If tensions between the U.S. and Iran escalate into a full-blown conflict, what should investors be buying? Jim Cramer laid out a wartime portfolio during Monday night's Mad Money program so investors can be prepared.
The first thing investors must have is cash, Cramer said, and lots of it. Cash provides some protection against losses but also provides the ability to be flexible. The second thing investors need in their portfolios is gold. Cramer recommended bullion or stocks like Barrick Gold (GOLD) or Agnico Eagle Mines (AEM) . He felt gold prices could soar to $2,000 an ounce. Let's check out some charts.
In this daily bar chart of GOLD, below, we can see that prices have been strong from June. Prices rallied to an August high followed by a cup and handle pattern/consolidation pattern. GOLD is above the rising 50-day moving average line and the rising 200-day moving average line, but a close above $20 is needed to refresh the uptrend and generate an upside breakout.
The daily On-Balance-Volume (OBV) line has quietly moved higher from September and the Moving Average Convergence Divergence (MACD) oscillator is in bullish territory above the zero line but narrowing towards a possible take profits sell signal.
In this weekly bar chart of GOLD, below, we can see that prices have broken out of a base pattern from early 2018 to the middle of 2019. Prices are above the rising 40-week moving average line.
The weekly OBV line has been moving higher from August of 2018 and it has made new highs recently. A rising OBV line tells us that buyers of a stock have been more aggressive. This tends to foreshadow higher prices.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line and poised to cross to the upside for a new outright buy signal.
In this weekly close only Point and Figure chart of GOLD, below, we can see a potential upside price target of $22 being projected. A trade at $22 should refresh the uptrend and precipitate even further gains in the months ahead.
In this daily bar chart of AEM, below, we can see that prices have been in a consolidation pattern since August. AEM is trading above the rising 50-day moving average line as well as the longer and rising 200-day moving average line.
The On-Balance-Volume (OBV) line has been steady to higher since late May and suggests that buyers of AEM have been more aggressive and prices should eventually trade higher.
The MACD oscillator is above the zero line and should turn higher (bullish) if prices rally from here.
In this weekly bar chart of AEM, below, we can see that prices have been strong since the summer of 2018 and the recent price action looks positive with a rising 40-week moving average line and a rising OBV line.
The longer-term MACD oscillator looks poised to turn to the upside.
In this weekly close only Point and Figure chart of AEM, below, we can see a potential upside price target of $74.
Bottom line strategy: No one really knows how things will play out between the U.S. and Iran but it looks like traders and investors have considered the long side of gold mining companies like GOLD and AEM.