Why we are buying Gold
Commodities had a big week last week as they enjoyed a falling $US and increasing tensions in Iran with gold rallying +4.3% and crude oil +9.4%.
MM believes gold is only just beginning its breakout to the upside with significantly higher levels appearing likely – we are bullish gold and its respective stocks.
Although both the iron ore and gold sectors have enjoyed stellar years we now prefer the precious metal stocks to the bulks on a relative basis.
Gold Chart
The chart below shows the NYSE “Gold Bug Index” which we believe is / has broken out with well over 50% upside, last week’s rally was a surge to be bought not faded in our opinion. NB: The NYSE Gold BUGS Index is a modified equal dollar weighted index of companies involved in gold mining. BUGS stands for Basket of Unhedged Gold Stock.
NYSE “Gold Bugs Index” Chart
