Trade to Win: Proven Strategies to Make Money

Chapter 14. Going for the Gold

In 2003, gold began a bullish run that has been sustained for more than four years. I have been bullish on the shiny metal since I spoke to a group of traders and investors in Vegas that year. Up to that time, I had not traded gold for 12 years because I did not see the right play. At the time of this writing, I am long hard metals—not futures. I may day trade futures but my long-term play is with the actual product. The chart in Figure 14.1 tells the gold story. Prices have made a steady move upward over the course of many years. Like all markets, there have been periods of consolidation and short, brief corrections, but the overall trend has been unquestionably up, as Figure 14.1 clearly depicts.

Gold is traded at the Chicago Mercantile Exchange (CME) Group and the Commodity Exchange (COMEX). At the CME, trading begins at 6:16 pm and continues until 4:00 pm the following day. Like the S&P 500 E-mini contract, mini gold is totally electronic. A big gold contract is traded at the COMEX from 9:30 am until 1:30 pm and trading is conducted in an open outcry pit. At the CME Group, the symbol for mini gold is YG and for the big contract it is ZG. Gold moves in 10-point increments; that is, there are 10 ticks per dollar of movement. Each tick of the mini contract is valued at $3.32 or $33.20 per point of movement. Each tick of the big contract is valued at $10, and the value of a point of movement is $100.

When I am trading gold, I watch the precious metals ...