Mechelany Advisors’ Investment Ideas are here to make our readers make profitable investments over different time-horizons. Our value oriented investment management style and research focuses on cheap companies with great and solid businesses to be held as core holdings in portfolios. We provide individual Investment ideas based on our multi-layered screening and valuation process combining structural, top-down macro, sectoral analysis, bottom-up stock selection and valuation analysis. Our Investment Ideas may be included in our Model Portfolio while some may not be included if they do not fit the global risk profile and asset allocation chosen at the time of selection.
Since August 2020 and after its peak at 2100, Gold has been in a relentless bear market that saw its price fall 20 % to 1680 in March 2021.
Gold prices are very dependent on inflation expectations on Ione hand a real interest rates on the other hand, as negative interest rates make them an attractive alternative to bonds or cash deposits.
AS CAN BE SEEN FROM THE CHART BELOW, THE PEAK IN GOLD PRICES AND THE BOTTOM IN BOND YIELDS ARE TOTALLY CORRELATED AND THE RISE IN 10 YEAR US TREASURY YIELDS FROM 0.50 % TO 1.75 % TOOK ITS TOLL ON THE SHINY METAL.
BUT BOND YIELDS ARE PEAKING, AND GOLD PRICES ARE BOTTMING OUT AT THE SAME TIME, SENDING A BUY SIGNAL ON THE LATTER WITH A BREAK OF THE DOWNTREND AFTER A CLEAR DOUBLE BOTTOM.
So time has probably come in our views to re-instate long positions in Gold for a trade, with a potential re-test of 1950 and maybe even the 2000 level.
BUY Wisdomtree GOLD 3X Leveraged ETF
3GOL LN @ USD 34.30
To trade the coming move in GOLD, we privilege using the Wisdomtree 3X leveraged Long on Gold at US$ 34.30
As can be seen on the chart below, the upside on this instrument is significant while a clear bottoming process has been confirmed …
We have added it to our MODEL PORTFOLIO today.
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