Gold and Health Care Stocks Get a Clean Bill of Health

By Frank Holmes

CEO and Chief Investment Officer
U.S. Global Investors

As I told MarketWatch yesterday, $1,200 is an important threshold for gold miners because it helps increase profitability and spur production.  

The market move can be attributed not only to the Fear Trade—interest rate jitters and the Greek financial crisis—but also to the Love Trade. Heading into late June, the yellow metal has historically hit a trough and then rebounded on account of the approaching Indian festival and wedding seasons, a traditional time for gold gift-giving. I mentioned in a Frank Talk this week that in all but two of the past 27 years, gold and gold equities enjoyed a late summer rally, and that between 2001 and 2014, the metal posted an average 14.9-percent gain between midsummer and mid-autumn.

At the same time, it’s important for investors to keep in mind that gold has its own DNA of volatility. For the 12-month period over the last 10 years, gold’s volatility has been plus or minus 19 percent.

Other factors that could be influencing gold markets right now are China and, believe it or not, the State of Texas. The Asian giant is buying massive amounts of the metal to back the renminbi, which it purportedly wants to elevate to a world-class reserve currency. Similarly, Texas will be bringing home between $650 million and $1 billion worth of bullion from the Federal Reserve, as it’s in the early stages of creating the first state-run gold depository.