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Gold is taking back its crown from bitcoin as best defensive play, strategist says

Gold is surging to two-year highs. But does the rally have legs?

Gold soared to two-year highs this week as uncertainty rattled the market. The bull run isn't over yet, says one strategist.

"I am a buyer. I really do like it," Boris Schlossberg, managing director of FX strategy at BK Asset Management, told CNBC's "Trading Nation" on Wednesday. It's "retaking its mantle as the key defensive asset against bitcoin, which has certainly suffered a lot over the last couple of months."

As of Thursday, gold, the traditional safe-haven asset, had risen just over 3 percent this year. It was down 0.72 percent on Thursday.

Bitcoin was seen as an emerging defensive play last year as money flowed into cryptocurrencies through 2017. Since hitting its all-time high in December, bitcoin has tumbled 60 percent. However, bitcoin surged Thursday morning to briefly trade above $8,000.

Gold's rise is not a new development, says Chris Verrone, head of technical analysis at Strategas Research Partners. In fact, its rally has been years in the making.

"This improvement in gold is now about 4 or 5 years old," Verrone told CNBC on Wednesday. "We have this big base that's been taking shape really since late 2012."

Gold prices found a bottom in early December 2015 after hitting a multiyear high in late 2012. Since that low, gold has surged 28 percent to trade at around $1,347 an ounce.

If gold can break above the next key level of resistance, it would be a big positive for gold prices, says Verrone.

"This $1,375 level is key. That's been resistance over the last couple of years," he said. "We ultimately think it does break out above that."

Gold has not seen $1,375 since mid-2016.

But Verrone says the fact gold continues to push higher in recent months is a positive sign a trend higher can continue and it can burst past its resistance level.

"What we notice here are the higher lows over the last two years so every time they've tried to sell gold it's come back," he said. "We think ultimately that means it breaks out."

One way to play the rally in gold is to invest in miners, says Schlossberg.

"Miners are probably the best way to trade it because the leverage here is going to be tremendous," Schlossberg said. "Even if they hedge some of their production going forward, the new higher prices are going to create much better earnings for them going forward."

Verrone names Newmont Mining as the sector stock likely to benefit from higher gold prices.

Newmont is "pushing right up against this $42 level," said Verrone. "We had these higher lows over the last year or so. We think that bodes well for the stock, we think it bodes well for the metal."

Newmont Mining shares reached above $41 a share on Wednesday, though settled below that level by the end of the session. It was at $40.64 before Thursday's opening bell. Its stock has not seen a move above $42 since late January.