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Move over, Solid Gold dancers! Brush down your teased-out 1980s hair, and watch as solid gold teaches you some modern dance moves.
Gold futures boogied their way across the $1,300 mark today for the first time in history, notching another key landmark in its rhythmic march into the fold of the world's most legendary bull markets.
Fools are likely to be basking in gains from their precious dance partners. Holders of the popular SPDR Gold Trust ETF (NYSE: GLD ) have tacked on a further 18% so far in 2010, while gains from quality miners like Newmont Mining (NYSE: NEM ) or recent junior bloomer Aurizon Mines (AMEX: AZK ) have at last yielded the sort of leverage to gold price gains that mining investors have long pined for.
Given the disappointing challenges identified by Newmont during the ramp-up of its key Boddington mine in Australia, however, investors might do well to consider locking in some gains in this recent highflier. Newmont has handily outperformed the shares of rivals Goldcorp (NYSE: GG ) and Barrick Gold (NYSE: ABX ) throughout the trailing 12-months, and until we have confirmation that Boddington will make good on some lofty expectations, Fools might do well to consider whether alternate gold vehicles may be more apt to sustain that momentum for the near term.
In terms of the broader investment strategy for gold, I continue to urge Fools to maintain their exposure even in the face of these fresh highs. A disciplined focus upon the long-term fundamental picture is paramount to successful gold investment. Traders may dance around their speculative predictions of whether gold will pause near current levels or break convincingly through this psychological $1,300 barrier, but I believe the greater danger in a bull market of this magnitude is to miss out on the biggest upside moves of the cycle.
The U.S. dollar, as usual, provides much of the context for gold's broader moves. And this week, the death knell for the dollar has sounded. Back in May 2009, I pointed to the 80-level on the U.S. dollar index (USDX) as a critical pivot point between a dollar on life support and a dollar in full-blown crisis mode. When the index fell back below 80 this week following the Federal Reserve's dovish comments, currency trader Dan Norcini correctly identified the development as signaling the inception of a currency crisis.
Whether gold dances its way immediately through this $1,300 level and leads investors on a celebratory conga line to $1,500 or higher, or pauses briefly near present levels to gain further strength, will likely be determined by the dollar's ability or inability to regain the 80-level after a nasty decline Friday to beneath 79.50. For the disciplined Fool with an incorruptibly long-term perspective, however, such near-term dynamics are little more than a source of informative entertainment. The trend is your friend, so remain long and strong.