SPDR Gold Trust Driven By Low Rates And Strong Momentum

On the other hand, in years such as 2015 and 2018, when the main trends in different asset classes were weak and short-lived, the strategy produced mediocre returns in comparison to the benchmark.

The strategy buys strong assets and sells weak assets. When market trends are strong, either up or down for risky assets, the strategy does a solid job in terms of capturing those trends. Conversely, when trends are weak, the strategy will tend to get hurt by false signals.

Importantly, these kinds of strategies are not only useful for investors who trade ETFs based on quantitative indicators. The strategy can provide actionable information in terms of evaluating the overall market environment and positioning your portfolio in the right sectors at the right time. The signals from the strategy can also be used to make discretionary investing decisions.

During the month of February, the strategy is allocated to SPDR Gold Trust as one of the top 3 ETFs in terms of risk-adjusted relative strength. This means that ETF is not only in an uptrend but also outperforming many other alternatives in the market.

Winning assets tend to keep on winning over time because investors looking to outperform the benchmarks gravitate towards the assets that are not only rising but also outperforming. Strong price behavior attracts more buyers, creating a self-sustaining cycle that has bullish implications for SPDR Gold Trust in the current environment.

When considering both the fundamental tailwind of negative interest rates and the bullish price behavior in recent months, SPDR Gold Trust has what it takes to continue delivering attractive returns going forward.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 

Disclaimer: I wrote this article myself, and it expresses my ...

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