There’s Gold in them there hills, was the battle cry in the mid 1800’s for people to go to California, pick up some nuggets, get rich and end all of their problems…
At that time gold was under 20 bucks an ounce, now its $1,700 an ounce.
And with what looks like stock market crash number three of the decade – and who knows how bad this one gets? – once again, it’s all about gold.
Hearne ADVISED ME NOT TO DAY TRADE GOLD TWO YEARS AGO.
I didn’t listen. I didn’t know what the hell I was doing. I just knew gold and oil at that time were the plays. Gold was jumping between $880 and $1,000. I was in LA and day trading while working on a sports film. Oh yeah, with my big $15,000 dollar investment I was up 13 grand in two days. How dumb was Hearne?
Well, two years and change later, I’ve lost about 40 grand. HOW CAN YOU LOSE MONEY ON GOLD WHEN IT’S NEARLY DOUBLED IN THAT TIME FRAME?
Because I day traded.
And that means its covering all those ups and downs.
So how do YOU TRADE GOLD? Well, to me the safe way is go to Precious Metals on Metcalf and buy some ounces or a bar at the market price (he will you charge something over market for a profit but not too much).
That is the safe, smart way. And yes you should buy gold if you can afford it.
Likely gold is on the way to $2,500 before Xmas. And maybe $3,000 to $5,000 an ounce in two years. It sure looks possible. Even investment guru Jim Cramer thinks so – he says over $2,000 an ounce for sure and soon.
Doing futures is where the big money is.
How much is a gold contract? First you have to open an account with a solid company. There are several, ask a good broker who he likes. You just have to have enough margin money in your account to cover the downside of your buys.
It works like this; you buy one contract of gold (100 ounces) for the market price of $1,770 and it earns you $100 a point if it goes up. Or costs you if it goes the other way. So if it climbs to $1,780 on paper you made $1,000 dollars.
However there’s a down side – and boy did I find that out way too often.
It can go down 100 points as well. So if you have say two contracts at $1,770 and you put a STOP LOSS ORDER in at say $1,750 per contract (meaning if gold falls 20 points even momentarily), you lose that 20 points or $2,000.
That’s why trading futures is dangerous. But it pays so well when things go your way.
You need a lot of money to back you up, like say $30,000 per contract in your account. Thirty G’s gives you 300 points to play with. Can you imagine having five contracts the last month going up almost daily? You’d have made well over $100,000. Unless you’d guessed wrong and thought the market had topped. Then you’d be facing a $100,000 loss.
So my philosophy is, just buy and hold. Don’t day trade, sit on it. Or as Hearne told me, just buy the gold and put it in your bank box.