The $1.9 trillion stimulus package has been approved as expected. But we’re getting closer and closer to reopening. The Federal Reserve’s money-printing strategy has us at inflation’s door. So what does that mean for the markets?
Let’s start with commodities and discuss trading gold during inflation.
First, let’s address the frenzy we’re seeing in the stock market. With all of this extra stimulus and nothing to do, people are trading a lot. That’s all well and good… until you get stomped.
We started to see that even last week as the Nasdaq entered correction territory. Then another big move followed the jobs report, so we gave you a little trading advice.
WealthPress Senior Strategist Roger Scott said during our Monday morning roundtable that he was staying away from big-name tech stocks as the Nasdaq pulls back. He’s looking in other areas.
Trading Gold During Inflation in 2021
We’re seeing a resurgence in a lot of areas that were dead after COVID-19 hit.
As we reopen, travel stocks, gas and energy are rising. At first, that was a result of summer and the reopening. Now it seems to be a direct result of inflation and rising prices everywhere.
Gold is typically one of the best hedges during inflationary periods…
So why is it down?
Part of the reason is that investors are using other things, such as cryptocurrencies, to protect themselves rather than trading gold during inflation.
When trading gold, there’s one thing to keep in mind: Gold isn’t a stock like Tesla Inc. (Nasdaq: TSLA) or Amazon.com Inc. (Nasdaq: AMZN), where the stock goes up or down with the wind. It takes time.
However, just like Tesla, pullbacks from big moves do happen. Tesla was one of the best stocks of 2020, and now it’s taking a beating. It went too high, too quickly. Now it’s pulling back to correct that move.
A year ago, when COVID-19 hit, gold soared to all-time highs in a matter of months — that doesn’t happen. Gold is also experiencing a pullback to digest that huge move from a year ago.
For a deeper look into trading gold during inflation this year, watch our video below where we sat down with trading experts Roger Scott, James West and Adam Sarhan and dissect the markets.
As always, feel free to email your trading questions to jeff@joyofthetrade.com and make sure to stay ahead of the markets by subscribing to our YouTube channel.
P.S. What do an 83% stock price dip, dividend cuts and a mountain of debt have in common?
They were all bad news headlines about Apache Corp. in April 2020.
So with those awful headlines, how did ex-hedge fund manager Lance Ippolito know to buy in at that time…
And walk away with a 157% return just over a month later?
