There's blood on the golden streets and it seems that this dramatic fall's days are numbered. In fact we believe that we may have seen the bottom today. To put it shortly USDX touched the 80 level, gold fell substantially once again and gold stocks managed to rise (!) on considerably high volume forming a very bullish candlestick. This might be one of the best ways to achieve quick and / or substantial profits if approached right.
In our previous update (sent Aug 12-th) we wrote:
All of the abovementioned factors made us INCREASE our long position in the precious metals market. In other words we have added to our short-term speculative positions on GDX and were also trying to purchase medium term GDX call options, but our orders were not filled. Our Position Size Calculator suggested a very risky play on GDX Aug calls, strike 35 and we used a modest amount of capital to purchase them.
We did have a bottom, but that was not the final one. Our medium-term options lost most of their value, but it was compensated to a considerable extent by gains on Aug GDX calls strike 35. Even the small amount of capital that we used to buy these options, thanks to our model, improved our cash reserves because of the great deal of leverage involved. This is exactly what we wrote about in one of our previous essays speculation / investment in different time frames enables you to achieve particular diversification and improve your profit/risk ratio.
Once again our model suggests that a modest amount of money could be used to purchase ultra-short-term options Sep GDX calls strike 30. In our view medium term call options on silver and gold stocks are also a good way to profit on the coming rebound. Adding to your long term holdings, especially juniors that held up well during this correction is also a difficult, but in our view, profitable decision. While we're at it EDV.TO which was our first selection on the list of juniors that we liked, is acting very strongly right now. We hold a sizable position already, but if you are considering investing in the junior sector, this may be the good way to go.
Please note that these transactions are designed for risk-tolerant and disciplined speculators. If you decide to follow us in these trades, please remember to use only a small part of your portfolio. How small? Definitely not more than our Position Size Calculator (please see the Tools section for more details) suggests. Even that may be too much for some people. Always ask yourself whether the position is small enough, not to interfere with your perception of the situation on the market, should you lose that money. It's better to use too little money, than too much. Consult your financial advisor, if you haven't done so already.
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In our previous update (sent Aug 12-th) we wrote:
All of the abovementioned factors made us INCREASE our long position in the precious metals market. In other words we have added to our short-term speculative positions on GDX and were also trying to purchase medium term GDX call options, but our orders were not filled. Our Position Size Calculator suggested a very risky play on GDX Aug calls, strike 35 and we used a modest amount of capital to purchase them.
We did have a bottom, but that was not the final one. Our medium-term options lost most of their value, but it was compensated to a considerable extent by gains on Aug GDX calls strike 35. Even the small amount of capital that we used to buy these options, thanks to our model, improved our cash reserves because of the great deal of leverage involved. This is exactly what we wrote about in one of our previous essays speculation / investment in different time frames enables you to achieve particular diversification and improve your profit/risk ratio.
Once again our model suggests that a modest amount of money could be used to purchase ultra-short-term options Sep GDX calls strike 30. In our view medium term call options on silver and gold stocks are also a good way to profit on the coming rebound. Adding to your long term holdings, especially juniors that held up well during this correction is also a difficult, but in our view, profitable decision. While we're at it EDV.TO which was our first selection on the list of juniors that we liked, is acting very strongly right now. We hold a sizable position already, but if you are considering investing in the junior sector, this may be the good way to go.
Please note that these transactions are designed for risk-tolerant and disciplined speculators. If you decide to follow us in these trades, please remember to use only a small part of your portfolio. How small? Definitely not more than our Position Size Calculator (please see the Tools section for more details) suggests. Even that may be too much for some people. Always ask yourself whether the position is small enough, not to interfere with your perception of the situation on the market, should you lose that money. It's better to use too little money, than too much. Consult your financial advisor, if you haven't done so already.
