With the price of gold showing no signs of rising, these Top Picks are aimed to make money from shorting the metal.
PowerShares DB Gold Short ETN (DGZ) or ProShares UltraShort Gold (GLL)
from Davenport Investment Management
SPDR Gold Trust (GLD), the largest gold ETF, has steadily shed gold for the entirety of this year. As it has done so, the price of gold has steadily declined. As I have written many times now, GLD is a proxy for Western-based investor interest in the metal. Simply put—that interest is drying up and withering.
The perma gold bulls keep coming up with one theory after another to try to convince themselves that it is only a matter of a short time before gold rockets higher. They are only fooling themselves. The current environment is simply not conducive to higher gold prices.
How much money has been lost by so many listening to the same worn out theories and failed predictions by the leaders of the gold bugs simply because they refuse to accept what the market is saying and instead lent their ears, and their hearts, to those who have led them astray.
The lesson remains the same—learn to read the charts and the heed only the voice of the markets. Nothing else matters!
Gold has been struggling to maintain its footing above the 50-day moving average for the last week or so. Additionally, it has been attracting selling above $1200. It is the same story as has been the case with this metal for much of the past year—fading to non-existent inflation worries, sinking commodity indices, a powerful US Dollar and a soaring equities market.
Simply put, gold is running out of reasons to sustain any move higher. It pays no yield, no dividend, etc. and thus must compete for money flows against those assets that do.
It is going to take some sort of unexpected geopolitical event or some sort of currency event somewhere to keep this market on any sort of upward trajectory. For now, it remains RANGE BOUND at a new and lower level.
Looking ahead into the next year, it seems that we can pretty much expect the same thing.
Gold could be stuck going nowhere for years depending on the economic conditions around the globe.
One can take advantage of the further drop in Gold by buying the 1x inverse ETF, PowerShares DB Gold Short ETN (DGZ) or the 2x inverse ETF, ProShares UltraShort Gold (GLL).
C. Douglas Davenport, Davenport Investment Management LLC, Atlanta GA. 404-474-4247, December 31, 2014