Gold Giving Investors a Wild Ride

Investing in gold using a stock-like exchange-traded fund.
5:40 | 12/03/14

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Transcript for Gold Giving Investors a Wild Ride
That happened new York and has the financial markets close in on Wall Street for the Wednesday December 3 this is story stock. Last month the goal he known as the GO LD celebrities and anniversaries of the penetrate security. It's up over 150%. Since then it is hit though some hard times since hitting a peak in September 2011 down nearly 35%. Citing nearly 5% in the last three months so the question is why. Here hope that with some answers JC corrects an Eagle Lake capital JC thanks for you with us. Gold monster move a couple of years back and it's now retreated what's happening. Yet we had a huge mold after the bottom 19992001. Really nice bottoming process after a huge decline bottomed out front 250 box and a over the next. 101112 years really rallied up to over 19100 aisles over 650%. Move. And really that coincided that bottom in gold at the turn of the century. Coincided with a top in the US dollar could armor precious metals are denominated in US dollars. With the key catalysts in my opinion and then what happened at the top and are in 2011 when all the medals peaked. The US dollar bottom and has really been rally heart ever sense actually making ours today so that puts a lot of downside pressure in medals absolutely. A lot of pressure downside they're both so technically speaking what's next for gold permit traders viewpoint. Shorts I think it's important to really defying you know who you are as an investor you more tactical trader and more short term orient later you would longer term. I think short term you know really what the volatility that we've seen over the last week. I think perhaps the near term bottom you'll really might be in place maid you got about a hundred points to the upside something like that we do a lot of sentiment analysis and right now you know we really are approaching historic extremes in terms of bearish sentiment. Dot could be one of the catalyst to kinda lift it up a little bit but when he take a step back and you really look at precious metals from structural standpoint. I don't see any evidence yet that a new structural bull market it began last week I just don't see it. Particularly with the monster break out that we're seeing in the dollar I find it very hard to believe that we're gonna get a sustained a multiyear rally opera precious metals. Particularly gold so I would stick to what a little more tactically for now. Okay so that we'll given that that is a makes sense then for investors to own gold via the GO the sure arm you know the correlations are extremely positive obviously tries to mirror. Deed the action in gold itself. The expense ratio is very minimal soul for retail investor out there you know if you want to have exposure teen gold. Owning GLD is very liquid easy to buy himself so I don't know any better way to do it omelet in terms of an investor going out there and buy gold regardless of the other vehicle what you want to use in this case we're talking about GOP again structurally I just don't see a historic bottom taking place last week. I'm I think more time is necessary and I think you give a longer term view. Are you can be patient. It's not about metals palladium. Sky oftentimes a very little known metal what's going on with that right now. Right so we talk about gold and silver these are really precious metals palladium has more industrial uses and is really the best of the group without a doubt I mean just look year to date alone are palladium is up 12% with all the precious metals down silver I believe is down 15% year to date are gold is also bound platinum was down as well about 1012% so. Palladium Mike barn away when it comes to relative strength. Definitely the best of breed and take it back to 2012. You know since the summer according twelve get a historic bottom big time bottom a lot of medals are a lot of courage is vs the dollar. Since then you got gold down 45% silver down 40%. Palladium is up 40% so you really wanted to palladium and certainly want in any of the medals that's the one you know we'd like to position ourselves in some cases where were neutral particular market. You know will you buy one in short another. Buying palladium and shorting silver against it continues to work last week hit ten your highs and that ratio. Where you. Are searching for every dollar that of a palladium that your expose big you are short one dollar silver that ratio continues to work and I think it will continue to. In shorting essentially just basically saying that you believe that the prices going to drop when you own net that commodity. A warehouse less about copper because that's the basement hosted often time to a didn't hit the industrial production and really an overall economic movements what are we seeing for copper. Shore and you know we like to focus on really forward looking our markets you know the economy in the stock market. There's really no reliable correlation there I would argue that the price of copper in the behavior there. Really was would emerging markets not necessarily US stock sold. Particularly the brick nations Brazil Russia off. In the yard chiding up copper really moves hand in hand with those. And it's not a coincidence that both of them continue to struggle. You know copper is just not a metal that we want to own it continues to make new lows emerging markets continue to make those as well. If you look at the market in the world as a group when it comes to stocks are you really want to look at copper and emerging markets to gather I think that's really the key indicator. Keeping an eye on all things bunch of shiny chasing correct from eagle bay capital JC thanks so much have been Wednesday thanks for having. You go watch the story stock passed it would for latest headlines and Dan play in New York.

This transcript has been automatically generated and may not be 100% accurate.

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