Snowstorm, Fed – What Else Can Happen?!

Written by Mike Hammer

Sometimes the world conspires against you. Or at least it seems to. Winter superstorm Sandy clobbered us here in the Northeast US yesterday through last night, and is now easing up as it hopefully moves over the Atlantic Ocean to snow on some fish. By the way – thank you Weather Channel for naming winter storms – not really.

I’m pretty sure the storm drove away some US trading volume yesterday. Though you couldn’t tell by looking at GLD, just very slightly lighter volume than normal. GLD held its ground price-wise until about 1PM Eastern, when it sagged off into negative territory.

NUGT had a decent morning going then fell out of bed just after noontime. Guess the folks left at the trading desks decided to take recent profits and run.

All this dropping is no doubt due to today’s probable Fed rate hike announcement. This behavior of humans always amuses and confounds The Gold Enthusiast: Some event which has been widely publicized, and so in theory should already be baked into prices, finally arrives – and prices make a big change. I mean, come on folks, have we learned nothing in the last 5000 years of trading? The Egyptians could tell 6 weeks in advance whether it was going to be a big harvest or a small one, and figured out their strategy in advance. No electronics, no internet, nothing more than a pair of eyes and a working brain.

Today, with all our supposed improvements, we still freak out at the last minute over things we knew were gonna happen? Pathetic.

We with a brain can possibly make some money off this though. If you see your favorite gold investment take a big hit right after the Fed rate hike announcement – be it GLD, NUGT, or some junior miner – buy some. Don’t throw the farm at it, maybe half of your usual trading size. So if you like to trade 500 shares at a time of MyFaveGoldCoInc, buy 250 if it suddenly drops more than 5% then starts to rise. Try to wait for the rise though – let it come back up 1 or 2% before you push the button.

Then sell it when it gets back up that 5, 7 or 10% to where it was. You can call the profits a gift from your friendly Gold Enthusiast for being such a diligent reader.

We’ll see if we can catch a nice small gain here, and still look ahead to bigger gains in the coming months.

Signed, The Gold Enthusiast

DISCLAIMER: At the time of writing, the author has no position in GLD and is long NUGT. The author has no plans to enter a position in GLD but may day trade NUGT over the next 48 hours.

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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