Gold Is Surging – Here’s My Play

There is one thing that all investors should agree upon, the stock market does not like uncertainty. In times when uncertainty picks up for one reason or another, there is a clearly defined path that many investors follow almost every time. I’m referring to investors flocking to alternative asset classes that most view as lower-risk or “safe-havens” for capital. Now, of course, no investment comes without risk, but there are several asset classes that fall under this umbrella such as gold or highly rated bonds and Treasuries. After last week’s geopolitical unrest, interest in this group of assets has been rekindled in a big way! There are many ways that a trader could look to capitalize on this, but I am specifically locked in on the rising price of gold.

Now that further uncertainty has entered the picture due to ongoing military operations in the Middle East, we have likely not seen the end in gold’s rally quite yet! The current geopolitical tensions only add to a very strong bullish case for gold, which has been fueled by concerns about rising U.S. debt levels. Now, of course, one could look to play this trend by just owning gold, but often I prefer to instead look to trade one of the publicly traded gold merchants. The company I’m touching on today directly benefits when the price of gold rises as it goes straight to their bottom-line. The company I’m talking about is Royal Gold, Inc., symbol: (RGLD). Let me go ahead and show you what I’m seeing in this great looking chart!

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In this daily price chart for RGLD you can see where the clear ‘Buy’ signal for the stock began back in April ’24 and it is still intact to this day! The ‘Buy’ signal is indicated by our 50-Day EMA converging with our 100-Day EMA and crossing above it. As you can see, at present the 50-Day is still in this relationship with the 100-Day, indicating a healthy ‘Buy’ trend. This moving average trend confirmation is crucial to my trade selection strategy because I only want to target trades on equities that are in verified and durable uptrends. Looking at the RGLD chart, this is exactly what we have here, and I do not believe this stock’s rise is done quite yet.

Now that I have determined RGLD is a stock that I want to trade, the logical next question is “how would you want to gain exposure to this trade?” I often do purchase shares for the top stocks on my ‘Buy’ list. However, in this case as I have strong technical evidence of RGLD’s bullish trend and I am anticipating the stock to move higher, I would target this trade by purchasing an in the money call option on the stock. By setting up my trade in this manner, should the stock continue to trade higher as I expect it will do, my call option will also trade higher in tandem with the stock. In fact, there is one call if entered at current prices that offers a 99.5% profit potential should the stock increase by 10.0%. The is the kind of leverage I look to take advantage of by trading call options on my top ‘Buy’ signals!

Wishing You the Best in Investing Success,