The Gold Bubble: Profiting From the Gold Crash

Profiting From the Gold Bubble

For the last decade or so, millions of investors have, and continue to, seek refuge and profit in the comforting arms of gold. The once hallowed "gold standard", considered one of the most conservative investments, has evolved into nothing but a speculators dream. This long term speculative feeding frenzy has created one of the biggest gold bubbles in history.

Like all bubbles before it, the gold bubble has all the ingredients for a crash recipe. About half of analysts are saying buy, the other half saying sell. The common investor is left confused. Again. Instead of being the sheep in this golden bubble, why not profit from it. At the very least, hedge for a downside bear run. Here is an investing strategy to profit from the coming gold bubble crash.

Bull run of gold in last ten years.
Bull run of gold in last ten years.

The Gold Bubble Graph

While analyzing this graph, you'd be quite right to recognize the technical nature of gold's 10 year bull run. You'd also be right to ask the age old question in elementary investing. What goes up must guessed it. The first step in profiting from a speculative gold bubble play is to commit to the short investment. Commit to the notion that gold will go down despite a short term uptick with the first year. Investor's who shorted the market in 2007 perhaps lost about 20% in that year, but the last laugh was theirs. It is one thing to analyze and predict a gold bubble, but it's quite another to align your portfolio for it. I encourage you to be the latter. After committing to your speculation, the first step is to slowly move out of your long positions in your gold portfolio.

  1. Employer 401k Moving out of employer 401k's is easy and instant most of the time
  2. Individual !RA and Investment Accounts Seek out and exit all of your long positions
  3. Physical Assets If stockpiling bullion or coins, sell high. Now.

Three Ways to Short the Gold Bubble

Capturing profit from a gold crash can be done in a variety of investing options. With the popularity of ETF's and mobile applications from most brokerages, trades can be made quickly and far more affordably than ever. One of the easiest ways to invest on the downturn of gold is through buying short ETF's opposite long gold. The convenience of easy entry and exit and liquidity of ETF's will ensure the most profit from the trade. 

Put Options

The second position to take in a gold bubble crash is the simple put option trade. Hedge puts can be made against individual gold mining stocks, gold ETF's, and in the Binary Option market. If familiar with trading options, you are well aware of the risks involved with put options. The loss potential can be limitless with some trades.

Inverse Opposite Postion

Another way to attack the gold crash is to invest heavily in the inverse opposite of the downturn of the spot gold price. It used to be the case that the Dow Jones worked in opposite conjunction with the price of gold. Currently, that is not the case. Despite a recent recovery in all the DOW and the S&P, gold continues it's run partially out of lingering fear and also because speculators are artificially manipulating the spot price of gold.

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Comments 2 comments

chamilj profile image

chamilj 5 years ago from Sri Lanka

I think it is still worth buying Gold as an Investment.

nathandanials profile image

nathandanials 5 years ago from Golden Valley, MN Author

chamilj-I do still have some gold in my portfolio as well. I think 12% or so.

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