Investing is often about reverting to the mean. After one asset soars higher, another is likely out of favor. That will generally change as traders book profits in one area and look for a new trend underway.
A quiet trend has been going on with gold. Prices fell under $1,700 in early March, and have started to show some strength again. As investors look to alternatives to gold such as Bitcoin, the metal has gotten oversold, but is starting to move higher.
That’s a trend likely to continue to play out. Gold prices moved over $2,000 last year and remain about 15 percent off their highs. With other metals and commodities pushing higher, a continued rally in gold looks likely.
- Man Who Predicted 2008 Crash: “The Mother of All Crashes is Coming”
If you've watched the movie The Big Short,you've heard of Michael Burry. He was one of the few who no only predicated the 2008 crash but profited from it.
He made $750 million for his investors and $100 million personally when his bet against the housing market paid off. His next big prediction?
He's warning the "mother of all crashes" is coming.
If you have any money in the markets, I urge you to click here and get the exact day of the next stock market crash.
Action to take: Barrick Gold (GOLD) is one of the biggest and safest gold mining companies. Yet shares are down over 30 percent since November, and are closer to a 52-week low than a 52-week high. But since the start of March, they’ve started to trend higher.
Investors might want to start picking up shares here. At 15 times earnings, it’s an inexpensive bet on prices moving higher, and shares yield about 1.8 percent here.
For traders, the start of a new uptrend could result in better returns with a call option. The June $25 calls, trading for about $0.23, could deliver triple-digit returns on a jump higher in gold. If gold prices end up languishing, the loss is minimal.