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ETF TRADING STRATEGY: DGP

Jul. 14, 2011 11:18 AM ETDGP, GLD, SPY, SLV, AGQ, UUP
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David Fry's Blog
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Today, two major news events caused a breakout in Gold. The first was Bernanke testifying before The House Banking and Finance Committee and giving a nod to additional stimulus (QE3). Secondly, Moody's saying that The US Triple A dept rating would not be downgraded if the debt ceiling was raised and budget cuts were implemented. This will basically force Congress and the White House to raise the debt ceiling quickly and work out their squabbles and political positioning later. It also gives that the all important "blameability" that they were "forced" to raise the debt ceiling to protect America's credit. The rhetoric that stopping payment of Social Security for the old people and pay for the Military should be quieted. Interesting that the first places the govt has to cut is old people and soldiers -- throwing the golf clubs in Air Force One at $58K per hour and congressional junkets and perks are off the table for failure of American credit. It's good to be king.

Yeah, it's crazy. The only way to protect credit on the debt that you can't pay is to borrow more money just to pay the interest on the money that you can't pay back. I think I'm going to call Visa tomorrow and tell them I don't have the money to make the minimum payment and see if they'll raise my credit limit and give me more money. Oh wait... I'm not a govt, I have to be rational and responsible. Never mind.

Anyway, for schmucks like us that can't borrow money on other people's account, it would almost be irresponsible not to have assets in Gold as currencies are being crushed -- The US Dollar on endless stimulus tricks and Ponzi schemes and the Euro on collapsing economies throughout the region. Upon analysis on the Precious Metals sector, PowerShares DB Double Long Gold (DGP) appears to be our best option in this sector. It is one of the most heavily traded of the Precious Metals ETFs/ETNs and leveraged for the best performance. This is a pure Gold position without Silver, Platinum or Palladium -- which are substantially more volatile than Gold.

Lets look at the Daily Chart of DGP year to date...

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