As a result, McDonald said in a recent CNBC interview that gold miners are a “screaming buy” right now:
“The market’s going to push the Fed until the Fed breaks and doesn’t hike,” the strategist said Friday on CNBC’s “Trading Nation,” referring to the theory that a rise in volatility he expects to see will change the central bank’s plans.
When that happens, “gold miners will be the best place to be,” he added. “The risk reward even [in] the shorter term is quite good as the market is almost fully in the December hike camp. If those chances are to change to the downside, miners will be a great beneficiary.”
Why should investors pay attention to McDonald? Because his calls on the gold mining sector have been spot on this year — not once, but twice. Back in January, he called gold miners “the best trade in the world,” and the group surged over the following six months. Then in June, just prior to their recent top, he called miners “very overbought.”
Precious metals analyst Jordan Roy-Byrne agrees with McDonald as well. He wrote earlier this week that investors should “Continue to accumulate on weakness and don’t be afraid to exercise some patience as more buying opportunities will be ahead.”
The Market Vectors Gold Miners ETF (NYSE:GDX), which is the largest fund tracking gold equities, rose $0.43 (+1.84%) to $23.77 per share in Tuesday morning trading. Year-to-date, the GDX has gained 73.25%.
Meanwhile, the Market Vectors Junior Gold Miners ETF (NYSE:GDXJ), which tracks mid- and small-cap mining stocks, rose $0.92 (+2.38%) to $39.63 this morning. GDXJ has surged 106.3% since the start of the year, making it one of the very best performing non-leveraged ETFs of 2016.
Investors looking for further options in the gold mining sector should consult our Precious Metals ETFs page, which contains dozens of additional funds focused on gold and silver.