All eyes on Wall Street are watching for the Federal Reserve meeting this week. The two-day yawn fest happens Tuesday and Wednesday. Consensus, and pre-meeting talk among the members, looks for a 0.25% increase in the Fed’s base interest rate. It sounds like almost nothing, and it is – If your business lives or dies on a quarter-point, you should be looking for another business. But there are ripple effects, and the trend of increasing interest rates would be bad for the housing and bond markets.
Right now it looks like “the fix is in” already for the gold market. We’ve seen a few big-volume days as traders shuffled positions in gold, bonds and equities. So when the announcement comes out, look for a minor move in gold, probably down. This may present a brief buy-low opportunity. The Gold Enthusiast hopes to be watching the market that day, and may pick up a little NUGT or DGP for a day trade to grab some quick gains.
But not diving in whole-hog. That’s important. We are probably looking at a few more months of gold trading in the current low range, barring a major geopolitical event. We would need to see GLD rise above 113 or NUGT above 9, to think there’s any hope of a rise into the next trading range. Buying a small amount to establish a base, maybe 1/8th to 1/4 of your total desired position size is probably OK on a dip. You have to understand you’ll be holding this for a while, so if there are other things you need to do with this money either keep it on the small side or don’t do it. If you’re short-term trading the oldest advice in the book applies: Buy low, sell higher. Haha!