Gold - Silver - The Herd Mentality - GDX Trade
Overview:
For as long as I have been a goldbug there is no shortage of feverish rallies, conspiracies and let downs based on news and events. Keep in mind long term I'm bullish on gold, but short to medium term we are not positioned to rally, sentiment is just not right for a huge rally, so we are still in accumulation mode. Silver is still the undervalued metal in my opinion and where I continue to accumulate physically.
The Trump proposed Tariff and all the news concerning a "Trade War", saw a flight to safe haven assets like gold and bonds since the Thursday announcement. Breaking it down we knew days before hand that this announcement was coming, and the metals continued lower up and until the day of the announcement where we spiked. What does this tell us? First, Smart money did not see the announcement as a threat to world order. Second the retail investor no matter how many times they lose their butts, are always herded into the direction of the Lions. Third this was a knee jerk reaction. Fourth Goldman' Sach's issued a "BUY" on gold' at the perfect time yesterday, enough to push the herd right into the green pasture where the Lions were waiting. Well the Lions are feasting.
Technical:
Gold' has once again failed to break the 1360 level which has held in the past couple of rallies, and the recent peak is forming an upper downward sloping resistance line. A close below the 1343 level and we will likely trigger a mini selloff as longs exit trades. Where we find initial support is at the 1338 1326 level which are the 0.382 and 0.618 retrace of the previous bullish swing. The stock market is strong, housing is strong, the world economy is strong and though we are entering the final stages of the bull market in my opinion (based on the restaurant factor) we are not ready to breakout just yet, but this did create an opportunity to reduce our positional cost on our continuing GDX' trade. Keep in mind this is a continuing trade where we are looking to increase our gold' exposure for the long term but using the herds money to do it with.
Trade:
As we posted yesterday elsewhere we sold the 18May 23 Covered Call for 0.65 against our position where our average cost is 21.63. We have locked in a 9% profit in less than a month with this move but the intent is to either to close the position before expiration or let them expire worthless using the profits to reduce our position average cost per share. As we continue to chip slowly away we are building a larger position using market sentiment and the herd mentality to do this.
Summary: We now put ourselves in a win win situation with a guaranteed profit of 9% or reducing our share cost by 3%. This is all about money management and using our portfolio wisely.
Thank you Goldman' Sach's for the final mini rally!
Silver' is still the undervalued metal here!
For as long as I have been a goldbug there is no shortage of feverish rallies, conspiracies and let downs based on news and events. Keep in mind long term I'm bullish on gold, but short to medium term we are not positioned to rally, sentiment is just not right for a huge rally, so we are still in accumulation mode. Silver is still the undervalued metal in my opinion and where I continue to accumulate physically.
The Trump proposed Tariff and all the news concerning a "Trade War", saw a flight to safe haven assets like gold and bonds since the Thursday announcement. Breaking it down we knew days before hand that this announcement was coming, and the metals continued lower up and until the day of the announcement where we spiked. What does this tell us? First, Smart money did not see the announcement as a threat to world order. Second the retail investor no matter how many times they lose their butts, are always herded into the direction of the Lions. Third this was a knee jerk reaction. Fourth Goldman' Sach's issued a "BUY" on gold' at the perfect time yesterday, enough to push the herd right into the green pasture where the Lions were waiting. Well the Lions are feasting.
Technical:
Gold' has once again failed to break the 1360 level which has held in the past couple of rallies, and the recent peak is forming an upper downward sloping resistance line. A close below the 1343 level and we will likely trigger a mini selloff as longs exit trades. Where we find initial support is at the 1338 1326 level which are the 0.382 and 0.618 retrace of the previous bullish swing. The stock market is strong, housing is strong, the world economy is strong and though we are entering the final stages of the bull market in my opinion (based on the restaurant factor) we are not ready to breakout just yet, but this did create an opportunity to reduce our positional cost on our continuing GDX' trade. Keep in mind this is a continuing trade where we are looking to increase our gold' exposure for the long term but using the herds money to do it with.
Trade:
As we posted yesterday elsewhere we sold the 18May 23 Covered Call for 0.65 against our position where our average cost is 21.63. We have locked in a 9% profit in less than a month with this move but the intent is to either to close the position before expiration or let them expire worthless using the profits to reduce our position average cost per share. As we continue to chip slowly away we are building a larger position using market sentiment and the herd mentality to do this.
Summary: We now put ourselves in a win win situation with a guaranteed profit of 9% or reducing our share cost by 3%. This is all about money management and using our portfolio wisely.
Thank you Goldman' Sach's for the final mini rally!
Silver' is still the undervalued metal here!
Comment:
GDX hit the MPM resistance level of 22.49.
Comment:
This is not the time to catch a falling knife. We are testing the first support level as mentioned above, and are watching for a break of the 1326 level. A break of 1318 would be a bearish sign and we likely test the 1300 area which is critical to hold for longs. Our trade is well in the green and we will be watching closely to close this position out and look for a reversal where we may go long for a swing trade. Overall gold is setting up for a bullish breakout but the timing is just not right. YET!
