Trading Gold

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Trading GoldTrading Gold

Trading gold is popular these days asTrading gold is popular these days as
both the Euro and US dollar are inboth the Euro and US dollar are in
jeopardy.jeopardy.

Gold has passed $1,700 an ounce andGold has passed $1,700 an ounce and
Bank of America Merrill Lynch hasBank of America Merrill Lynch has
raised its twelve month target priceraised its twelve month target price
to $2,000.to $2,000.

Before We Continue…Before We Continue…
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Forex Conspiracy ReportForex Conspiracy Report
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Remember that gold ended the 1990Remember that gold ended the 1990
at a little over $200 an ounce! Alsoat a little over $200 an ounce! Also
remember that gold peaked in 1980remember that gold peaked in 1980
at over $600 an ounce in 1980, fellat over $600 an ounce in 1980, fell
precipitously, and then went intoprecipitously, and then went into
hibernation for two decades.hibernation for two decades.

Trading gold, like trading otherTrading gold, like trading other
commodities, trading stocks, orcommodities, trading stocks, or
trading derivatives such as futurestrading derivatives such as futures
and options contracts requires bothand options contracts requires both
fundamental and technical analysisfundamental and technical analysis
to succeed.to succeed.

Although true gold bugs will say thatAlthough true gold bugs will say that
gold is the best and only investmentgold is the best and only investment
a look at gold prices tables over thea look at gold prices tables over the
years, shows us that gold advancesyears, shows us that gold advances
and gold declines.and gold declines.

It is with fundamental analysis of theIt is with fundamental analysis of the
factors that drive gold prices thatfactors that drive gold prices that
traders can anticipate long term goldtraders can anticipate long term gold
price movement.price movement.

It with technical analysis tools such asIt with technical analysis tools such as
Candlestick analysis that trading goldCandlestick analysis that trading gold
in the short term can becomein the short term can become
profitable.profitable.

Although buying gold bullion in 2000Although buying gold bullion in 2000
and holding it until would have beenand holding it until would have been
profitable there is more to investingprofitable there is more to investing
in and trading gold.in and trading gold.

Gold investing and gold trading canGold investing and gold trading can
take a number of forms.take a number of forms.

Gold futures are traded on the COMEX,Gold futures are traded on the COMEX,
the commodity division of the Newthe commodity division of the New
York Mercantile Exchange, NYMEX.York Mercantile Exchange, NYMEX.

Traders can profit from buying orTraders can profit from buying or
selling futures directly and they canselling futures directly and they can
profit from buying or selling optionsprofit from buying or selling options
on gold futures contracts.on gold futures contracts.

With gold having passed $1,700 anWith gold having passed $1,700 an
ounce and closing in on $1,800 anounce and closing in on $1,800 an
ounce COMEX gold futures trading isounce COMEX gold futures trading is
active.active.

In trading futures on gold bullion it isIn trading futures on gold bullion it is
rare for traders to hold their contractrare for traders to hold their contract
until expiration.until expiration.

Traders rarely if ever deliver or takeTraders rarely if ever deliver or take
delivery of physical gold.delivery of physical gold.

Rather they exit their futures contractRather they exit their futures contract
on or before the end of the contracton or before the end of the contract
period by executing the oppositeperiod by executing the opposite
trade, hopefully with a profit.trade, hopefully with a profit.

Gold exchange traded funds, ETF, areGold exchange traded funds, ETF, are
another possibilities for trading gold.another possibilities for trading gold.

The value of the ETF tracks the valueThe value of the ETF tracks the value
of gold bullion.of gold bullion.

Gold ETF shares trade like stocks.Gold ETF shares trade like stocks.

Traders can use Candlestick patternsTraders can use Candlestick patterns
to follow ETF prices as they wouldto follow ETF prices as they would
use Candlestick stock charts to followuse Candlestick stock charts to follow
ordinary stocks.ordinary stocks.

As with ordinary stocks traders canAs with ordinary stocks traders can
profit by buying options or sellingprofit by buying options or selling
options on Gold ETF.options on Gold ETF.

A means of leveraging capital inA means of leveraging capital in
trading gold is buying stocks andtrading gold is buying stocks and
selling stocks of gold miningselling stocks of gold mining
companies.companies.

Gold stocks commonly rise faster thanGold stocks commonly rise faster than
the price of gold in a rising market.the price of gold in a rising market.

They also fall faster in a falling market.They also fall faster in a falling market.

Options trading provides both leverageOptions trading provides both leverage
and management of investment riskand management of investment risk
in trading gold.in trading gold.

Buying puts or buying calls on goldBuying puts or buying calls on gold
futures, ETF, or mining stocks limitsfutures, ETF, or mining stocks limits
investment risk to the price of theinvestment risk to the price of the
options contract.options contract.

Of course options writers, commonlyOf course options writers, commonly
limited to large investment houses,limited to large investment houses,
can sustain substantial losses, whichcan sustain substantial losses, which
is why the business of writingis why the business of writing
options is often limited to largeoptions is often limited to large
institutional traders with very deepinstitutional traders with very deep
pockets.pockets.

With US interest rates near zero and aWith US interest rates near zero and a
solution to dealing with thesolution to dealing with the
monumental US debt still not in sightmonumental US debt still not in sight
trading gold is attractive.trading gold is attractive.

Smart traders will watch theSmart traders will watch the
fundamentals and can usefundamentals and can use
Candlestick chart formations inCandlestick chart formations in
profitably trading gold as goldprofitably trading gold as gold
bullion, ETF, mining stocks, options,bullion, ETF, mining stocks, options,
or futures.or futures.

Trading Gold

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