c14 JWBT016-Busby September 30, 2008 14:30 Printer: TBD
Going for the Gold 143of weeks and cannot make a new high, expect a correction. If prices drop
$40 to $60 an ounce, it is a huge warning and they could go down as much
as $140 an ounce.
In the current market, as long as gold is above 772, I will be gener-
ally bullish. On October 31, 2007, gold hit a low of 772 following the Fed
announcement. Since that date, it has not been below that price.Review
Gold has been moving up steadily in price since 2003. Gold is an interna-
tional currency, and traders and investors around the world put cash into
gold when they fear the eroding power of inflation will devour their port-
folio value. Or, perhaps a major international crisis erupts that may upset
financial markets around the world, or traders fear that such an event is
imminent. Then they turn to gold as a safe haven where their investment
will be more secure than in other markets.
As a rule, I do not day trade gold. However, I often hold gold for the
long haul. Geof Smith, our chief instructor at DTI, is an avid gold trader.
He frequently trades the shiny metal and uses a swing-trade approach, in
which he holds gold for weeks or months. As long as he is making money,
he uses a trailing stop, locks in profits, and waits for payday.
As with all investment, respect risk first. Educate yourself about the
market and begin slowly. Until gold falls below 772 an ounce, the overall
picture is still bullish.