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

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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