An Easy Trade to Make for Profits from Gold Price Volatility


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An Easy Trade to Make for Profits from Gold Price Volatility

GOLD & SILVER, OPTIONS, TECHNICAL ANALYSIS
 

There’s a lot to unpack when it comes to the current analysis of gold and precious metals. As you know, gold tends to be a safe-haven type of investment – something investors turn to when they don’t want their money associated with a certain company or government (bond/currency).

After the Financial Crisis of 2008-2009, gold became an extremely popular investment. For a few years there, it seemed like there was a gold-buying shop on every street corner. Gold was bid up, at least in part, by a massive amount of buying by central banks who wanted to back up their currencies with physical assets.

For the last several years though, gold and other precious metals have been trading at less elevated levels. Then again, with the February 5th meltdown, is it possible metals will become more valuable to investors?

Below is the chart of SPDR Gold Shares ETF (NYSE: GLD), one of the most popular ETFs out there and a very common method for investing in gold. You can see gold did spike during the market meltdown in early February, but has since come back down and is hanging out around the 50-day moving average.

Typically after periods of high volatility, investors start moving more of their portfolio to gold or other precious metals. Yet, in this case, gold lost its luster almost immediately after the market stabilized. Hence, while gold was still a quick buy during the crisis, it hasn’t been holding its own as a safety net after the fact.

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