Gold Futures and Spot Trading Alternatives for Qualified Investors

Gold is the great bellwether of the global economy. Last week’s gold futures hit 1,300 an ounce, a possible signal of uncertainty in the world. But some qualified investors who have liquidity, understand the risk and use discretionary dollars, also purchase gold futures and play the gold spot market. Michael S. Young contributed to this article.

Algorithmic trading utilizes state-of-the-art mathematical quant formulas to formulate probabilities of market directions from real-time data inputs. Algorithms can also perform a number of functions beside probabilities. One example of this is Mediatrix Capital, Inc., which utilizes nine algorithms working in concert to create market-directional probabilities. These are signals that cause the systems to buy or sell a trade, establishing the automatic ability to extend a present target exit if the market is moving to a greater profitability, allowing us to auto hedge and/or instantly trade a counter-trend market direction change, to hedge against trades that may become out of the money. Watch the interview with international investment consultant Michael S. Young as he discusses how to profit from gold without owning it.

The benefit of auto trading with these algorithms is speed. With Mediatrix Capital for example, simultaneous trades in correlated markets that move against them can take advantage of that move in correlated markets before it happens. It eliminates emotion and trading temptations and executes at laser speeds. Auto trading is also operational a 24 hours a day, so any profitable market moves that may occur outside of a normal eight-hour work day are captured.

Their system is equipped with the ability to create “trend and counter-trend” probabilities and place trades based on the likelihood of market direction.

As is the case from time to time, when probability calculations do not accurately signal the proper market direction, and trade positions are actually wrong, these wrong trades represent a potential loss. Within microseconds, the system develops a counter trend directional trading action, which creates a profitable leg offsetting any prospect of loss for legacy trades.

The key is understanding the spot prices of gold are correlated to the futures markets. The advantage this correlation is as the price in the futures market fluctuates, the fluctuation is directly related to the active buying and selling of the gold; the supply-and-demand effect and control the trend and counter trend market movements. When gold is overbought, the price drops, when gold reaches an oversold status, the price will increase again. This activity in the futures market affects the price of the spot market as well for these commodities.

The advantage of utilizing cycle trading algorithms is even when a position may be in a losing status, their counter-trend trades are not. When the market cycles back in an opposite direction, the profitable trades are sold for gain, and the unprofitable trades usually will exit with a profit, as the cycle responds and comes back into a range of advantage. The consistency of establishing an Average True Range, within short timeframes (under four-hour periods) for gold, in part due to the spot-price correlation to the futures market, make our trading system ideal in many ways to trade these commodities while minimizing risk, and taking advantage of the upside.

Mediatrix Capital trades Spot Gold, Spot Silver, and Spot Currency pairs (GBPNZD, EURAUD, CHFGBP, CHFJPY). Again, this type of trading is for a qualified investor who recognizes the risks and has the liquidity to absorb potential losses.

Syndicated financial columnist Steve Savant interviews international investment consultant Michael S. Young on the virtues of owning gold in your portfolio. Right on the Money is a weekly financial talk show for consumers, distributed as video press releases to 280 media outlets nationwide.