The Gold market has truly taken off in the past month. It has traded from $652.00 on August 17th up to $726.50 on September 14th. The Gold has rebounded and has been aided by higher energy prices and a weaker U.S. Dollar. Even with the ongoing Mortgage and Credit Industry debacle that caused many investors to liquidate their precious metals positions to cover margins in their Stock portfolios, the Gold has rallied over $70 in one month. I was able to take advantage of the rally by being long October bull call spreads. Despite having these positions as the market broke from the $680.00 level down to $652.00, I was able to ride out the storm.
The recent volatility has been very unbelievable. I believe traders love markets with volatility and heavy trading volume. During the market’s break from $680 down to $652 there was lots of volatility but the volume was small due to traders unwilling to trade the frantic markets. However on the way back up the volume increased helping to curb lots of the volatility. Using trading strategies involving spreads and options certainly takes the sting out of volatility, in my opinion.
I am totally convinced the best way to trade Gold is long term. I do trade my swing numbers on a daily basis but rarely do I take a naked Gold position overnight if I can avoid it. Doing research and forming a strategy is key to forming your market opinion. I prefer to put clients in low risk trades with good upside potential.
I believe there is plenty of upside opportunity in the Gold market and I am presently positioning clients in the Gold market appropriately. Never underestimate the power of trading using a protective hedge. My opinion is the same as I have said in the past, “spreaders and hedged traders are usually the most successful and are still around.”
If you would like to follow my swing numbers and opinions I offer a blog site that is a thirty second read: www.dalygoldreport.com .
Trade smart …
Manduca Trading LLC
There is a risk of loss in futures and futures options trading.