Still Short on Gold

by JDH on June 24, 2017

I’ll keep this brief, since I explained last week why I’m short on gold, temporarily.

I’m still short, and the week started out great with that strategy, using JDST, a 3x leveraged bear fund.

But then gold bounced up, and I finished the week essentially back where I started.

So, on Friday, I increased my position to average down.

My line in the sand are the previous lows (just under $50 on JDST), so if we hit that I’m out, and I’ll take the loss.  However, a bounce and I’ll take the profit.

As I said last week, this is not a long term play.  I expect to be out of this position over the next two or three weeks, hopefully at a nice profit.

We shall see.

So far, I’m wrong, but I’m still hopeful.

Thanks for reading, more next week.

 

I’m now SHORT on Gold (Temporarily)

by JDH on June 17, 2017

Yup, I’m short on gold.

I still believe that by the end of the year gold will be trading higher than it is today, perhaps significantly so.  But, as I said last week in my post that it’s not looking good for gold, gold has some issues.  Let’s take, as an example, GDXJ, a security I don’t own and don’t pay attention to; it’s a Junior Gold Miners ETF.

The trend is clearly down, but more worrisome is that the break above the 200 Day Moving Average in February didn’t hold, and the attempted break this week didn’t get even close (see the two orange rectangles in the chart).  (Click the chart to enlarge).

I would not be surprised to see a test of the December low, below $28.

Not good.

Here’s a similar chart, but for gold itself:

You can draw the trend lines however you want, but regardless of how you draw them the downtrend remains intact.

A break below the previous lows of just below $1,220, or just below $1,200, will signal that we have significant issues.

So with that background, what’s the plan?

I have liquidated a sizeable portion of my gold portfolio.  I still hold some stocks for long term growth purposes, but I am largely in cash.

I have now deployed some of that cash in two speculations: DUST and JDST.

DUST is the inverse of NUGT.  DUST is a Gold Miners Index 3x Bear Fund, so it’s goal is to go down 3 times as much as the shares go down on a daily basis.  It’s not an investment; it’s a speculation, and because it uses options and other strategies to achieve three times leverage, it’s value degrades over time.

As you can see from the chart, the $24 level is relatively strong support, so I doubt it will fall much from this level.  In December it was twice as high, so if gold drops, DUST as the potential to double, or more, very quickly.

Of course it can also go bust, so be careful.

Want more risk?  Try JDST, which is the same as DUST, but it’s based on an index of junior gold stocks for even greater volatility.

The chart looks the same as DUST, but for added interest I’ve zoomed in with a ten day chart.

Key point: On June 14 the volume was almost 8 million shares (see the orange box), the highest volume ever.

So why, on a down day, was the volume so high?  I can only speculate that the big boys were buying.  Sure enough it bounced up the next day before pulling back on Friday, which is when I bought.

Again, this is a high risk speculation, but it is easy to make the case that a month from now it could be a double, or a triple.  Or not, we shall see.

To re-iterate: I like gold in both the medium and long term, but I also remember last summer where I gave back all of my gains from the first half of the year.  This summer I’m holding cash, and placing some speculative bets on the short side.

If they work, I’ll have lots of cash to deploy in very inexpensive gold miners at the end of the summer, and that’s exactly where I want to be to ride the next wave up.

Stay tuned.  Should be fun.

See you next week.

Not Looking Good for Gold (So You Should Buy)

June 10, 2017

The gold chart is not encouraging (so I’m probably interpreting it incorrectly, so you should probably be buying……..).  As my proxy for gold I use NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS because it’s 3x leveraged to a basket of gold miners, so the swings are more pronounced. Here’s the six month […]

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Gold and Crypto-currencies

June 3, 2017

The weather is gorgeous this weekend, so I’ll keep this short and sweet: Gold As me in a week or two and I’ll tell you what’s happening. For now, I don’t know.  The chart of NUGT shows that we are nearing an inflection point. The longer term uptrend line is about to intersect with the […]

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A 10 Year Look at Gold

May 27, 2017

It’s a good idea to occasionally take a step back and look at the big picture. Here’s the big picture for gold: What does it tell us?  Either a lot, or not much, depending on your perspective. The blue lines show the uptrends from 2008, and 2009, remain intact.  The red lines show that since […]

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Perfect Timing on Gold

May 20, 2017

Perhaps the timing was not exactly perfect, but it was close.  The chart shows red circles where I was buying, and the blue boxes were the sell orders. I was buying on April 27 just under $31, which I thought was the bottom, but it wasn’t, so I averaged down again on May 5 at […]

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Bull Market Just Beginning, and Great Week for Gold

May 13, 2017

So there was a story last week that said that a life changing rally is shaping up in the stock market.  Hard to believe, right?  The markets are at or near all time highs, so how is it possible that the bull market is just getting started? The theory is that, if you look at […]

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NUGT: Reverse Split Apparently NOT a Buy Point for Gold

May 6, 2017

Last week I proudly proclaimed that the NUGT Reverse Stock Split was a Buy Point for Gold.  Apparently not. As we can see over the last six months, NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS bottomed around $22.50 (split adjusted) just before Christmas, and then peaked just under $55 (split adjusted) in […]

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NUGT Reverse Stock Split and Buy Point for Gold

April 29, 2017

I’m back in gold. As regular readers of this little blog know, I have a significant percentage of my portfolio invested in gold stocks.  In addition to gold miners, my preferred speculative gold play is NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS,  which was over $13.50 in mid February, before correcting […]

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Report from Kentucky

April 22, 2017

I have spent the last few days in Kentucky, so having not followed the markets this week, I will give you a very brief report on Kentucky itself.  Here’s the short version: from an uninformed tourist’s perspective, (so this assessments is most certainly incorrect), Kentucky is in fine shape. We drove down from Ontario (because […]

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