Long-term interest in gold has come out of the shadows, and the luster and allure are obvious with a move towards de-dollarization spreading around the globe.

But that’s just part of what’s driving gold higher.

If politicians in Washington do allow (or even seriously talk about) the U.S. Government defaulting on its debt, gold and gold miners will be some of the primary beneficiaries.

Consequently, since November 2022, SPDR Gold Trust (GLD) has gained 23.5% as investors have looked for ways to hedge inflation and rising interest rates.

Rather than targeting a single gold mining stock and taking on the risk associated with a single stock, I like VanEck Gold Miners ETF (GDX), which is an exchange-traded fund that seeks to replicate as closely as possible the price and yield performance of the NYSE Arca Gold Miners Index.

Because GDX holds a basket of 48 gold mining stocks, it has little single-company risk, but it still tracks the price momentum of gold miners, as a whole.

The top holdings in the portfolio include Newmont Corporation (NEM), Barrick Gold Corporation (GOLD), Franco-Nevada Corporation (FNV), Agnico Eagle Miners Ltd (AEM) and Wheaton Precious Metals Corporation (WPM) with weightings of 9.47%, 8.77%, 7.8%, 7.55% and 5.91%, respectively.

And the chart looks really good for a breakout.

Over the last year, the stock has experienced resistance twice, at approx. $33.00, once in June 2022 and then again in January 2023. And now, with gold miners catching a tailwind on surging gold prices, that same price (approx. $33.25) turned into support in late April 2023 and again last week.

I really like the technicals at this price!

I like buying-to-open the GDX June 23, 2023 $35/$36 Call Spread for $0.33 or less.

GDX closed as high as $35.87 on April 13, 2023, and at $35.69 on May 4, 2023, which is just below the $36.00 Call at the top of this spread. Any breakout to new highs should cause today’s recommendation to be fully in-the-money for an easy 200% profit in just 39 days.

— Shah Gilani

Source: Total Wealth