Good article about gold and related trading methods. The blog was posted on 3/28/08, when gold price just came off the peak recorded on 3/14/08.
http://caps.fool.com/Blogs/ViewPost.aspx?bpid=43223&t=01009900444600847326
So, is it over, is it not? What happened today? And how can you invest/trade in it? The unbelievable bull in Gold finally stumbled a week ago when in reaction to the Fed lowering rates, gold prices went nowhere. Standard response to every Fed rate cut has been: sinking dollar, rising gold. When gold didn't immediately rocket up and instead the dollar seemed to strengthen many folks were spooked out. Could it be that all the Fed's future cuts were priced in? Or with recently announced international bank actions, had Bernanke persuaded Europe and others to lower rates?
It's still unclear as to whether "all the Fed rate cuts" are priced into Gold, but clearly not all foreign banks have agreed to follow us down. The European Central Bank once again chose not to lower rates. Today the President of the ECB, Jean-Claude Trichet, reiterated that he is more concerned about inflation than growth. The ECB's move was a small hit to the dollar, and another boost to Gold. BTW, I've linked it before, but if you have an interest in the ECB and an international bankers take on the world, Trichet always gives a nice long statement, and holds a question and answer session. All is available on the ECB website here.
There are plenty of folks making the argument for a long-term bull case for gold, but I think we're going to continue to see some weakness for at least a few months. The whole Gold bull / Gold bear thing is too exciting and volatile for me to work with in my personal portfolio. But I've been building a big set of Gold bear picks in CAPS. It's a little risky, but it's just CAPS and will move me nicely up if it works because it's quite the contrarian play (most of the top players are long gold).
For real-life or CAPS, you can go with etf's or individual miners. The main etf's for gold are GLD and IAU. The etf for gold miners is GDX. There are a few brand new etf's that are ultra long and ultra short of Gold, so you can do that too. DGP is the ultra long etf, offering twice the monthly return of the index. DGZ is the short etf. If you're trading in an account where you can't go short - a short etf let's you go long to go short. And DZZ is the ultra short - twice the inverse of the gold index. These new etf's only came out the end of February and the press release with further information is here.
If you want to grab a list of miners, one quick way to do that is to look at the tag "gold" in CAPS. Here are all the stocks tagged with "gold" in CAPS: gold tagged stocks.
I also like to look at sectors in Google Finance and Yahoo Finance. The G!Finance sector page gives you the top news, the top movers, and let's you sort by market cap, %up/%down, and many others. Here's the G!Finance page for gold. The Y!Finance sector page for gold is organized a little differently - also worth a look if you're mining for info. Here's the Y!F gold page.
Oh, and last but not least, if you want to check the real time Gold price as it's traded around the world - check out Kitco's site. 24hour gold price.
