Individual investors are lining up to buy gold bullion hand over fist. You can see it at gold dealers big and small. And that’s the primary reason why gold is up nearly 10% since late January, notes Sean Brodrick, editor of Wealth Wave.
How else do I know this is the start of something big? This surge in demand comes on top of last year’s. Last year was a great year for gold. Demand for bars and coins hit 1,124 tons in 2021, according to the World Gold Council — the highest in almost a decade.
Why is this happening? Gregor Gregersen, founder of Silver Bullion in Singapore, thinks he knows. Gregersen says his company saw gold and silver sales rise 235% in the first week following Russia's invasion, and demand has only intensified since.
Gregersen told Bloomberg, “Investors are thinking along the lines of a worst-case scenario with the war in Ukraine and are finding it prudent to buy physical safe-haven assets in a safe jurisdiction like Singapore.” But it's not just Singapore. From New York to London to Berlin, gold dealerships are reporting that customers are lining up for bullion.
And that’s why I know that — while gold has rallied — it has a lot more room to go. My short-term target on gold is $2,100. Longer term, I believe it’s going a lot higher than that. What do you think that will do to the share price of miners leveraged to the metal?
An easy way to find out is to buy the VanEck Vectors Junior Gold Miners ETF (GDXJ). It’s a basket of junior and mid-tier miners of gold and silver. Its top holdings include Pan American Silver (PAAS), Yamana Gold (AUY), SSR Mining (SSRM) and more. And the GDXJ is breaking out right now:
GDXJ is stepping higher along its 20-day moving average (MA). The 20-day MA is a dividing line for short-term bearish and bullishness. The GDXJ has stepped right up to overhead resistance around $47.50 and pushed through it.
The next stop for the GDXJ will probably be $61. What happens there? We’ll find out. Nothing travels in a straight line, but with the way gold is moving, that may be a short rest stop indeed.
