Gold…The “Trade Of The Century”
One of last year’s best-performing hedge funds says the “trade of the century” is to buy gold and sell stocks as risk assets are due for another meltdown.
The consensus is pointing to a recession in 2020 or 2021, Tavi Costa, a global macro analyst at Crescat, said by phone. “We think it’s a lot closer than that and we have a number of macro timing indicators that we look at.”
Going long gold in yuan terms and shorting global equities currently explains three-quarters of the hedge fund’s strategy.
“We’re not perma-bears by any means,” Costa said. “This is a very tactical bearish view right now, and hopefully when the market turns, we want to also time the bull market at some point.”
Wow, the trade of the century. I was only expecting, go to get to $1700, although I have seen some folks out there calling for $5000.
If you agree with Tavi, that gold is going to move significantly higher, one way to play Gold is through the SPDR Gold Trust, GLD.
The investment objective of the Trust is to reflect the performance of the price of gold bullion by holding gold bars and issuing Baskets in exchange for deposits of gold and distributes gold in connection with redemptions of Baskets.
It only makes sense, when the Fed Powell told the world interest rate hikes were going to be put on hold, it became a risk on environment again. Thus, GLD has underperformed the SPY year to date. But as the economy continues to slow and Fed Powell begins lowering interest rates in the future, the US dollar and the US equity markets are going to fall and GLD is going to get the last laugh.
NOTE: Red line is SPY and blue line is GLD
So what can we expect from gold at the present time, lets go to charts to find out?
Monthly Chart (Curve Timeframe) - the monthly demand is at $109 and monthly supply is at $129.
Weekly Chart (Trend Timeframe) – the trend is sideways, but the current momentum is to the upside.
Daily Chart (Entry Timeframe) – the trade set-up was two weeks ago when price pulled back to the weekly demand at $121. If this is going to be the "trade of the century" the chart suggest to wait until price breaks the monthly supply first.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.