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Back to trading and time to back Gold

US markets tend to be week in September in fact its one of the weakest months of the year with the Dow Jones dropping on average 1.1%. Of course as a spread trader we can bet for prices to go down so this is not a problem. Anyone that has been short the last few months would have made very good profits in the Dow, FTSE100, NASDAQ and S&P500.

Whilst the US indices tend to have a bad month in September Gold on the other hand tends to shine and it would be worth looking at taking an (UP BET) on Gold over the coming weeks. A big factor of how well gold does is the price of the US Dollar, if the dollar is strong it makes gold more expensive to foreign buyers as gold is mainly traded in US Dollars. If the dollar is weak and we are UK buyers exchanging £ to US$ then gold seems cheaper to us.

The good news when placing a spread bet is that you can bet in either £, Euros or US$ per point with most financial bookmakers. Let me run through an example of going long (buying) gold:

Example of a spread bet on Comex Gold

Let's say you think gold is going to rise in price over the coming days or weeks and you want to bet that this will happen

In most cases this can be done online or by telephone, and you can trade in sterling, euros or US dollars. The dealer will quote two prices: a buy and a sell price. If the quote on gold is $371/$372.50, you buy at the second price, $372.50. You decide to place a £10 per tenth of a dollar bet, so you would buy £10 at 372.5. This means that for every tenth (or point) the price of gold rises, you win £10, and your potential profits are unlimited

You also need to place a stop which will prevent you from losing too much money if you are wrong. In this case you might place the stop at $360, 125 tenths lower than the price at which you placed the bet. So even if gold tumbles to $300, your maximum loss would be 125 X £10 = £1,250.

Two weeks later gold moves to $405 and you want to take your profit. You are quoted $404/$405.5, so you sell at the lower price to close the bet.

The price has moved up by 315 tenths, so on this bet at £10 per tenth, you would have made £3,150 tax-free profit.

The chart above shows historically how Gold does each month. I complied this for the last 4 years and you can see September does well. Also worth noting that December is a very strong month for Gold so we will make sure we are long again this December. Of course no guarantee that Gold goes higher this September but odds do favour this.

Remember: YOU SHOULDN'T SPEND MORE THAN GBP500 TO ATTEND A WORKSHOP OR SEMINAR NOT EVEN IF THEY PROMISE YOU GOLD FOR ATTENDING