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.
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.
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.
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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.
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.
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.