“Nice”, of course, is a relative term. If you are long and leveraged in gold, the drop from the $1,294 level on June 6 to intra-day $1,206 on July 7 could not be described as “nice”. A 7% drop in a month is not nice. If you are looking to add to your positions, perhaps the word nice does apply.
If you, like me, on June 16 bought JDST – Direxion Daily Junior Gold Minders Index Bear 3X Shares for $67.72 and DUST – Direxion Daily Gold Minders Index Bear 3X Shares for $30.89, you are saying one simple word:
Nice.
So, as a gold bull, why am I buying two leveraged ETFs that only go up if gold mining shares go down? Simple. There is a difference between short term and long term. In the long term, I have no doubt that gold is headed much higher. I would not be surprised if by Thanksgiving gold is $1,300 per ounce, or even $1,400. But in the short term, the months of June and July, it certainly appeared that gold was overbought and headed lower.
My strategy was simple: I can’t pick the top and the bottom, so I trimmed down my gold shares a bit, but I retained most of my position. Obviously it has lost value, but I own high quality companies that I want to earn long term, so I’m not going to panic over short term swings.
The speculative portion of my portfolio is a different matter.
For the last 18 months I have played NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS , a three times leveraged ETF that goes up when gold miners go up. Last year I made a lot of money in the first six months of the year, and then gave it all back in the second half. This year I made money through May, and then sold all of my NUGT.
In June, I bought the opposite of NUGT, JDST and DUST, because they go up when gold goes down.
JDST put in a solid base around $50, and since the spring has been making a series of higher highs, which is good.
How high will it go? I have no idea, but a challenge to the early May level of $100 would not surprise me. As a result, I have put in sell orders at $96, because I’m not greedy. Making a 30% return in a month is fine.
If I had to guess, I would guess that the correction in gold will probably end this week, or perhaps next, but certainly before the end of July, so this is a short term play. Take the cash and run.
I’ve put in a sell order on DUST at $40, because that also seems like a good level.
If gold begins to strengthen this week I’ll cash in and be done.
I will then take the profits from these trades and put in some stink bids on the good gold stocks I already own, to average down, so I am well positioned for the run up in the Fall.
That’s the game plan.
Will it work? Tune in next week to find out.
Nice Collapse for Gold
by JDH on July 8, 2017
“Nice”, of course, is a relative term. If you are long and leveraged in gold, the drop from the $1,294 level on June 6 to intra-day $1,206 on July 7 could not be described as “nice”. A 7% drop in a month is not nice. If you are looking to add to your positions, perhaps the word nice does apply.
If you, like me, on June 16 bought JDST – Direxion Daily Junior Gold Minders Index Bear 3X Shares for $67.72 and DUST – Direxion Daily Gold Minders Index Bear 3X Shares for $30.89, you are saying one simple word:
Nice.
So, as a gold bull, why am I buying two leveraged ETFs that only go up if gold mining shares go down? Simple. There is a difference between short term and long term. In the long term, I have no doubt that gold is headed much higher. I would not be surprised if by Thanksgiving gold is $1,300 per ounce, or even $1,400. But in the short term, the months of June and July, it certainly appeared that gold was overbought and headed lower.
My strategy was simple: I can’t pick the top and the bottom, so I trimmed down my gold shares a bit, but I retained most of my position. Obviously it has lost value, but I own high quality companies that I want to earn long term, so I’m not going to panic over short term swings.
The speculative portion of my portfolio is a different matter.
For the last 18 months I have played NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS , a three times leveraged ETF that goes up when gold miners go up. Last year I made a lot of money in the first six months of the year, and then gave it all back in the second half. This year I made money through May, and then sold all of my NUGT.
In June, I bought the opposite of NUGT, JDST and DUST, because they go up when gold goes down.
JDST put in a solid base around $50, and since the spring has been making a series of higher highs, which is good.
How high will it go? I have no idea, but a challenge to the early May level of $100 would not surprise me. As a result, I have put in sell orders at $96, because I’m not greedy. Making a 30% return in a month is fine.
If I had to guess, I would guess that the correction in gold will probably end this week, or perhaps next, but certainly before the end of July, so this is a short term play. Take the cash and run.
I’ve put in a sell order on DUST at $40, because that also seems like a good level.
If gold begins to strengthen this week I’ll cash in and be done.
I will then take the profits from these trades and put in some stink bids on the good gold stocks I already own, to average down, so I am well positioned for the run up in the Fall.
That’s the game plan.
Will it work? Tune in next week to find out.