Briefly: we are increasing the stop-loss level in gold to $1,272.
The price of gold is quite close to our current stop-loss level ($1,257) and it's currently the case that if gold touched this price level, it would not automatically change even the short-term outlook. Consequently, the stop-loss level should be adjusted.
This change does not mean that the outlook became less bearish. It simply reflects the changes in the price of gold that was accompanied by additional bearish signs that further confirmed the bearish picture. The previous SL therefore did not reflect our current views on the market and therefore it should be adjusted.
It does not mean that the SL level was placed too low previously either. When placing the SL at $1,257 it was a price that - if reached - would automatically change the short-term outlook. Therefore, it was justified. However, given the current situation, with all the signals that are in place, the above is no longer the case.
The stop-loss levels for silver and mining stocks remain unchanged.
As always, we’ll keep you – our subscribers – informed.
To summarize:
Trading capital (supplementary part of the portfolio; our opinion): Full short positions (250% of the full position) in gold, silver and mining stocks are justified from the risk/reward perspective with the following stop-loss orders and exit profit-take price levels:
Gold: profit-take exit price: $1,062; stop-loss: $1,272; initial target price for the DGLD ETN: $82.96; stop-loss for the DGLD ETN $47.17
Silver: profit-take exit price: $12.32; stop-loss: $15.11; initial target price for the DSLV ETN: $47.67; stop-loss for the DSLV ETN $28.37
Mining stocks (price levels for the GDX ETF): profit-take exit price: $13.12; stop-loss: $20.83; initial target price for the DUST ETF: $80.97; stop-loss for the DUST ETF $27.67
Note: the above is a specific preparation for a possible sudden price drop, it does not reflect the most likely outcome. You will find a more detailed explanation in our August 1 Alert. In case one wants to bet on junior mining stocks’ prices (we do not suggest doing so – we think senior mining stocks are more predictable in the case of short-term trades – if one wants to do it anyway, we provide the details), here are the stop-loss details and target prices:
GDXJ ETF: profit-take exit price: $17.52; stop-loss: $31.23
JDST ETF: initial target price: $154.97 stop-loss: $51.78
Long-term capital (core part of the portfolio; our opinion): No positions (in other words: cash)
Insurance capital (core part of the portfolio; our opinion): Full position
Thank you.
Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager
