Gold Trust (GLD) setting a new record of 843.6 metric tons of gold in their bank vaults. The more cash invested in the SPDR Gold Trust, the more gold bullion bars this fund buys and stores.The best-performing precious metals funds were closely tied or leveraged to the price of gold, with E-TRACS UBS Bloomberg CMCI Gold ETN (UBG) topping the list at a 14.95% return for the period. PowerShares DB Gold Double Long ETN (DGP) did nearly as well at 12.67%. At 150% leveraged to the mining shares in the Dow Jones Precious Metals Index, the ProFunds Precious Metals UltraSector ProFund (PMPIX) jumped 12.54%.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV