How to Use Currencies to Trade Gold

Want to take a position on gold without trading the yellow metal itself? Here's a way to get the same results by trading currencies.

"A lot of the time when you think of a currency to trade a commodity, you look for the country that exports a lot of that commodity," said Rebecca Patterson, global head of currencies and commodities for J.P. Morgan's private bank.

But that is not always the best approach, Patterson said. For example, South Africa is a major gold exporter, but Patterson says the currency is too volatile and the South African economy too uncertain. The good news is you can find other currency-based ways to "trade" gold, she told CNBC's Melissa Lee.

The key is considering why you want to buy it.

If gold is an inflation hedge for you, "the Australian dollar, [AUD=X  1.0242    0.0076  (+0.75%)   ] even the Canadian dollar [CAD=X  0.9887    -0.0057  (-0.57%)   ] might work," Patterson said.

But if you are buying gold for risk aversion, Patterson said, "Go with the Swiss franc."[EURCHF=X  1.0336    0.0032  (+0.31%)   ] 

She likes the fundamentals in Switzerland, and she says the Swiss franc "has had almost a 90% daily correlation with gold against the euro for the last two years."

The trade Patterson recommends is buying the Swiss franc and selling the euro at current levels, with a stop about 1% above current levels and a target of 2% below.

Todd Gordon, co-head of research and trading at Aspen Trading Group, concurred on a technical basis. He noted five waves in the Swiss franc/euro price pattern, and called current levels of Swiss franc/euro "a great entry point."