The Fed are the Greatest People in the World

by JDH on September 24, 2016

Of course I’m being facetious.  The Federal Reserve in the U.S.A, and the Bank of Canada, and all central bankers everywhere, are useless.  You do not need a group of men and women to control the money supply.  We had money before the Fed, and we also had minimal inflation/deflation, and close to full employment.  Since the Federal Reserve was created in 1913 the American dollar has lost almost 100% of it’s original value.  That’s a wonderful performance, that would get anyone in the private sector fired.

However, the Fed is great for gold.

For years they have threatened to increase interest rates, and other than a tiny blip last year they have done nothing.

They can’t.

All modern economies are financed by debt, so even a small increase in interest rates would kill the economy.

There is an election in six weeks in the United States.  The Fed can’t do anything before the election, for fear of influencing it.  (Not that it matters.  The election is over).

So the Fed talks, and people think it means something, and then when they don’t raise rates, the dollar tanks and gold goes up.

nugt-sept24-2016-1week

So, thank you Fed, for cutting my losses in my position in NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS, or substantially this week.  Another week like that and I will be very happy.  Keep it up.

From a low of exactly, to the penny, $18 on September 20, to an intra-day high of $22.55 on September 21 (with the big run up happening at 2:00 pm when the Fed made their non-announcement), that’s a 25% uptick in less than a day.

Nice.

Longer term we are moving in the right direction, I believe.

nugt-sept24-2016-3months

From the high over $35 back in mid-August NUGT has experienced a substantial correction, but I see a double bottom around $17, and since this week the bottom was $18, I think the bottom is in, for now.

So what next?

As I mentioned last week, I’m sitting with a substantial position at a cost basis of $24.67.  Last week NUGT closed at $18.21, so I was in a massive loss position.  The closing price this week at $20.26 leaves me substantially under-water, but improving.

I said last week I would take some cash off the table around $21 (since I averaged down by buying more at $17.60), but I didn’t.

I think this week I’ll put in a small sell order, for perhaps 20% of my position, at $24 to take some cash off the table, and let the rest ride.  I’m not on margin, so I can wait.

And so I will.

Thanks for reading; more next week.

Gold: The Correction Continues

by JDH on September 17, 2016

It was not a great week for NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS, or for those of us who trade it as a proxy for gold.

nugt-sept16-2016-1week

It did climb over $21, briefly, on Monday, but it also touched $17.37 on Friday, before closing for the week at $18.21.  Since it closed last week at $19.33 that’s a drop of 5.7% on the week.

More worrisome is the series of “lower lows” experienced on Tuesday, Thursday, and Friday.  That’s not an uptrend.  The double top on Wednesday and Thursday is also not encouraging.

So, what did I do?

I bought more.  I bought more at $17.60 on Friday, to average my cost down to $24.67, leaving me in a massive loss position.

Why buy more?

Because I believe gold is going higher.

nugt-sept16-2016-1year10months

A longer term chart shows a Fibonacci support level at $15.77, so we could see more weakness.  But, looking at a year to date chart, the trend on the year is obviously positive, so I’m not budging.

September and October are traditionally weak times for gold, so I should have been in cash.  I’m not, but so be it, this is where we are.

I will probably place some sell orders in the $21 range to liquidate the shares I bought this week to raise some cash, but otherwise I’m holding.

That’s the plan, for now.

Thanks for reading.  More next week.

Gold: Correction, or End of the Ride?

September 10, 2016

Let’s look at the evidence, using NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS as the proxy for gold (because it’s a 3x leveraged ETF, so it has more volatility than gold shares, or gold). The week started out good.  After an intra-day low below $21 on Monday, NUGT gapped open up on […]

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A Quick Lesson in Bouncing Back

September 3, 2016

This is the Labour Day weekend in Canada (Labor Day in the USA); the weather is good here in southern Ontario (not so great where hurricanes are in Florida and earthquakes are reported this morning in Oklahoma), so I will keep this brief and touch on two matters. First, I have read with interest the […]

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Two Heart Attacks in Two Days

August 27, 2016

Not real heart attacks.  Figurative heart attacks. As you know, my favorite vehicle for speculating on the price of gold isNUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS, a 3x leveraged ETF.  As you can see from this chart, NUGT opened on the morning of August 23 at over $29, and […]

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Alterra Power Corp.

August 20, 2016

There are two ways to make money investing in stocks: capital gains, and dividends.  With most stocks, it’s one or the other.  Today we discuss a stock that will, I believe, end up providing both streams, and that makes it a great, relatively low risk investment: Alterra Power Corp. As regular readers of this blog […]

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Short and Sweet This Week: New Recommendation Next Week

August 13, 2016

Not much happened this week, so I’ll keep this report short, and give you a tease for next week’s report. This week I did my “in and out” trade in  NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS; it’s becoming almost boring.  You can read the full history of all trades on […]

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Detailed Thoughts on NUGT

August 6, 2016

A very interesting week for shares of  NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS. After a significant correction bringing the price down below $120, we saw a steady six trading day climb back up over $175. Sweet. Would have been much sweeter if I hadn’t bought shares as high as $168 […]

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Royal Gold – I’m Out

August 5, 2016

Long time readers of this pathetic little blog will know that one of my core holdings was RGL.TO – Royal Gold Inc. I liked Royal Gold because it paid a good dividend, was leveraged to the price of gold, and was listed on the Toronto Stock Exchange and therefore was easy to hold in my Canadian dollar […]

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Breathing a Sigh of Relief on Gold

July 30, 2016

On July 11 I bought shares of  NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS for $168.  On July 25 and 26 they traded at below $120.  For those of you who are math-challenged, that’s a loss of just under 30%.  Yikes. What was I thinking?  As you can see from the chart, the […]

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