c14 JWBT016-Busby September 30, 2008 14:30 Printer: TBD
140 STRATEGIES TO WIN
FIGURE 14.1 Gold prices as they have moved up. In 2003, the steady climb
began.Geof Smith, our chief instructor at DTI, is an avid gold trader. Geof
enjoys trading gold often and especially trades it in the wake of market-
moving news. That means that Geof has many opportunities to trade be-
cause gold is highly sensitive to economic news and prices will become
very active when economic data is reported. There is usually a big price
response to any information about inflation, recession, or deflation. The
reason for the extreme sensitivity of gold to news is that gold and precious
metals are deemed by many traders and investors to be a safe haven in time
of trouble. If other investments are heading south, they put their money in
gold for safekeeping. Gold is also very sensitive to inflation fears because
it is an international currency that is deemed by investors to hold its value.
Investors put their money here in an attempt to preserve the value of their
assets.
In 2003, gold was trading around $280 an ounce. At the time of this writ-
ing, gold is trading around $940 an ounce and is in a consolidation mode.
It has been as high as $1016 an ounce. In late March 2008, it made a new
high and immediately corrected to $876 an ounce. Since that tumble, it has
gained some ground.
Geof position trades gold. That is, he enjoys swing trading and holding
his trades for days, weeks, or even months if he is getting paid. Here is