Trading, Investing & Saving

Trading and investing can be highly risky.  Please read the Disclaimer.

Current Trading Positions

Comments, 29 July 2010 (posted 06h00 CET):
How many times have we seen this pattern?  The precious metals get trashed by the big shorts at the end of the month so that as few calls as possible expire in the money.  The short-term moving averages are broken, with the consequence that ‘black-box’ traders reverse from long to short.  And open interest climbs as a result of all the specs entering new short positions, thus giving the big shorts the opportunity to cover what they sold earlier this month at higher prices to stop the metals’ price advance.  These events describe what has happened over the past few days, right in time for option expiry.

Past experience has shown that breakdowns like the current one are a good time to buy.  It is impossible to predict whether past experience repeats here, but gold remains good value, as I recently explained in my article about the Fear Index rising to a 16-year high.  The high gold/silver ratio means silver remains good value too.  So we should buy this dip in price.

Gold
1) The position bought at $1191.50 on July 20, 2010 was sold on July 23, 2010 at $1188.00, which was its stop-out point.  Loss: $3.50

2) The position bought at $1195.50 on July 22, 2010 was sold on July 23, 2010 at $1192.00, which was its stop-out point.  Loss: $3.50

3) Buy one position if Comex gold trades at $1162.00 or on the first Comex spot close in New York above $1172.00, whichever comes first.  I’ll set a stop-out price after this position is filled. (updated 29 July 2010)

4) Buy one position on the first Comex gold spot price close in New York above $1184.00.  I’ll set a stop-out price after this position is filled. (updated 29 July 2010)

Silver
1) The position bought at $17.798 on July 21, 2010 was sold on July 23, 2010 at $18.02, which was its stop-out point.  Profit: 22.2¢. 

2) The two positions bought at $18.115 on July 22, 2010 were sold on July 23, 2010 at $18.02, which was their stop-out point.  Loss: 19.0¢.

3) The two positions bought at $18.096 on July 23, 2010 were sold on July 26, 2010 at $18.02, which was their stop-out point.  Loss: 15.2¢. 

4) Buy one position if Comex silver trades at $17.50, or on the first Comex spot close in New York above $17.68, whichever comes first.  I’ll set a stop-out price after this position is filled. (updated 29 July 2010)

5) Buy one position on the first Comex spot price close in New York above $17.84.  I’ll set a stop-out price after this position is filled. (updated 29 July 2010)

Gold/Silver Ratio – traders are short the ratio (i.e., long silver and short an equal dollar value of gold) from 67.4, the June 11, 2010 close in New York.  Stop-out point: none for the moment (updated 1 July 2010)

Comex options (options are high-risk and therefore not for everyone):
Long one Dec’10 Comex 1200 gold call from $67.30, the February 26th Comex close. 
Long one Dec’10 Comex 18.00 silver call from $1.419, the February 26th Comex close. 

Buy one Dec’10 Comex 1200 gold call and one Dec’10 Comex 18.00 silver call at the market.  I’ll use the July 29, 2010 Comex close for record keeping. (updated 29 Jul 2010)

Comments, 23 July 2010 (posted 07h00 CET):
It looks like the precious metals have finally turned higher.  Thursday’s action was very positive, and as I write, the metals are holding those gains.  We’ll see how the precious metals trade today as we head for the weekend. 

Friday afternoons are notorious for ‘painting the tape’ by the shorts, as occurred with the swoon last Friday.  We’ll see how it turns out this week.

Comments, 18 July 2010 (posted 16h15 CET):
It is a well-known tenet that markets can do anything, and last week was a good example.  Contrary to my expectations, both gold and silver again fell back into support.  Gold is testing support under $1200 while silver is doing the same thing under $18.

Given that markets can do anything, we can’t rule out the possibility that the metals could dip to new lows.  I doubt it, but we need to consider it is possible. 

It is more likely in my view that the market was knocked down on Friday afternoon to paint the tape, and maybe some weak hands have been shaken out.  But it is important to recognize that gold remains good value, as I recently explained in my article about the Fear Index rising to a 16-year high.

Consequently, we should follow the same game plan.  We should build a trading position in anticipation of higher prices.  We should scale-up by buying on strength, if we get it – and I expect that we will.

Comments, 10 July 2010 (posted 18h00 CET):
Gold and silver closed the week on strength.  The open on Monday will be important.  On two occasions recently the metals gapped open on Monday morning, only to be smacked down later in the day.  I have been waiting for the metals to gap open on a Monday morning and then just keep working their way higher until breaking out to new highs.  Maybe the precious metals will finally hold that gap on their third attempt.  Let’s see what happens on Monday.

Comments, 8 July 2010 (posted 22h15 CET):
Gold and silver are holding support.  These tests of support are taking longer than I expected, but that doesn’t matter.  What does matter is the strong support the metals are building around $1200 and under $18.  View these support zones to be future launch pads that will take the precious metals into new high ground.  In short, gold and silver are being accumulated here.  Their chart pattern is one showing real strength, and not distribution into weak hands.

Comments, 6 July 2010 (posted 23h30 CET):
The testing of support continues.  I expect support to hold, so get ready to jump on board if gold displays strength and starts moving higher from here.  On a short-term basis, gold is oversold, so a bounce is expected.  The key will be whether any bounce turns into a resumption of gold’s uptrend.

Long-term Core Positions 

Since March 23, 2001, we have been holding goldgrams as our Core Currency Position (i.e., liquidity - which is sometimes also referred to as one's "Cash Position" - is being held as goldgrams in GoldMoney).  I continue to recommend the ongoing accumulation of physical gold bullion as one's savings.

Note: Beginning with Letter No. 272-10 published on October 20th, 2000, I have  been recommending the ongoing accumulation of select gold mining stocks. The week gold cleared $500 in December 2005, I recommended in Letter No. 375 to continue this ongoing accumulation of gold mining stocks as long as gold was below $900.  In Letter No. 414 in November 2007, I increased this limit to $1,500 because of the ongoing debasement and declining purchasing power of the dollar.  For these same reasons, I may need to again raise this limit in the future, but for now, contrinue to accumulate those stocks in the following tables that are not on "hold".  Once gold goes over $1,500, then it is time to stop accumulating, stand aside and happily watch the price appreciation of assets that were carefully and steadily accumulated when they were undervalued.  In summary, I have been recommending and continue to recommend the dollar-cost-averaging of the stocks in the tables below that are not on "hold".

The following two stocks 'mine' oil in Canada's oil sands, and have been recommended because of their dividends.

 Long-term LonL Lonn
Historical Trading Results

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