Briefly: We think that closing the trading positions in GDX and GDXJ (as well as related ETNs) within the last 10 minutes of today's session would be justified from the risk to reward point of view. Ideally 5-7 minutes before its end - regardless of the prices at which they will be trading, and without further confirmation from us.
Based on the similarity to 2008 that we described in today's first - regular Gold & Silver Trading Alert, it seems that gold is going to soar one final time before topping. In fact, this sharp - likely final - upswing appears to be already underway.
Please note that the US session is about to be over, and the above-mentioned move could end before the markets open in the US tomorrow. Consequently, one might not be able to take full advantage of this upswing in case of the mining stocks, simply because they will not be trading overnight.
It could happen that gold soars overnight, but tops and declines even before miners have a chance to react to it in tomorrow's trading. Consequently, the prices that we have right now might be the best profit-take prices that we can get. And more precisely - the prices that we are likely to have right before the end of today's session. Gold is soaring very fast and even 10 minutes could make a difference.
Moreover, please note that entering the long positions on March 13 would have yielded best results if done exactly 5 minutes before the end of the day. Of course, this specific seasonality might not work to the letter this time, but based on what we see in gold right now, it seems relatively likely, as taking only soaring gold into account, the later today we would exit the longs, the better prices we might get.
It could also be the case that gold soars and stays high tomorrow. In this case, GDXJ and GDX would be likely to move even higher. However, the risk to reward ratio for keeping the long positions overnight appears too big.
If gold futures are trading above $1,670 within the final 7 minutes of today's trading, then we think that speculative short positions in GDX and GDXJ would automatically be justified with the regular size of the trading position (100% of the regular position size). The speculative vehicles that one could use in this case are DUST and JDST. These positions, in our opinion, should be entered without an additional confirmation from us. There would be no time to send one before the end of the session, anyway.
If the above condition is not fulfilled (gold doesn't rally above $1,670), we will likely open speculative short positions in GDX and GDXJ in the following days, anyway.
As always, we will keep you - our subscribers - informed.
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager