Most investors consider gold a long-term investment or “store of value.” And they’re not wrong.

Gold has acted as a hedge against uncertainty for thousands of years.

As I write, someone in America is probably burying the shiny yellow rock in their backyard. It’s a cross-cultural, centuries-old tradition.

And every well-diversified investment portfolio is better for having gold in it. The precious metal generally holds up well in bad markets, and it can rally in good markets.

But every few decades, something unusual happens..

Gold enters a bull phase that transforms it into a market leader. We’re in one of those phases right now.

Unfortunately, most gold investors aren’t familiar with how assets trade when they are in a rip-roaring bull market.

A buy-and-hold strategy might make a ton of sense during this period. Simply own a bunch of gold and enjoy the ride.

But there is another way to play gold when it’s ripping higher… and this method can significantly increase your returns.

Instead of owning it, trade it.

A Rare Chance to Trade

Investing is where we look to identify assets that we think can go up two to five times over several years.

We then buy these and hold on, only selling if there is a significant change in the thesis. The long-term hold in gold fits this strategy.

Trading, on the other hand, is where we look to take advantage of the volatility in the market to create shorter-term returns.

When we can find assets that are in an identifiable uptrend, then we can trade them in clearly defined patterns to make money.

Gold is now in one of these patterns.

Take a look at this chart of the spot price of gold quotes in U.S. dollars per Troy Ounce.

That sure looks like an uptrend to me!

Gold has been steadily grinding higher now for over a year. During this time, it has gone from $2,000 to a current spot price of over $3,300 — a 65% move.

This is one of the biggest one-year moves in the gold price in history.

If you have simply held on to your gold, then you have made great returns. But with trading, you could have done even better!

Sell High, Buy Low

Here is a one-year chart of gold along with my favorite technical indicator that we use for exit and entry signals — the relative strength index (or RSI).

On the chart, you can see that gold has consistently traded above its 200-day and 100-day moving averages over this period.

We have highlighted several periods where gold has been overbought based on the RSI. This is when the RSI trades above 70, indicating enthusiasm has built and that gold is likely to consolidate in the coming months.

An important point to note is that the period of consolidation does not happen after gold initially trades above the 70 RSI level, but after it posts a second group of overbought signals.

It also happens after the price is at least 10% higher than the 50-day moving average.

This is how assets that are in well-established bull markets trade when investor interest turns into speculation. This is exactly how Bitcoin has traded over the last decade.

When you see this combination of signals, holders of gold can have an opportunity to increase their profits.

Sell high to buy low.

Savvy traders can take advantage of this overbought signal to book some profits. Then they wait for gold to trade back to the 50-day moving average to buy back the shares they sold.

Executing this strategy methodically with one-quarter or one-half of your gold position would have increased your returns by an additional 25%.

This strategy has tax disadvantages, but the return more than makes up for the higher tax bill.

Right now, it is hard to find any assets that are in a solid bull market. Gold is absolutely the biggest one.

But perhaps it’s time to sell high, given gold’s current overbought reading and the distance it’s trading above its respective moving averages.