Wednesday, September 29, 2010

Gold and How to Play It

Gold has had a terrific run since 2008 and the financial meltdown.  Prices recently have hit over $1,300 and could be headed higher.  Gold has multiplied since 2000 which makes investors think that Gold still has room to run. Not to mention that it generally holds its value over the long term and overall is considered a safer security than bonds. This creates a bubble when everyone uses Gold as a "safe" security from stocks, bonds, etc.

Gold, recently is losing hold on an important support and could be headed lower.  Now, let me tell you that I am not necessarily a gold bear but rather a cautious trader who has seen disaster strike before.  Most obvious example is the Internet bubble burst of 2000.  Everyone piled into Internet stocks only to lose everything when the bubble burst. 

Ok, so I am cautious...how would I trade gold?
I would stick to the Gold Miners ETF (GDX) which has performed well this year, up 13%.  If you aren't into gold miners and want something that attempts to track the price of gold, I recommend the usual Gold Trust (GLD).  GLD is up 13% this year as well. 

My outlook on gold is lightly bullish.  I like gold but it has had a nice run and will eventually come down.  Now this is probably a longer term deal when gold will burst (3-5 years).  Until then, reap the benefits of gold!

**Keep a look out for October's Stock of the Month

Disclaimer: Invest Chief is not held accountable to any loses sustained by stocks recommended. It is always important to do your own research of the stock before you invest. These trades and ideas are the opinions of the crew of Invest Chief. Invest Chief receives absolutely no compensation from companies that are recommended. We are a private organization, dedicated to promoting financial well being and prosperity.

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