Topic: Gold: I smell a trap - page 38. (Read 90828 times)

Yes.

While it seems gold will go down from here there are factors which could push it higher through the week. Interestingly the swiss central bank is now trying to devalue the swiss franc. Later today the US markets are set to fall. Obama will announce more deficit spending on Thursday for sure. Today there was a bounce back in European stocks but those stocks don't look good to me.

Is it wise to think gold will continue to rise further this week before another correction or has it reached the short term top already?

From what I see gold when down a lot earlier today but shot back up again around about when the news came about the Swiss franc but it's not gone back to it's earlier highs.

so MatthewLM, are you still long?

Thanks for this suggestions, FCX in particular seems a very interesting stock.
But speaking of dividend-paying, why you suggest AG and TRX that never paid one?

OT: Anyone knows how to have a list of stocks orderd by yield for example on yahoo finance or google finance?

In the foreseeable future I can only see it go up against fiat currencies. Can't predict how the universe will turn however.

There's a long way to go until the downtrend. $2500 at least.

S3052, you made money on this short position but you still think there will be a major gold crash at some point? Good for you you didn't go short for the long term thinking there was a turning point for gold into a downtrend like cypherdoc appears to have believed.

Very nice, thanks for the update!

Yes, that's typically the next effort after a H&S pattern has failed to hold. When the double top fails to hold, the shorts retreat to the next level they can reasonably defend. I'd expect a push down by shorts early this week after a close today near $1900. Look for $1740 as a downside target again if the $1810-1840 range is breached. If selling, be extremely attentive.


I would hope that my ruminations on Bitcoin offer a better gauge of that than self-assessment. For brevity's sake, let's just say that I see forms of direct democracy and an emergent collective consciousness a la Gaia theory as strong potentials for crypto-currency systems beyond their intended purposes. I'd imagine that would be the difference between animal awareness and sentience, only on a planetary scale.

That could be considered a singularity. From my view, the last singularity event was the emergence of human sentience and before that, eukaryotes.


Apologies, I should've been more specific. At the moment, no - I don't chase the price; calls are too expensive now relative to when the price of gold dipped near $1700 on the 25th of last month. That was when I had closed my short-term puts and opened additional Jan 2012 calls. Most of the options are in GLD, GDX/GDXJ, SLV and SLW. I use very small short positions compared to my calls for profiting from minor corrections. It also helps to offset negative Theta.

This rise and the next decline might be the last time I make use of GLD/SLV on the way up because of concerns about physical movement of metal in the trusts behind the scenes. That depends on how much metal is drawn down during the next decline relative to how much is added from now until then. I'd rather be on the short side of those ETFs when the paper and physical prices diverge than caught with calls on a rapidly-declining paper "asset", not to mention the possibility of a bank holiday with markets closed.

Your December calls should be good. I expect the real plunge to take place by the middle of 4th quarter (prior to November options expiration), wiping out most new entrants from $1900-2000 on up. At the breach of $2000, I'll be closing enough of my calls to cover all expenses including commissions and will not be buying any additional calls. Above $2100 is when I'll start buying puts as close to $0.10 or under as possible. Over $2400 is when I'll start buying GLD puts in quantity between $160-200, again around $0.10 or under.

During that rise, I'll be scaling out of my long call positions as well, using about half of the profits to fund the put buying. Focus must be maintained on the fact that this is trading, not investing for the long-term. If that were the case, I'd be suggesting a simple buy-and-hold strategy with physical metal and quality dividend-paying miners such as AG, FCX, GFI and GG or the Tocqueville gold fund (TGLDX). Royalty companies would include RGLD, SLW and TRX. The best junior miner list is Gene Arensberg's at the Got Gold Report.

Remember to let the deals come to you. Options for $1 might seem good now, but focus on quantity of contracts within a defined range (GLD $160-200) rather than perceived value. High volatility will be what brings in the bacon. I'd prefer 1,000 puts bought at $0.10 than 100 for $1.00. Even a conservative estimate of the numbers from on high to a low should put the options in excess of $10 valuation. That would be the difference between $90,000 return and $990,000. You can see the tremendous impact should the options rise in value to $20, $30 or even more than $50.

This type of gold trading analysis should be available on Noble Nomads periodically. Another service I've found to be very effective, though less aggressive, is SK Options.

The math, for anyone not familiar with options:


Today is a US holiday. Treasuries are up on virtually non-existant volume while the dollar is at about 1/3^rd of its normal. Both have been seeing declining volume during their rallies; not suggestive of continuation. There will have to be some devastating developments in Europe or elsewhere for the dollar to close over 76. Until then, it's an uphill battle.

The higher the dollar and treasuries close today, the better the chances of a boost tomorrow if gold is brought down to any significant degree. Not that such an effort would realistically provide any more than temporary support.

Short position closed successfully with a gain of 117.19 points with good leverage. I will either take a new position tomorrow just under 1912 or wait until we may see another pop into the 2000-2100 area.

Here is the copy paste from my official trading account:
23/08/11   Gold Kassa   -   SELL   0.1   1884.49   1767.3

And, accepted the bet as well.

Deal

interesting. $DXY and UST futures up as well.  $DXY over 75. Might as well have ALL the safe havens rally together, eh?

I'm interested what happened with this short position, is S3052 around?
And I haven't yet received a confirmation to our bet. We can also change it to 2 years 1200 gold/USD if it suits you better.

Gold back at $1900 again.

I see, I thought you were advising to buy those puts now.  By the same token then, are you buying out-of-the-money calls right now?  December GLD calls with a $240 strike are selling for roughly $1 a contract.  Just trying to gauge how confident you are in this move, buy doing both you would make money going both directions (assuming your call is correct of course).  I chose December options since you mention end of the year in an earlier post.

yeah, but its getting painful.  if we break out to new highs i'll take it down.

the slow early rise in the USD has me worried.

Are you still betting on a short position cypherdoc?

out of curiosity; how well do you think you understand Bitcoin and its implications?

what I've been hearing is they'll make it a double tops.

It came damn close to passing $1900 today.

Thanks and yes, quite an impressive few days indeed. I'm thinking Bitcoin will start to see gains in the near future as well (~3-6 month range), though ironically that's much more difficult to call than gold.