Introducing New Gold ETF

Once Gold broke the $1000 resistance level, it has been on nothing but an upward trend. It has quickly broken the next two projections at $1080 and $1160. Gold will continue to go up as long as the dollar is weak. As dollar gains strength, Gold will lose steam and will go the reverse direction. But for now, Gold’s next target is at $1240. Investors should not be asking themselves if today is a good time to get into Gold. Instead, they should be asking themselves how they can buy Gold now.

The two ETFs, SPDR Gold (GLD) and Gold Miners ETF (GDX), have done very well, as Gold price continued to move upward. GDX has done better than GLD in 2009. GDX has gained 46% while GLD has gained 25%. However, there is now a new ETF that could serve you even better than the first two ETFs. It’s called Market Vectors Junior Gold Miners ETF (GDXJ). Unlike the other two ETFs, GDXJ provides exposure to junior gold miners. Since these junior gold miners markets are smaller, the potential for their growth is much higher compared to other Gold ETFs. The portfolio of GDXJ consists of 39 different junior gold miners. GDXJ will experience more volatility than GDX and GLD since many companies in the portfolio are still in early stage without much revenue. For short-term investors, GDXJ has a higher potential compared to GDX. For long-term investors, I do not recommend GDXJ due to higher volatility. Instead, GLD could be more attractive in your diversified portfolio.

I do not own GDXJ as of today. But, I plan to buy shares of GDXJ sometime this week as a short-term investment. I am confident that as Gold prices continue its movement upward, GDXJ will definitely reap the benefit.

What is an ETF?

An Exchange Traded Fund (ETF) is much like a mutual fund consisting of a group of stocks. Unlike the mutual fund, you can trade ETFs in the open stock market. Transactions related to mutual funds can only occur after the stock market closes. Since ETFs can be traded anytime while stock market is opened, there will be broker fees.

Dubai's Financial Concerns...

The S&P 500 index closed much lower last Friday as many investors exited their equity positions for more safe investments due to financial concerns in Dubai when it attempted to reschedule its $80+ billion debt. However, there was a quick pull back from the sell rally as shorts started to cover their early session losses, profiting their gain. It looks like there could be a steady opening on Monday but it could generate additional weakness in the market. Close below the 20-day moving average (1083) will mean we have seen the short-term top at 1102 area. But, if market rallies above at 1112 area in next week, then there is more upside left and it could continue to post higher levels. Keep in mine the next resistance level at 1103 and the next support level at 1083 as you make trade decisions next week.

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