Last week I described my Apple Experiment; this week I ended the experiment. You will recall that I bought Apple shares, and sold covered writes against them. That worked out fine, most of the transactions were profitable, but in the end I decided the risk was not worth the reward. Yes, making 1% each week is nice, but we live in a world of volatility. Apple traded under $302 and over $324 last week. That’s a 7% swing in one week. In other words, my profit of 1% can be destroyed and take 7 weeks to get back.
That’s not a great risk.
So, On February 5, I sold Apple for $321.75.
That worked out fine, since I bought those shares on January 13 I bought those shares for $311.87.
I’ll take it.
What’s up next?
I don’t know.
My assumption is that the stock market will continue to make new highs for the next few months. Trump’s re-election is now guaranteed. The economy is booming, unemployment is low, and the Democrats don’t have a candidate to run against him, so with that uncertainty gone, speculators can focus on an up market.
I’m not saying the economy is actually doing well. Unemployment is low because many people have short term contract jobs, or work in the even more uncertain gig economy (like driving for Uber), but it’s perceived to be doing well, so that’s all that matters.
Gold has paused, by is still looking good, so I’ll continue to focus on gold in the coming weeks.
That’s the update, thanks for reading, more next week.
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Equinox Gold – New High – What’s Next?
by JDH on February 15, 2020
Back on January 11, 2020 I published Equinox Gold Corp – A Deep Dive, where I explained why I thought EQX.TO – Equinox Gold Corp., my largest gold holding, would go much higher.
This three year chart looks good. Very good, actually.
Equinox Gold traded at $9.62 on January 3, and closed on February 14 at $11.87, so that’s a nice 23% pop so far on the year. Not bad.
My reasons for expecting a good performance from EQX:
First, favorable gold market. Money printing, uncertainty in the world, etc. Gold is up about 4.4% on the year, so that assumption has so far been proven correct.
Second, the company is doing well. The merger with Leagold will increase production, and that’s good.
Finally, and most importantly, increasing size leads to inclusion in indexes. We live in the world of ETFs. The passive investor is king. So, if you want to invest in gold, you buy a gold ETF.
As I said last month:
As of today EQX is not part of GDXJ, but I expect it to be added over the next month or two. When that happens a new wave of buying is required to include it in the index, and up goes the share price.
Of course everyone knows this. It’s not like I’ve got insider knowledge. So, I assume the smart fund manager are already buying, so they are positioned when the inclusion happens.
As I also said last month:
It’s not just one fund that will be buying EQX; there are many.
Equinox should easily be a $15 stock by the summer, and perhaps $20 by the end of the year, so I’m holding.
So far, so good.
More next week.