Gold & Silver Breaking Out?: Leverage with Double Long Gold ETN (DGP)

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 1

The following is analysis provided by exclusive to readers of SelfInvestors.  I completely agree with this analysis.  Breaking of bullish wedge formations/downtrends are taking place in the Gold & Silver ETFs.  Great post!


In our daily screens of stock charts exhibiting positive and negative MACD crossovers, The Correct Call recognized a trend too large to ignore. Our heads turned when we saw at least 25% of the upside candidates were Gold/Silver stocks and ETFs. As we have noted many times before, we are big believers in confirmation. When we see a disproportionate number of companies in the same sector all presenting the same "buy signal", we feel it is safe to say something is happening.

In these turbulent times it nice to find some water in the desert.

Investors worried about mounting losses can possibly stem the tide by adding Gold to their portfolio. According to a study titled "Is Gold a Hedge or a Safe Haven? An Analysis of Stocks, Bonds and Gold" by Dirk G. Baur and Brian M. Lucey, gold is an "ideal venue to park money during periods of uncertainty." Their analysis found that in the US, Gold and stock returns are negatively correlated and that Gold acts as a hedge at all times. That means when stocks go down, Gold usually goes up.

That’s good news for investors.

All of the Gold/Silver stock & ETF charts we reviewed look this iShares COMEX Gold Trust (IAU). Each has roughly a 6 week narrow trading range with yesterday’s MACD breakout.

Conservative investors should buy IAU, streetTRACKS Gold Trust (GLD) or iShares Silver Trust (SLV).

More aggressive investors might consider owning individual stocks or DB Gold Double Long ETN (DGP). DGP’s objective is to give its owners twice the return of Gold’s price changes. That means if Gold moves up 5%, investors can expect see a return of 10%.

The precious metal stocks with charts pointing the way up include:

    Barrick Gold Corp. (ABX) Apollo Gold Corp. (AGT) Pan American Silver Corp. (PAAS)

If we have made The Correct Call, we would expect investors to profit by 10% or more in the next 3-to-6 months owning Gold/Silver stocks and ETFs. (double that for DGP.)

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Comments on Gold & Silver Breaking Out?: Leverage with Double Long Gold ETN (DGP) »

[…] Gold as a long play was discussed here several days ago and it continues to be a top performer.  The iShares Gold Trust ETF (IAU) broke out of a downtrend and looks poised to test all time highs around 100 within the next few months.  If you missed out, be patient.. it should pull back and offer a better entry.  I have been playing gold with the Double Long ETN (DGP) and my top individual play is Yamana Gold (AUY) […]

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