Where to Put Your Gold Money Now That The Market Is Getting Nervous

By Douglas A. McIntyre Published Nov 20, 7:35AM EST

Quick Read

Gold’s surge to the 4100–4200 range was followed by a 20% correction, but renewed investor demand and central bank buying have helped prices rebound above 4100.
UBS maintains a short-term $4200 target, while Goldman Sachs (NYSE: GS) and Bank of America (NYSE: BAC) project gold could reach $5000 next year, citing strong global demand and rising geopolitical risk.
Investors hesitant to hold physical gold are opting for alternatives like the closed-end fund GGN and the SPDR Gold Shares ETF (NYSE: GLD) for easier exposure.

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Where to Put Your Gold Money Now That The Market Is Getting Nervous — © 24/7 Wall St

Watch the Video

When Lee asked me about the latest moves in gold, I told him the speed of the prior run still stood out. The metal sprinted toward the 4100 and 4200 range so quickly that many investors avoided buying simply because they felt they were chasing. Then the selling pressure hit. Gold dropped nearly twenty percent, falling back into the high 3900s before buyers stepped in again.

Why the Rally Restarted

Once Washington signaled that a government shutdown might be avoided, the tone in the market shifted. Investors who had been waiting for a pullback finally had an entry point. Lee reminded me that central banks in China, Japan and other regions buy gold consistently, often daily. That buying creates a natural floor when prices dip, and it helped gold recover back above 4100.

Price Targets and Institutional Views

Lee walked through the forecasts. UBS is looking for a move back to 4200 in the near term. Goldman Sachs and Bank of America see the possibility of 5000 dollars by the end of next year. Those calls assume ongoing geopolitical tension and steady central bank demand, which both of us agreed seem plausible given the current environment.

How to Own Gold Without Buying Bars

We also talked about the alternatives to physical gold. Lee mentioned GGN, a long running closed end fund managed by Mario Gabelli that blends oil and gas exposure with major gold miners such as Newmont (NYSE: NEM) | NEM Price Prediction and Barrick (NYSE: GOLD). It trades at a low price point and pays a monthly dividend, which makes it appealing for investors looking for income.

For investors who want direct exposure to gold without storing it, GLD offers a straightforward option. The fund holds physical gold and tracks the price closely, though it does not distribute dividends. Either approach gives investors a way to participate in the gold trade without buying bullion.

The Costco Surprise

Lee and I laughed about a report showing that gold bars at Costco were selling at prices below the spot rate after member discounts. It created an unexpected arbitrage opportunity for anyone willing to buy a bar while shopping for groceries. As we pointed out, if global tensions intensify, gold could move far beyond current targets and potentially test 6000 or 7000.

Transcript:

[00:00:04] Doug Mcintyre: Lee. I can’t figure out where gold is going, you know, there was this huge bull marketing gold, God, I mean it. Uh, it went up so fast, it was blinding. Uh, now people are worried that, you know, it may have, in essence, got out over its skis.

[00:00:21] Doug Mcintyre: A why is it moving, and B, where is it going?

[00:00:27] Lee Jackson: Yeah, you’re, you’re exactly right. And when we had the, the pullback recently where we had some pretty heavy selling, you know, gold was not, uh, escaping any of that action. And it was, it, after trading up to 4100, 4200, it got pushed back down in, in literally into correction territory.

[00:00:47] Lee Jackson: It was down like a quick 20% when it fell back to like 33950, 39 60. But boy, I’ll tell you one thing. The minute that the tables turned and that there was some indication that the government, you know, malfeasance is over and the shutdowns about to end if they finally sign it because it took ’em a while to get back to Washington apparently.

[00:01:12] Lee Jackson: But now the gold, gold has had a nice, uh, return rally. ’cause I think there was really a lot of people that were anxious to try to buy some gold, but they just were like, Ugh, can I chase this at 4,000 or 4,100 or 4,200? But the one thing that we’ve tried to remind people and we’ve suggested for years to all of our readers and, uh, people that watch our, our videos that you should always keep 5% of gold in there or 5% of some sort of combo of gold and, and, silver and, and, you know, other commodities like that. But now, you know, when investors got a chance to get back in, they pushed it back up well over the 4,100 level and, and UBS says they’re heading in on 4,200 and there’s two firms out there, I think Goldman Sachs is one, and I think V of A is the other one, they think Golds has a $5,000 target by the end of next year.

[00:02:07] Doug Mcintyre: Yeah, well if that’s true, you better. I would buy it now if you think it’s,

[00:02:11] Lee Jackson: Yeah, you may want to get a little bit. You know, the thing is, and we try to remind people of this too, central banks, especially in China, Japan, um, other countries, they are buying gold for their central bank every single day. And I’m sure when it dipped a little bit, they were real buyers.

[00:02:30] Lee Jackson: So you have kind of a natural support under it because of, of that kind of central bank buying, which helps a little bit. But again, it had gone up so much, so fast so far that, um, I think a lot of people, a, that were in early, decided to sell some, and B, the people that were late to the party decided to hold off.

[00:02:50] Lee Jackson: But, you know, everybody on Wall Street is, is reasonably bullish. And like I said, UBS has a short term, 4,200 target and two banks have 5,000 as a target.

[00:03:01] Doug Mcintyre: And you know, if people don’t wanna buy physical gold, there are alternatives to that. In terms of et, you know, if you don’t wanna buy gold Lee, what are a couple other ways you can basically get in on the Gold Trade?

[00:03:14] Lee Jackson: Well, one way is a good one. Mario Gabelli has run this little closed in fund for a million years and it didn’t do anything for a million years ’cause it was like 50% oil and gas and 50% gold. And the symbol on that is GGN. It’s, you know, it’s exchange traded fund it. It’s not very expensive. It’s about 480, 470 now, but it pays a really good dividend.

[00:03:37] Lee Jackson: And think about it, if you want an old gold, what better contrarian trade now is than buying oil and gas and every, it’s, you know, Gabelli’s got all the big names in there, you know, um, Exxon’s in there (NYSE: XOM), Chevron’s in there (NYSE: CVX), Conoco Phillips is in there (NYSE: COP). But then he is got all of the gold miners in there too, right?

[00:03:56] Lee Jackson: He’s got Newmont and he’s got Barrack and he is got all of those in there. And, and again, it not only does it pay like an 8% dividend or something like that, it pays it monthly. Oh, nice. Yeah. And so that’s simple GGN or, you know, you can always, uh, buy the, there is a way to buy physical gold without buying gold bars, although you can go, I saw an interesting thing.

[00:04:20] Lee Jackson: I saw a guy in, in a morning piece I got that said, you can literally go to Costco. and buy a gold bar there. Yeah. How much, you know, it’s like an, an ounce, I guess. Um. And after you get your discount and everything, it’s, it’s cheaper than the spot price. So you literally had, you were saying you have a gold arbitrage, at Costco next to the chickens.

[00:04:43] Lee Jackson: And so I was like, okay, that makes sense though. You could, you could have been up on it already, but, it’s gonna be interesting to see how it plays out because if we have any sort of, and the world seems to be teetering a little bit, and if anything goes wrong, you know, heck it go through 5,000 up to six or seven.

[00:05:01] Lee Jackson: If, oh yeah, we had something serious go wrong.

[00:05:04] Doug Mcintyre: If the world goes to hell, gold is gonna, gold’s gonna trade. Way. Way.

[00:05:08] Lee Jackson: Yeah. And, but again, another way, if you wanna own the physical gold, but not go to Costco or Port Knox and buy it, you can buy the, the uh, GLD fund.

[00:05:18] Doug Mcintyre: Yeah.

[00:05:19] Lee Jackson: Which holds physical gold. It doesn’t pay a dividend, but it actually holds physical gold.

[00:05:24] Lee Jackson: So that’s another way to play it. So

[00:05:27] Doug Mcintyre: I would say this in conclusion, if you think the world’s gonna go fall apart, short Palantir and go long gold.

[00:05:38] Lee Jackson: Yeah, that would be a good pair. There you go.

[00:05:40] Doug Mcintyre: That’d be your ultimate crazy pairs trade

[00:05:43] Doug Mcintyre: I’m sorry. That’s it. That’s my, that’s my pairing trade.

[00:05:47] Lee Jackson: Well, if you’re one of those people that is a doom and glooner, that’s, and that’s your ultimate trade. You know, that’s, that’s my trade. But the one thing you always gotta remember, you gotta know where to gold at. And, uh, if you haven’t seen that video, you gotta see it. So look for a wet of gold out and look for bars at Costco.

[00:06:03] Lee Jackson: Good.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.