Many investors are looking for safer ways to invest their money but do not want to sacrifice the opportunities for higher yields if, and when, market indicators show the economy getting back into shape. I currently have had a lot of success trading between Apple and Caterpillar but in order to survive this market I have currently allocated most of my cash into in the money calls for SPDR Gold Shares (NYSEARCA:GLD). Currently my strategy is a overweight hedge in GLD but I pull the trigger on the bear closes so that my securities can turn profits for my portfolio during a providing upswing.
With the economic uncertainty and lagging in both the United States and more chaotically in the EU with currencies causing huge concerns many investors have found some help in gold in creating a great hedging strategy for these huge downward swings. The better asset value to me about GLD is the pure play being independent of the miners and refiners, I would also prefer this over the Silver ETF SLV as the safety correlation is not as strong. Gold is on a tear driving over $1800 per troy ounce today. Gold investors feel comfortable as a safe haven and even on bull market days Gold does not follow suit by selling off the way one would theoretically occur. Gold is currently at the $1800 levels and as the uncertainty in both the United States and countries around the world will still act as a safety net that investors will look non security plays like the GLD ETF. Currency plays like the debt bundles in the eurozone give even more incentive for those to flee nominal currencies and turn to appealing real hard assets like gold and the Gold ETF and central gold trusts around the world.
Both JP Morgan and Goldman Sachs have increased forecasts for spot gold prices to $2,500 and $1,730 a troy ounce by year's end. A trend that I have enjoyed, however short lived it may be, is how the market responds going into weekends during these uncertain times and how increase in the money flow into GLD pushes the share price. I currently have been trading the GLD Oct 22 '11 Calls that have performed very well. With today's downturn and Gold's 30 point gain I have closed my gold positions only temporarily and will look to get back in during the next market rally. I will continue to do so until the volatility subsides, as no market strategy works continuously without adapting to different trends. Gold is currently a remarkable trend.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GLD over the next 72 hours.