Pairs Trading: The Best Way To Invest In Gold Today

 | Feb 25, 2018 01:49AM ET

I'm frequently asked about gold.

Over the years, it's been a great investment, but lately… (sigh).

Let's just say the shiny stuff has hardly lived up to expectations.

Part of that is due to the dynamics of the gold market itself, and part of that is due to the fascination with cryptocurrencies.

Let's talk about each of those things then move onto a great way – perhaps even the only way – to play gold today.

Gold has historically been driven by its relationship to inflationary expectations, to interest rates, and to physical supply. Generally speaking, gold prices move inversely to economic prosperity.

You can actually see that quite clearly when you compare the SPDR Gold Shares ETF (NYSE:GLD) to the S&P 500. Prices tracked almost in tandem from 2009 to mid-2012, then broke when investors finally decided that the post financial crisis recovery had teeth.