Gold: Brief Pause Over, Ready for Liftoff

by JDH on September 21, 2019

Pretty optimistic title, eh, from a guy who started buying gold heavily three weeks ago?  No worries, I am very optimistic for the next few weeks.

Here’s the chart of NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS, an ETF with 3 times leverage to shares of gold miners:

As you can see, NUGT had a beautiful uptrend line starting in June, tripling in price, from $15 to $45 at the beginning of September.   But then, as NUGT is wont to do, it gave a lot back, dropping to $27.50 a week ago.  So why am I not worried?  Two reasons:

First, the correction back to just under $28 was just above the low on July 31, but not below it.  The bottom was tested, but not broken.  Good.  That should form a solid base from which NUGT can move higher.

Second, the Relative Strength Index is at 50, on an uptrend.  The last time that happened was at the end of May (the green line on the chart) and NUGT went from around $17 to $30 before pausing, briefly.  Will NUGT double from here?  It’s certainly possible, so I’ve set my target at $60.

Here’s how I’m playing it:

I already own the position I want, so I’ve placed sell orders, good for the next month, at the following prices:

  • $44
  • $50
  • $55
  • $60
  • $65

Am I a wild-eyed optimist?

Perhaps, but if we are moving into a prime period, I’d like to take advantage of it.

Check back next week and see what, if anything, has transpired.