Gold has had a rough year so far. Over the course of 2021 alone the price of gold has fluctuated by nearly 12 percent of its peak value, moving within a band of roughly $250.
“Gold trades seem to be my nemesis. When I take them, they fizzle. When I don't, they run," Timothy Collins wrote recently on Real Money. "That's how it often feels for me, even if it's a slight exaggeration. Usually, it is just small wins and small losses when playing the commodity or miners. When I get the pattern, like I see on the VanEck Vectors Junior Gold Miners ETF GDXJ, though, I will still play it.”
Exchange traded funds like (GDXJ) - Get VanEck Junior Gold Miners ETF Report give investors exposure to precious metals without having to buy in directly. The price of this fund reflects the companies inside of it, all firms which are involved in the precious metals industry. This allows you to profit when gold goes up, while giving you a bit of distance from the extreme volatility of the underlying asset.
“We have a breakout today of a ‘V’-shaped price pattern," Collins wrote on Nov. 8. "Some traders may want to see a close over $45.50 to get long. As long as we don't get a big gap higher, I believe that is a perfectly acceptable approach. I see a resistance line being broken. This comes on the heels of the bullish crossovers in both the Full Stochastics and MACD indicators of two days ago. Those bullish divergences led the price move higher. We also saw the parabolic stop-and-reverse (PSAR) flip higher, as well. This pattern played out particularly well to start October and not half bad to end August, so there is a little history here giving us some guide. It is by no way perfect, but I don't want to second guess it.”