This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

How to Get in on Gold Today

NEW YORK ( TheStreet) -- Everyone's focusing on gold lately -- and with good reason.

After trading in a sideways consolidation range from 1,540 to 1,640, the market decisively broke out to the upside Aug. 22. The problem for many people: The market hasn't looked back since!

People who missed the move are now kicking themselves and wondering if the market will ever give them a chance to "get in" and make money.

As bullish as I feel for the economic and geopolitical backdrop for gold, markets don't go straight up or down, do they? Thus far, gold has covered about $150 to the upside. So far, pullbacks have been almost nonexistent -- they have been short-lived and shallow. This is an indication that we are dealing with a very strong market.

So how does one enter the market now? Here are my thoughts: First, I would rule out buying new highs at this time. The reason being that the market has a band of resistance from 1,790 to 1,800 or so. Buying new highs would be buying right into established resistance -- and that is a trading no-no. Patience is key here.

The way I see it, one could look to buy the 50% to 62% retracement back lower if the market gets down there -- or one must wait and see if the market is able to take out upside resistance and then look to buy the first pullback. After all, old resistance becomes new support. In other words, if the market is able to pull away from the 1,800 level on a closing basis, I would then look to buy a pullback to that level.

In addition, if the market is able to break above that level, then new highs can be bought, but there should be confirmation first. As I said, patience is paramount.

For now, the strategy below is one way to try to get into the gold market using the December futures contract. As always, if futures are not your thing, feel free to contact me to discuss alternatives. Please note, today is Sept. 24, and all trade information is based on the most recent data.

Buy 1 December gold futures contract at $1,675 or lower good until canceled.

Place a protective stop at $1,658 good until canceled.

Target $1,800 or higher.

Stop may be trailed based on an individual's risk tolerance and money-management preferences.

Risk on trade: In the scenario above, $1,745 including a $45 R/T commission inclusive of all fees.

Profit potential: theoretically unlimited to the upside. If target stated above is reached, profit would be $12,455 after subtracting a $45 R/T commission inclusive of all fees.

Please note that a mini contract may be used. In that case, amounts stated above would be one-third.

Please note: Futures and options trading is inherently risky and isn't suitable for all investors. Past performance isn't indicative of future results. Stop-loss orders meant to limit losses may not be effective because market conditions may make it impossible to execute such orders.

Matt Zeman is a trader at Kingsview Financial. He began his trading career as a runner in the grain pits at the Chicago Board of Trade before becoming an arbitrage clerk. Eventually he started trading equity options and stocks. Matt now is a full-time futures broker. He has been a frequent guest on CNBC, Fox and Bloomberg, and provides his views on the stock, bond and futures markets for financial media including Dow Jones, the L.A. Times and The Associated Press. Matt is a member of the Chicago Board of Trade, and carries series 3, 7 and 66 licenses.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs