How to trade swings in the gold market

With the gold market so heavily long, there is money to be made by trading against the main trend. John C Burford demonstrates how with a recent trade.

There's no doubt about it; the gold market is capturing the attention of just about every investor out there - with articles appearing even in the popular financial press. And no wonder. As faith in the value of fiat currencies (that is, all of them) has declined in the last few years, gold's traditional role as the ultimate store of value has come to the fore (once again).

Of course, this degree of promotion has kept the bull market alive for many years. Here is the chart going back ten years showing the progress from $250 an ounce to the recent $1,400 level. Note there have been dips along the way (the most severe being the $350 drop in 2008). But the chart shows clearly the accelerating rise for the past two years.

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John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.