Again with Gold!

 

On Oct 16^th, I wrote a blog regarding my bearish position on Gold.  Well…we have had a strong surge to the downside, but some recent activity is enticing me to look at some bullish gold trades.  Our price target on GLD on OCT 16^th was around $67-$69.  As we approach these levels, we need to take a look at how to profit. 

 

First, let’s take a look at a chart of the EURO currency, FXE.  I have overlaid the price of gold so that you can see the strong correlation.  The Euro is ready for an oversold bounce which will lend to a strengthening of gold.  You can play this with FXE calls if you so desire.

 

Second, the sell off in gold has been perpetuated by the deflationary economic environment.  While that is the short term environment we are in, we may soon enter a time where strong inflation concerns resurface due to the large amounts of money injected into the financial system and the continued interest rate cuts across the globe. 

 

My play on gold will be in the gold mining stock arena.  These stocks like ABX, AEM, GG, AUY, and NEM are beaten down tremendously.  GDX is the etf that allows you to play them all.  Take a look at a long term chart.  Keep an eye as any short term weakness in gold may prove to be a fabulous long term buy opportunity!

 

 

 

Happy  Trades,

Jeff