Get Ready to Learn 10 Powerful Gold ETF Trading Systems
 Gold ETF funds
are the perfect investment tool to use for investing in gold.
They are liquid, can be bought or sold immediately during the trading
day, and offer several different ways to play the gold market.
We are going to
explore 10 different trading strategies for investing in gold ETFs
and highlight some of the key advantages and disadvantages of each gold
trading system. Ultimately the success of any gold trading system
boils down to successful strategy, timing, and execution. Having
the right trading strategy and timing signals is the secret to golden
investing
success in the long run.
The Glitter of Gold Investing
For thousands of years gold has been an important commodity as
well as storage of value, and some of the earliest forms of currency
were minted gold coins. Even with the paper currencies of
today, many countries still back the value of their currency
with gold reserves held in their central banks. Gold also has
significant world demand as a physical commodity, in a time of
decreasing availability. Creating additional supplies of gold
requires very expensive mining operations that have to search for a
commodity that is becoming scarcer, as more of the worlds gold
resources are depleted. Let's review the pros and cons of
investing in gold:
BENEFITS:
- Gold is
viewed as a safe haven – in times of crisis many investors
and global institutions seek out gold as a safe haven to preserve
value. Gold has backstopped many currencies over the last
century and is still viewed by many as the original store of
value. Most central banks hold large reserves of gold to
provide confidence in their paper currencies.
- Gold is a
real store of value – unlike most other investments gold
has a tangible value accepted by global markets, and has no market
risk, credit risk, or liquidity risk associated with it. It
also has demand as a physical commodity that is rising, coupled with a
shrinking finite global supply, which is getting costlier to extract
and mine.
- Gold is a
hedge against inflation – gold protects wealth against the
destructive effects of inflation. If you adjust purchasing
power for the effects of inflation, gold has maintained its purchasing
power over hundreds of years, whereas paper currencies have experienced
a significant devaluing effect.
- Gold is a hedge against paper
fiat
currencies and a backstop of value for government issued paper
currencies. It was not too long ago that major paper currencies
were backstopped by gold and many investors and economists still view
gold as the global international currency.
- Gold has commodity value
and is
used in many tangible products and industrial processes. As
demand for these products and processes increase, the demand for gold
rises.
- Gold has a limited physical
supply
and is a resource that is becoming scarcer to locate and extract from
the ground. Global gold demand is already starting to outstrip
the production and finding of new gold resources and this supply
constraint has the effect of increasing and supporting the current
price
of gold.
RISKS:
- Gold is a cyclical investment
that has dramatic and long-lasting peaks and troughs in its
price. For many years gold was an outcast and drifted aimlessly
in a trading range
- Gold does not pay interest
and
has the risk of volatile price changes
- Gold does not pay a dividend
and actually costs money to hold as an asset.
- Gold bullion requires physical
security and storage costs and can be a difficult investment to
transport and protect in larger quantities.
Gold ETFs are one
of the best investment
funds you can use to easily add gold exposure into your investment
portfolio and they have several advantages over gold mutual
funds, gold
stocks, and speculative resource penny stocks. Investing in
gold sector stocks is now most commonly done with Gold ETFs -
you
can gain instant exposure to many gold industry company stocks or even
gold
bullion using Gold ETF funds.
There are several gold exchange traded funds available, and most give
you direct exposure to gold and offer a level of
diversification similar to buying a basket of gold mining stocks.
There are several reasons why gold could form a part of your asset
allocation, however, knowing the right time to invest in the gold
sector will be the key to your investment success. Let's discuss
the
pros and cons of the 10 gold trading strategies we can use with ETFs.
The 10 Most Profitable Gold ETF Trading Systems:
#1 : Bullish Gold ETF Trading Strategies
This is probably the most basic strategy people consider when gold
prices are expected to rise. There are several bullish ETFs to
consider, some focus on different parts of the gold sector and some
even provide leveraged exposure to gold price movements. Use
bullish gold trading strategies in times of inflation, global and
financial crisis, and when there is rising physical demand for jewelry
and industrial gold supplies. Here are the most popular bullish
gold exchange traded funds:
- IAU
– iShares COMOX Gold Trust ETF - invests directly in gold bullion
- SGOL – ETFS
Physical Swiss Gold Shares ETF - tracks gold spot price
- SPGH – E-TRACS S&P
500 Gold-Hedged Index ETN - S&P 500 return hedged against gold
- UBG – E-TRACS CMCI Gold
ETN - basket of forward gold futures expected returns
- AGOL – ETFS Asian Gold
Trust ETF - tracks gold spot price
- GOE – ELEMENTS MLCX Gold
ETN - rolling futures gold contracts
- DGL – Powershares DB Gold
Fund ETF - gold futures performance
- FSG – 2x FactorShares
Gold Bull / S&P 500 Bear ETF - leveraged gold spread return against
S&P 500
- DGP – 2x Powershares DB
Gold Double Long ETN - leveraged gold futures performance
- UGL – 2x Proshares Ultra
Gold ETF - leveraged gold bullion performance
- CGL – Claymore Gold
Bullion ETF (Canada - TSX) - gold bullion in CDN dollars
- HUG – COMEX Gold ETF
(Canada - TSX) - gold futures in CDN dollars
- HBU – 2x Horizons BetaPro
COMEX Gold Bullion Bull Plus ETF (Canada - TSX)
As you can see there are a range of bullish gold investment options
with
exchange-traded funds and exchange traded notes that can deliver the
safety and security of
investing in physical gold, with the convenience of stock shares that
can be bought and sold at anytime.
#2 : Bearish Gold ETF Trading Strategies
Shorting the gold sector is now as easy as a regular stock trade
with inversely-correlated Gold ETF funds. You no longer
need to "short" an ETF to profit from expected downside movement, many
sectors and indexes now offer an "inverse" or "bearish" version of
their ETF to let you benefit from declining price movements. In
addition, you can now double-down on the shorting by trading in
double-inverse funds which attempt to deliver twice the downside
shorting return. Here are the most popular
bearish gold exchange traded funds:
- DGZ - Powershares DB Gold Short
ETF – uses derivative Exchange Traded Notes to deliver the
inverse return of gold
- DZZ - 2x Powershares DB Double
Short Inverse Gold ETF – uses derivative Exchange Traded
Notes to deliver 2x inverse return of gold
- GLL - 2x Proshares Ultrashort
Inverse Gold ETF - uses
derivatives to attempt to deliver 2x the inverse return of gold
- HBD - 2x Horizons BetaPro COMEX
Gold Bullion Bear Plus ETF (Canada - TSX) - uses
derivatives to deliver 2x the inverse return of gold
Investing in bearish inverse ETFs involves a higher level of risk due
to the underlying derivative investments and volatility used to
approximate the negative-correlated returns. Inverse ETFs are
best suited to short-term trades involving a few weeks or months and
are not recommended as long term investments due to index tracking
errors and volatility.
#3 : Dollar Cost Averaging Strategies
Investing in gold with a dollar-cost
averaging strategy is useful when you have capital available to
invest at frequent intervals (such as monthly), and you expect the price of
gold to continue in an upward trend for an extended period of
time. In simple terms you are buying the same dollar amount of
gold ETFs each month, and as prices fluctuate you will "average" your
cost base overtime so that you don't invest all your capital at once
price-point, reducing the chances of buying at a higher than average
price.
You need to consider trading costs when practicing this strategy, and
also the long-term outlook for gold. Dollar cost averaging your
entry into an ETF over a period of time can increase your odds of
getting an overall better cost base on your investment. You can
also use the same strategy in reverse to "scale-out" of a position, but
instead of set intervals, try to time your sales during recent
short-term
highs in the price of your gold ETF.
Do not use dollar cost averaging with leveraged or bearish gold ETFs
due to their tracking performance errors and extreme volatility.
#4 : Trend Trading with Gold ETFs
The trend is your
friend when investing in the gold ETFs because most commodities
have cyclical performance cycles.
 ETF Gold trend trading signals simplify
investing timing
Gold is a cyclical commodity so it is important to time your
gold trading strategy so you are on the right side of the trend. These
simple Gold
ETF trend trading signals help guide your Gold trend
trading
strategy and keep you on the right side of the trade.
#5 : Relative Strength Comparative Ranking Analysis
Investing in gold
ETFs with a relative strength comparative ranking strategy is quite
possibly
the holy grail of ETF performance investing. As far as trading strategies
go, we think this one is the grand daddy of long term investment
success. The singular focus of this trading system is to compare
the returns of every ETF to the market benchmark index and find the ETF
that has the greatest out performance. In other words - find the
best performing ETF in the market! When this ranking
strategy identifies gold ETFs at the top of the ranking list it can
turn into an investment home run.
The difficulty with using this strategy is the complexity of
calculations that are required. In simple terms, the performance
of every ETF needs to be compared to the index return to calculate the
performance gap, then this needs to be repeated in a multitude of time
frames, then averaged down to a comparative value, then ranked into a
performance list. It takes millions of calculations to rank the
ETFs in the marketplace, and required complex and expensive
mathematical software
algorithms. Luckily, we have a short-cut to automate this process.
The beauty of this strategy is its
ability to rank the market ETFs in order of out performance to a
benchmark index like the S&P 500. You'll always know
the best time to invest in gold ETFs and also when to short them, but
more importantly you'll have a guide to point your way to the best
performing ETFs in any market conditions. See how gold
ETFs
rank in this report using this popular trading strategy.
 Discover a simple trading strategy to profit from gold
trends.
If you would like simple Gold
ETF
trading
strategies to follow that focus on identifying
long term stock market trends you can download the 7 powerful ETF
trading strategies that are the foundation of this ETF
trading system.
#6 : Momentum Trading Strategies
Investing in gold with momentum
strategies can deliver tremendous returns if practiced
well. Momentum ETF trading is a process of identifying those ETFs
that have the highest inertia and are moving the fasted in one
direction. Gold is a sector that often experiences rapid price
movements over the span of a few months, and catching a fast moving
gold ETF trade can deliver strong returns over a few short
months. Trading gold ETFs with a momentum strategy involves trend
analysis and
relative trend strength analysis to find those ETFs that are likely to
continue their fast-moving price momentum.
Technical analysis of ETF charts and careful study of price movement
relative to historical norms and averages is critical to momentum
analysis. Your trading time frame will also be a key determining
factor of the time series you analyze. For example, momentum day
trading of ETFs will examine very short time frames, often price
movement bars as short 1 minute to develop their trend and momentum
analysis. These trades are short and quick, and usually have
limited price movement, but can often be repeated several times in a
trading day. Trading costs and time commitment are significant
considerations for trading short-term momentum plays.
Medium to long term ETF momentum strategies allow for significant price
appreciation with limited time commitments and trading frequency
costs. If you want a short-cut around all the heavy mathematics
and analysis, we suggest you check out the
momentum ranking of gold ETFs in this trading system.
#7 : Strategic Asset Allocation
#8 : Tactical Asset Allocation
Tactical asset allocation is a
portfolio trading and re-balancing strategy that increases your
portfolio exposure to sectors that are experiencing strong upward
pricing movement. Use this strategy with gold ETFs when
gold sector stocks are outperforming other major asset class
sub-categories. The best way to practice tactical asset
allocation is to regularly measure and rank the trend and momentum
performance of all key sectors in the stock market.
When gold is performing on a relative performance basis in the top
quartile of all sectors in the ranking list it is time to consider
trading gold ETFs because their asset category is outperforming 75% of
the stock market sectors. It is also a good idea to also confirm
that gold ETFs are in a technical bullish uptrend, so that you can
expect both absolute and relative performance gains (ie. you want to
make sure gold is actually moving higher, not just dropping less than
the rest of the stock market as can happen in severe bear market
conditions).
 Is it time to go long or short on gold?
If you would like the latest
Gold
ETF
trading signals including long
term trend signals, short
term trend signals, momentum
signals, market timing signals,
asset allocation signals, and market strength ranking signals,
download a copy of the ETF
investing
newsletter.
#9 : Market Timing
Use market timing to your advantage when trading gold ETFs by entering
gold trades when gold is most likely to experience an upward price
movement. Timing the gold trade really boils down to confirming
long and short term technical trends, momentum analysis, and relative
strength comparative analysis to the stock market returns. You
can use moving averages and stock charting analysis to visually confirm
price trend actions, but just remember to use time frames in your
technical analysis that match your trading horizon and expected holding
periods.
Momentum and relative strength comparative analysis on gold ETFs should
confirm that gold price momentum is ranking within the top 25% of all
sectors in the stock market to consider trading gold, otherwise there
is probably better sectors to consider trading that gold stocks.
Market timing studies can help confirm leading trends as well as giving
early warning signals of when it may be time to end a trade.
#10 : Sector Rotation
Learning When to Invest is Key
Success in trading is determined by the timing of your
trades. Buy at the right time before a big move and you can
accumulate huge trading profits, but if you buy at the wrong time you
can suffer massive losses. Having the right timing signals
and knowing which sectors are about to experience strong upward moves
is the secret to investing success over the long run.
 ETF Screener finds popular ETF trading opportunities
This ETF list highlights some of the most popular exchange traded funds
used by investment professionals today for gaining exposure to gold
bullion and gold mining stocks. Use the ETF
screener list to help locate the next wave of ETF trends.
You Can Benefit from Sector Timing
The world of stock market investing has changed dramatically
over the last 20 years. Access to transparent information has
become readily available to all with the advent of the internet
age. You no longer have to pay expensive brokerage fees, or
invest in under performing and expensive mutual funds now that better
alternatives exist. Consider these facts:
- Buy and hold is dead – why would anyone hold an investment
for over a decade any be satisfied with a negative return?
- Sector timing can boost long run returns by allocating more
of your portfolio to top performing sub-sectors of the stock market
- Sector timing gives you the tools to survive bear markets
intact and preserve your capital
- Sector timing with ETFs can enhance your asset allocation
and potentially reduce your volatility risk
- And best of all, Sector timing can get you on a long term
path towards financial independence!
Sector Timing Can Give You Financial Freedom
Imagine what it would feel like to achieve financial
independence and the ability to pursue and follow your
dreams. Using ETFs as your primary investment vehicle to
capture big upward trends in the hottest stock market sectors of the
day is a long-term strategy for success that can help you outperform
the market by a significant margin. As you begin to
absorb this information, you'll find that Gold is not the only
profitable investment one should consider. There are hundreds
of potential sectors to invest within using ETFs, and at any single
moment
there are usually several hot sectors that are emerging to
significantly outperforming the pack. Are you
beginning to
see how sector timing could potentially uncover a never-ending series
of hot new sector trades?
When you Subscribe You'll Unlock the Secret to Timing Gold
ETF Investing
When you subscribe to the free ETF Sector Ranker Report you
will discover why so many people have embraced this revolutionary
sector market timing approach to know exactly when to make their gold
investments using flexible Gold ETF funds. Best of all, when
you subscribe to the free ETF Sector Ranker Report you will uncover
exclusive market timing signals for trading every type of sector and
industry! When you subscribe you'll discover why so many
people are excited and telling their friends about the free ETF Sector
Ranker Report!
|
