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Gold has been on a relentless run, nearly hitting $3,000 on futures contracts before pulling back. It’s up over 10% year to date, and history suggests there’s more room to run.
With global tensions and inflation concerns, gold is sitting in a win-win position.
But when it comes to trading gold, I don’t mess around with leveraged ETFs or futures. I keep it simple with the SPDR Gold Shares ETF (GLD). It’s liquid, it tracks gold closely, and it doesn’t come with the dangers of margin calls or excessive volatility.
Why Gold Is in a Win-Win Scenario
Gold thrives in times of uncertainty, and right now, there’s no shortage of catalysts driving it higher.
- Gold tends to rally in consecutive years. Historically, when gold has a 20%-plus year, it follows up with another strong performance. In 2024, gold was up nearly 30%. If that pattern holds, 2025 could see another 20% gain or more.
- Central banks are buying. China and other nations continue adding gold to their reserves at a record pace. That persistent demand provides a strong tailwind.
- Gold benefits from rate cuts. Every single time the Federal Reserve starts cutting rates, gold takes off. That’s because lower rates weaken the dollar, and a weaker dollar makes gold more attractive. And we are likely to get a rate cut at some point this year if not two.
Now, there’s a lot of speculation on when the Fed will actually start cutting. Chair Jerome Powell just testified, and while he didn’t signal an immediate move, rate cuts are coming — it’s just a matter of time.
That’s why I see gold as a no-lose scenario. If inflation stays sticky, gold works as a hedge. If the Fed cuts rates, gold surges.
Either way, it’s in a strong position.
Why I Trade Gold With GLD
I don’t bother with leveraged gold ETFs like NUGT or JNUG, and I definitely don’t trade gold futures. Here’s why GLD is my go-to:
- It tracks gold almost perfectly. GLD is backed by physical gold, so its price movement closely follows the metal without the headaches of futures contracts.
- It’s highly liquid. Unlike some leveraged products, GLD has deep liquidity, making it easy to enter and exit trades without huge slippage.
- No margin calls. Futures can wipe you out fast if gold moves against you. GLD eliminates that risk.
- It works for both short- trades and long-term hedges. I can trade options on GLD for short-term plays or hold shares as a core position.
In my Lightning Trades portfolio, we had been sitting on a GLD trade that closed up over 170%. It was meant as a hedge, but it turned into a monster winner.
How to Trade Gold From Here
If you’re looking to capitalize on this gold rally, I’d focus on buying pullbacks. Gold tends to move in bursts — big spikes followed by healthy retracements. That’s where I look to add GLD calls or increase my position.
Gold could remain volatile in the short term, but over the next several months, I expect new highs. If you don’t have exposure yet, GLD is the easiest way to get in without taking on unnecessary risk.
The ‘Opening Playbook’ Free Trade Idea: The Weekly Momentum Play
Each week on my “Opening Playbook” livestream, I give a minimum of three free trade ideas. Here’s how we’re doing so far…
Looking good, so let’s see if we can keep it going with…
Ticker: COST
Options:
- 21 FEB 25 EXP.
- BUY $1070 CALL.
- SELL $1075 CALL.
Price: $2.50 debit
Keep in mind that the underlying stock will move by the time you read this, so you may need to adjust your strikes, the idea of a “Wrap Order” being to wrap the two strikes around the current price of the stock.
For more training on how to place wraps… go here!
Graham Lindman
Graham Lindman Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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