Time to Hedge – Get Your Gold On

As geopolitical tensions rise, a position in GLD could offset losses


SPDR Gold Shares (GLD) — This ETF made a bear market low on Dec. 31, closing 2013 out at $116 and rallying to a March 14 high above $133. GLD then settled down to form a bottom with a higher low near $120 on June 3.

Since then, the movement in this fund has been purely technical, as it topped at just under $130, and on Thursday, bounced from the conjunction of the 50-day and 200-day moving averages.

In my opinion, since gold has no earnings and pays no dividend, there is only one reason to own it, and that is as a hedge against inflation, geopolitical conflict or tough economic times.

With Ukraine in crisis and Israel invading Gaza, GLD jumped more than $2 on Thursday. A break from the current triangle with resistance at just under $130 could result in a quick move through the highs to about $140.

While allocating some of your portfolio (10% max) to gold may not make you rich, it could offset a portion of a serious decline. Traders should consider options on GLD for a quick move higher. But be prepared to cover when it looks like the geopolitical situation is calming down.

GLD Chart
Click to Enlarge

Chart Key

Article printed from InvestorPlace Media, http://investorplace.com/2014/07/trade-day-spdr-gold-shares-gld-2/.

©2017 InvestorPlace Media, LLC