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Gold prices have been soaring and are currently trading around all-time highs. Many analysts attribute this move as a classic ‘flight to safety'.
Investors fear an outbreak of war in the Middle East so they have been buying gold. Historically, gold has rallied in times of geopolitical conflict and crisis.
But many who wish to buy gold don't.
They think that owning gold is complicated and risky. They believe that the only way they can get exposure to the metal is by buying gold coins or bars and hiding them in their house or putting them in a safe deposit box.
These investors are wrong.
There is a way to buy it that is just as easy as buying a stock. They can get exposure by owning the SPDR Gold Shares (NASDAQ:GLD). This ETF is designed to track the price of gold.
And now may be a logical time to get in.
Read Also: Barrick CEO On High Gold Prices, Why He Says The Miner Is Undervalued: ‘You Get A Lot For Free’
As you can see on the chart, GLD is testing resistance around the important $218 level. There's a good chance that it breaks this resistance and trades at new all-time highs.
Resistance means that at, or around this price, there is a large concentration of people who want to sell.
When a market is moving higher, there isn't enough supply or sell orders to fill all the demand or buy orders. People who wish to buy need to pay successively higher prices to attract sellers.
But when a market reaches a resistance level, the dynamic changes. There is enough supply to fill all the demand. This is why rallies tend to pause and possibly even reverse when they reach them.
If the market breaks out or trades above the resistance, and given the current geopolitical concerns there is a good chance that gold does, it shows that this large group of sellers is gone. They are out of the way. They have either canceled or finished their orders.
And with no sellers around, buyers face a dilemma. They will be forced to pay higher prices to draw sellers into the market. This could force a new uptrend to form.
People who wish to buy gold don't need to take physical delivery of the metal. They can profit from moves higher in gold by owning the SPDR GLD ETF.
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Posted In: GLD
