Trade of the Day: VelocityShares 3X Long Gold ETN (NASDAQ:UGLD)

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One of the topics I get asked about frequently is gold. Everybody is interested in whether it’s an opportunity or not, especially in a world of currency questions and historically low interest rates.

My short answer is this: I’m more interested in stocks and exchanged-traded funds (ETFs) over time than I am parking a chunk of my money in gold, but I am interested in shorter-term trading opportunities when they make sense. We got that opportunity recently, and Hilary Kramer and I recommended a gold ETF to members of our ETF Trend Trader service.

If you think ETFs are boring, this was what’s called a leveraged ETF. It tracks the price of gold but at three times the velocity, so it can move. Leveraged ETFs like this are perfect for short-term trades because you can make your money fast and you can play an entire sector or subsector without having to pick one stock.

The gold ETF we recommended is VelocityShares 3X Long Gold ETN (NASDAQ:UGLD). Below is the chart when we got in. As you can see, UGLD had rallied for a month and then pulled back to its 50-day moving average (the orange line). When the ETF held above that level and confirmed it as strong support, we were able to build our position confident that downside risk was limited.UGLD

We believed that uncertainty surrounding the new Trump administration could remain a catalyst for gold to rally in the very near term. A little over a week later, Monday’s strength pushed it above $10, so we are now sitting on 11.5% gains in six trading days. But with the gold rally that’s taken place since December remaining intact and UGLD continuing to make higher lows and higher highs, we’re hanging on for further upside. Here’s the current chart as of Monday:UGLD2

There’s a good chance that gold has at least one more short-term pop in its future, so if you’re looking to make a few bucks quickly, UGLD as a leveraged ETF is worth a look. Since we caught the first part of the move off of support, we could likely use the next pop to lock in a nice profit.

Matthew McCall is founder and president of Penn Financial Group, an investment advisory firm. Matt also is Editor of FUTR Stocks and the ETF Bulletin. Earlier this year, Matt and Hilary Kramer teamed up on Breakout Stocks and ETF Trend Trader where Matt serves as the Co-Editor. Most recently, Matt and Hilary joined forces again. This time, they are helping individual investors make money trading ETFs. For more on their latest project, visit www.etfedgesummit.com.


Article printed from InvestorPlace Media, https://investorplace.com/moneywire/2017/02/trade-of-the-day-velocityshares-3x-long-gold-etn-nasdaq-ugld/.

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