Avoid This Trade If You Want To Hold On To Your Money

| October 9, 2013 | 0 Comments

goldBecause of Washington, the financial markets are on the brink of spiraling into chaos.  The government shutdown is already long past due for a resolution.  But now, the possibility of a US debt default grows by the day.

Make no mistake, a default of this magnitude would have catastrophic consequences.  So how do we trade during this increasingly volatile period?

Well, there are several strategic possibilities for this unusual period.  But, the one thing I know for sure is what I wouldn’t do.

I certainly would not buy puts on gold.

It’s true, gold hasn’t exactly been setting the world on fire lately.  The precious metal is even trading under the key $1,300 level as of this writing.  Yet, despite gold’s tough year, it’s the last thing I would take a short position in.

Over the last several years, the yellow metal has thrived as a hedge against inflation and geopolitical uncertainty.  But this year, as the global economy has stabilized, gold lost its luster.

Here’s the thing…

Uncertainty is back, and in a big way.  The US is on the brink of self-induced chaos, brought on by politicians.  If the US defaults on its interest payments, the country’s creditworthiness is going to take a substantial hit.

And most importantly, US Treasuries will no longer be considered the world’s most reliable safe-haven investment.

So what’s next in line for risk averse investors?  Gold has got to be at the top of the list.  It’s been a store of value for thousands of years.  Inevitably, investors will return to the safety of the world’s most popular precious meal in times of crisis.

Now, I’m not going to tell you the price of gold is going back to $1,800 either.  I’m not necessarily a gold bull.  However, I definitely think there’s a floor to how fall the price of the metal could fall.

So save yourself the risk, don’t buy gold puts.

Alright , I’ve talked about what you shouldn’t do.  But how about what you should do?  What trades are worth looking at over the next several months?

Fortunately, I have some answers for you.  In fact, I’ve been working diligently for the last few weeks on a brand new report, Top 3 Options Trades For 2014.  Go ahead, and follow the link to check out my latest research and trade ideas.  The report is loaded with valuable information, and you’re not going to want to miss out.

Yours in Profit,

Gordon Lewis

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Category: Breaking News

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also editor of our dynamic theme-based options trading service, Advanced Options Adviser, and one of the key analysts behind the highly successful Options Trading Wire.