c14 JWBT016-Busby September 30, 2008 14:30 Printer: TBD
CHAPTER 14 Going for the Gold
I
n 2003, gold began a bullish run that has been sustained for more than
four years. I have been bullish on the shiny metal since I spoke to a
group of traders and investors in Vegas that year. Up to that time, I had
not traded gold for 12 years because I did not see the right play. At the
time of this writing, I am long hard metals—not futures. I may day trade fu-
tures but my long-term play is with the actual product. The chart in Figure
14.1 tells the gold story. Prices have made a steady move upward over the
course of many years. Like all markets, there have been periods of consol-
idation and short, brief corrections, but the overall trend has been unques-
tionably up, as Figure 14.1 clearly depicts.
Gold is traded at the Chicago Mercantile Exchange (CME) Group and
the Commodity Exchange (COMEX). At the CME, trading begins at 6:16PM
and continues until 4:00PMthe following day. Like the S&P 500 E-mini
contract, mini gold is totally electronic. A big gold contract is traded at the
COMEX from 9:30AMuntil 1:30PMand trading is conducted in an open
outcry pit. At the CME Group, the symbol for mini gold is YG and for the
big contract it is ZG. Gold moves in 10-point increments; that is, there are
10 ticks per dollar of movement. Each tick of the mini contract is valued
at $3.32 or $33.20 per point of movement. Each tick of the big contract is
valued at $10, and the value of a point of movement is $100.
When I am trading gold, I watch the precious metals complex. That is, I
watch movement on silver and platinum also. I want all three of these com-
modities moving in the same direction and confirming my play. If precious
metals as a group, are moving up, I may make a day-trade play, but I rarely
day trade gold.