Gold and gold stocks took a tumble this week following the Federal Reserve’s highly-anticipated interest rate hike. The SPDR Gold Trust (ETF) GLD 0.66% is down 2.1 percent this week, while the Market Vectors Gold Miners ETF GDX 0.47% is down 6.8 percent. Triple-levered inverse gold ETF Direxion Shares Exchange Traded Fund Trust JDST 4.17% is up 31.8 percent.
Traders looking to figure out how to time the rate-hike gold trade can look back to the trading action following last December’s rate hike. In the first three-plus weeks following the 2015 rate hike, the GLD traded up 4.2 percent, the GDX jumped 9.7 percent and the JDST fell 29.3 percent.
However, the tide quickly turned for gold. From January 7–19, the GLD dropped 2.0 percent and the GDX plummeted 16.2 percent. The JDST jumped 68.7 percent in that period.
After bottoming out on January 19, gold then rebounded in a big way. From January 19 to February 15, the GLD jumped 13.8 percent, the GDX spiked 51.0 percent, and the JDST plummeted 72.2.
Investors And Volatility
What can gold traders glean from last year’s action? First of all, if last year’s trading is any indication, there could be some major volatility in the gold market in the next two months. Of course, there was also major volatility in the S&P 500 as well during the same period last year.
However, despite some bumps in the road along the way, gold ultimately demonstrated…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
