Chartology: The Gold Trade
By: Lee Brodie | Producer
Gold, the traditional safe haven in times of economic turmoil, proved to be more a commodity that everyone loved to hate last year -- even amid the turbulence that engulfed world markets.
But as 2009 gets under way the yellow metal has found huge traction with money managers.
In the last eight sessions, gold has rallied as much as $100 an ounce to hit a near four-month high of $915.30 on Monday -- in spite of a rising dollar – although it’s pulled back since.
The furious rally stems from expectations that the U.S. government will need to borrow about $2 trillion of debt this year to finance its rescue packages for the battered banking sector. Already, outstanding Treasury debt stood at $5.5 trillion at the end of September.
If you watch Fast Money regularly you know that both Pete and Jon Najarian are bullish on gold. (Click here to read more ) In fact Jon Najarian speculated it could climb as high as $1000 an ounce. And during her most recent visit Suze Orman told us she thinks a portion of your portfolio should be in gold. (Click here to read Suze Orman’s Trade )
But what’s next?
To find out what the charts say, we turn to Natexis Bleichroeder technical analyst John Roque. He tells Fast Money, relative to the S&P gold has been – and remains – the clear outperformer.
And he thinks you can play it with the GLD ETF or by putting mining stocks such as Barrick Gold ,Agnico-Eagle Mines , and Randgold Resources , on your radar.
Following are Roque’s recommended trades:
| Price | Change | %Change | ||
|---|---|---|---|---|
| YNP | --- |
#1:Barrick: This stock is currently trading above its early 2008 breakout level of $36. Any pullback to $36 or below looks like a buying opportunity.
| Price | Change | %Change | ||
|---|---|---|---|---|
| YNP | --- |
#2:Agnico-Eagle Mines: This stock has climbed about 100% since its Oct. 2008 lows. Don’t chase this stock but if you see any consolidation or a pullback, consider buying.
| Price | Change | %Change | ||
|---|---|---|---|---|
| RRS | --- |
#3:Randgold Resources: The price action above the downward sloping trendline since mid Dec '08 is a positive sign. Add to positions within consolidation.
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Trader disclosure: On Jan 28, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (BAC), (MSFT), (MS), (TM), (MCD); Seymour Owns (AAPL), (BAC), (EEM), (F), (FXI); Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (MSFT), (UNH); Finerman's Firm Owns (DNA) & (DNA) Call Spread; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (COF), (USO)
Natixis Bleichroeder Inc. and/or its affiliates make an over-the-counter market in the stock of this company: Royal Gold Inc
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