SPDR Gold Trust (NYSE:GLD) is one stock that everyone run’s towards in the time of panic.
Gold acts as a safety trade when investors panic, as well as a hedge against inflation. We haven’t seen inflation for a long-while (despite the Fed’s best efforts), but we are seeing signs of fear.
Yesterday’s market saw stocks, gold, and bonds higher. One of those is wrong. Those three don’t trade together in tandem for long. Looking at the GLD chart, it looks ready for another leg up.
GLD Hourly Chart
A technical trader can easily forsee a bullish chart. You have a series of higher lows to start with. Then you have the 200-period moving average acting as support as it moves higher. Lastly, you have GLD move up yesterday and then go straight sideways with no sell-off, even as equities rallied.
The market may or may not crash out. With elections this year, we’re in for some volatility. That’s why I don’t mind trading GLD higher and higher. The implied volatility is pretty high. So, selling put credit spreads is always worthwhile. On the flip side, buying calls is an option. However, I’d wait for it to pull back to the 200-period moving average again (if it does).
This is a trade that I can play over and over through a series of months since I expect gold to be bullish throughout the year. It just becomes a matter of picking my spots and my setups that present the most favorable opportunities.