GDX ETF

The price of gold has reached a fever pitch, breaking its record price almost forty times this year. Gold's most recent record highs saw the precious metal soaring to over $2,750 per ounce.

The rally in gold and gold miners, particularly the VanEck Gold Miners ETF, looks exhausted and may be due for a breather. The GDX ETF is highly concentrated, with Newmont Corporation making up 15% and the top five stocks comprising 44% of the fund. Momentum indicators for GDX and gold suggest potential intermediate tops, with RSI and PPO showing signs of weakening.

Since 2020, I've maintained a generally bullish stance on gold and silver, which I view as key hedges against growing systemic monetary system risks. These risks have escalated this year due to the recent devaluation of the Chinese Yuan and China's extreme economic measures, which have encouraged its population to buy gold and avoid real estate. Gold may be in a bubble today due to excess demand from China. However, its price is reasonable if the Federal Reserve makes a significant recessionary dovish pivot.

The VanEck Gold Miners ETF is up 24% YTD, driven by rising gold prices due to geopolitical tensions, central bank buying, and falling interest rates. Central banks' increased gold purchases, geopolitical instability, and potential interest rate cuts create a favorable environment for sustained gold price increases. Investing in GDX offers exposure to gold miners, which can amplify profits as gold prices rise, providing diversification and reduced risk.

The final trades of the day with CNBC's Brian Sullivan and the Fast Money traders.

Hedge funds are the most bearish on commodities prices in at least 13 years as fears of a deeper economic slowdown cast doubts on demand for everything from crude oil to metals and grains, according to a report by Bloomberg Meanwhile, WTI crude oil traded above $79 price per barrel.

GDX performance has lagged behind the price of Gold. GDX has also underperformed its top holdings. The current portfolio has a consensus upside potential of 12% and is valued at 10x PE or 0.4 PEG.

The final trades of the day with the Fast Money traders.

GDX has underperformed the S&P 500, but there are important caveats when judging short-term performance. Gold miners margins are now in a very good position to improve through the rest of 2024. Topline growth is also expected to remain high, while valuations do not seem to reflect that.