So this is the one that got away. Gold. First, gold makes me nervous because of how volatile it can be, and how much you can lose in a day, an hour, or a minute. That being said, that does not mean we shouldn’t try and play the gold market. Using the aforementioned strategy, we should still be able to realize a profit. Looking anywhere on the graph when the price crosses the trend line, we see a general trend in that direction. At the beginning of the year we saw a big run followed by a small dip and then another run. The most recent cross has gold going lower, with a spike up followed by a continued decline in prices. Using hard stops, there would be no reason we couldn’t make money here. The question would be, does gold fit our strategy at the moment. The price of gold peaked a few years ago around $1,800 per ounce, however, now it is sitting at a relatively average price (if not a higher than average price). The bet would be gold will continue to decline, but that is all it is (a bet). I want to point out to that gold isn’t a bet against the economy like some people think, it actually tends to trend with the economy relatively speaking, but is viewed rather as an inflation hedge. I won’t be making any gold buys now, but if it crosses that line I would think long and hard about it. Lastly, I am tagging the Motley Fool in this post, I want to get their opinion on commodity trading and the trend strategy (note: I fully understand what the Fools do and commodity trading do not really go hand in hand, but I would still like feedback). I listen to their podcast daily, and I think they have great commentary. They also do a lot of great recap of the daily news, but I want to hear more about predictions. It would be interesting to have a whole episode dedicated to stocks they own and why (maybe something other than Disney, Under Armor, and Amazon), and where they think prices will go. Followed by an episode a year later with the results of their predictions.
