Where Can I Hide? How About GLD...

If you even attempted to stomach the destruction experienced in today's market, you are probably left with a hangover of anxiety. I literally froze for a minute when I saw that the Dow was close to 1,000 down. Fortunately the tremendous move was attributable to a trading glitch, with the Dow moving quickly back up to 347 down for the close. This doesn't mean that the market is down 347 because of the glitch. There is much fear and uncertainty surrounding sovereign debt, China purposely slowing growth, financial regulation, etc. There was an astounding 11 Billion shares traded today, much higher than the average. This basically solidifies the downward pressure on the market. Usually when a big move happens with large volume, it is usually a sign that the move is meaningful.

As stated in my previous post, Hedge Funds have trimmed their stock equities and moved to the safer haven, Gold. Sharon Eperson, CNBC contributor, reported today that most investors that are holding Euro's are moving to gold to preserve their purchasing power due to the destruction of that currency. We've noticed that this is definitely the case with gold moving up a bit. So if this is the current momentum trade that is working, along with shorting the Euro, how can we best trade it?

We can certainly buy physical gold, with government issued bullions or gold coins. Or we can buy the GLD, which is a gold ETF. This ETF mimics the price action of gold and makes it a very liquid solution, since you can trade in and out of ETF's like you can with stocks. So if you believe in the continued problems that we are faced with, this could be a good place to park your investment flow if you don't want to wait out in cash. Please be cautious with this move. It is a momentum trade and a play on inflation. However, many factors can influence the price action of gold.

According to Yahoo Finance:
GLD- The investment seeks to replicate the performance, net of expenses, of the price of gold bullion. The trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the trust terminates and liquidates its assets, or as otherwise required by law or regulation.

Do not rely solely on the opinions of this blog or any other site when making an investment decision. Any investment could result in the risk of loss of capital. Please consider seeking professional advice before initiating your investment ideas.

Disclosures: Long BAC Long C Long F Long DNDN Long GLW
I did add a little to financial positions today.