NEW YORK (TheStreet)-- Gold recently surged to a record high, driven primarily by strong fundamentals and the likelihood of price support from global expansionary monetary policies.
According to a recent Barron's article, nearly every central bank around the world is aimed at avoiding a too-strong currency and is considering an expansionary monetary policy and printing more currency to shore up their slumping economies and starve off deflation. As a result, the value of respective currencies will decline and push the price of gold up.
On Wednesday, Japan reported to intervene in the currency markets to curb the recent surge in the yen's value by dumping 1 trillion yen onto the market. Additionally, Chinese authorities continue resist a full appreciation of their undervalued currency and many believe that the Fed will further expand its balance sheet for its second round of quantitative easing. Lastly, in Europe, the European Central Bank is still dealing with the effects of the sovereign debt crisis and is trying to curb any threats of a relapse of the crisis.In addition to this global expansionary policy, gold is likely to see price support from the U.S. monetizing of debt, which is expected to result in inflation and a reduction in the purchasing power of the dollar. As previously noted, some easy ways to gain exposure to gold include:
- SPDR Gold Shares, the most actively traded gold ETF.
- PowerShares DB Gold Fund, which uses futures contracts to gain exposure to the precious metal
- Market Vectors Gold Miners ETF, which holds companies that are involved in mining of gold such as Barrick Gold Corp (ABX) and AngloGold Ashanti (AU).
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
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
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
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 + 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