***2015 Gold and Silver Stocks/Options/Futures trading thread***
ProofCollection
Posts: 6,148 ✭✭✭✭✭
This is a continuation of the 2014 trading thread to discuss the trading of PM-related stocks, options, and futures. I've switched to an annual thread due to the lower activity levels.
2014 Was not a bad year for gold, being only down a few percent overall in USD, but has done well in most other currencies. We have now had a 39 month correction and if you look at the chart below, we're stuck just below the 38.2% retracement level. We are at a critical junction at this level, and as I see it if we can get a breakout over the $1225 level we should be at the start of a long and sizeable up-trend. Gold could continue to go sideways or decline from here, but a breakout should be really positive for the year.
Along with gold, I'm looking for Bitcoin to follow along any gold rally.
The USD is interesting. Looking at the monthly trend, this could be the 7th straight up-month in a row.
The stock markets, in my opinion, are in a precarious position at this moment. This run is impressive. The monthly doji from December at the end of this long run can be an ominous sign. I would have to believe we are due for a decent pullback - not necessarily a crash - although a pullback for this big of a move might feel like a crash.
2014 Was not a bad year for gold, being only down a few percent overall in USD, but has done well in most other currencies. We have now had a 39 month correction and if you look at the chart below, we're stuck just below the 38.2% retracement level. We are at a critical junction at this level, and as I see it if we can get a breakout over the $1225 level we should be at the start of a long and sizeable up-trend. Gold could continue to go sideways or decline from here, but a breakout should be really positive for the year.
Along with gold, I'm looking for Bitcoin to follow along any gold rally.
The USD is interesting. Looking at the monthly trend, this could be the 7th straight up-month in a row.
The stock markets, in my opinion, are in a precarious position at this moment. This run is impressive. The monthly doji from December at the end of this long run can be an ominous sign. I would have to believe we are due for a decent pullback - not necessarily a crash - although a pullback for this big of a move might feel like a crash.
0
Comments
I still have a small long gold position that I started around $1125.
As a slight gamble, I have a small ES (SP500) short position opened today.
"Toss a coin or throw a dart" on PM predictions .. Gold and Silver still appear to be weak. Plat, Pall & Rhod are holding up better only because of a strong U.S. Auto market.
More recently, I took a small long position in GDX (selling puts naked on the gold miner etf). I have a complicated option position in SPY that nets out to near neutral, but will profit the most if there is near exactly a 10% decline from here when the options expire. I update my blog weekly (signature link), so the GDX trades and position won't be reported there until this weekend.
Gold has broken out above $1225, but I would like to see it truly break out. I think it's going to, I'm going to look to add to my position tonight on a small pullback, but I'm not going to go nuts.
It's worth mentioning crude oil. I think it could go a bit lower and hit $40. I think this is a no-lose situation if you can afford to buy a position and hold it should it gown down further (temporarily). I think it's almost a sure thing that crude will be back above $60-70 (if not higher) no later than the end of the year. So downside should be limited and temporary, upside of $20-$30 or more from $40.
<< <i>My short on the SP500 has been profitable and I think Tuesday will have more downside. I'll be looking to exit tomorrow.
. >>
How did you navigate the massive gap up open for /ES? Did you manage to eek out a sliver of profit by selling early or pre-market? Or did you get run over by the train after the market opened?
<< <i>
<< <i>My short on the SP500 has been profitable and I think Tuesday will have more downside. I'll be looking to exit tomorrow.
. >>
How did you navigate the massive gap up open for /ES? Did you manage to eek out a sliver of profit by selling early or pre-market? Or did you get run over by the train after the market opened? >>
I didn't see any gap, but the sudden move up was unexpected. I still have a small profit. I'm going to wait-and-see how it develops. I'm looking for a collapse from 2050. If it doesn't go anywhere in the next few hours I'll close it out.
Gold on the other hand had a nice break above $1225 but I'm not 100% sure we're out of the woods. I didn't get a chance to add to my position. I think if I'm patient I might be able to catch a dip today.
<< <i>
<< <i>
<< <i>My short on the SP500 has been profitable and I think Tuesday will have more downside. I'll be looking to exit tomorrow.
. >>
How did you navigate the massive gap up open for /ES? Did you manage to eek out a sliver of profit by selling early or pre-market? Or did you get run over by the train after the market opened? >>
I didn't see any gap, but the sudden move up was unexpected. I still have a small profit. I'm going to wait-and-see how it develops. I'm looking for a collapse from 2050. If it doesn't go anywhere in the next few hours I'll close it out.
Gold on the other hand had a nice break above $1225 but I'm not 100% sure we're out of the woods. I didn't get a chance to add to my position. I think if I'm patient I might be able to catch a dip today. >>
Well if you are still holding short /ES it worked out, at least for this hour/day. I am dizzy from these swings. I stepped into a couple of piles of crap lately (entered some trades which are now in the red). Unlike some other traders, I tend not to do well during fast markets.
Gold has me a little worried, I did get filled on a dip and I am up on the additional contract but I may sell and try to catch on a further dip tonight. I think we'll hit $1225 again which will be a better spot to add that position back. I would feel much better if gold would take off but the $1225 level is a heavy attractor.
I would like to hear what others here have to say about a low for crude oil futures (CL). Is $40 a floor? I am seriously considering making a HUGE buy at that level, prepared to weather a drop to $30, and just hold it until oil climbs back to $70-80 or higher, expecting to hold for up to 2 years (although I'm not sure it will take that long).
Maybe that trendline holds right here? Next stop $35ish.
DO NOT expect a rebound like in 2009 as that was a flush of all assets, this is specific.
3 years from now oil could, and I think probably will be, less than $65.
Bubbles usually take a generation (20-30 years) to retest old highs---which I why I said 6 years ago that oil has probably hit its high during my lifetime.
How much is a 38% retrace of this down move, about $23? So if it stops here, dont expect to even see $70 on some ridiculous dead cat bounce. I think the most you would see is about a 24% bounce, or about $14 (right now) targeting $58. If the trendline does not hold and oil drops to $35, it wont get back above the trendline $50 on a bounce.
Knowledge is the enemy of fear
I don't see necessarily $100 oil coming back any time soon, but $70-80, and that's based on a few things:
1. Any commodity really can't sustain a price that far below production costs for long. I think a worldwide average production cost is around $70-80/bbl.
2. The "oversupply" of oil is only about 3%. If new supplies stop coming online to replace depleted supplies and consumption worldwide stays level or keeps increasing, the oversupply disappears pretty quickly.
3. Any oil supply disruption can send oil up $10+ instantly. Weather, terrorism, etc.
Working against the price of crude is largely the strength of the dollar, and that more than anything I can see supressing oil prices.
<< <i>Thanks for the perspective. Do you see us entering a more serious world-wide recession that causes oil consumption to go down? I think rather than buying at $40 I'd probably target a very short term overshoot to the $35 area to do a buy. Where do you see prices stabilizing?
I don't see necessarily $100 oil coming back any time soon, but $70-80, and that's based on a few things:
1. Any commodity really can't sustain a price that far below production costs for long. I think a worldwide average production cost is around $70-80/bbl.
2. The "oversupply" of oil is only about 3%. If new supplies stop coming online to replace depleted supplies and consumption worldwide stays level or keeps increasing, the oversupply disappears pretty quickly.
3. Any oil supply disruption can send oil up $10+ instantly. Weather, terrorism, etc.
Working against the price of crude is largely the strength of the dollar, and that more than anything I can see supressing oil prices. >>
Oil was about $15-20 for almost the entire decade of the 90s. What was the production cost then? Do you think costs are 4x higher today then then? IMO, the stated production costs are exaggerated and probably closer to 45-55.
In the commodity market, even the addition of just one extra unit can have a huge impact on prices. 3% oversupply might not seem like much but it is. Yes, any disruption could easily send gold 20% higher in just weeks, or a week. With prices where they are now, is there really any difference between $45 and $55? To a trader on the right side at the right time it could be huge, but to the economy, it means virtually nothing. There really is nothing to indicate an increase in demand in the foreseeable future either.
The drop in oil has been heavily influenced by the rise in the dollar. And unless interest rates in countries that have currencies that compete with the dollar rise dramatically (while rates here do not) then the dollar will continue to be strong.
I dont think oil will be $100 again for at least another 5-10 years and I really dont think any higher than 65 in the next 2---and hopefully thats in the next week since I went long some oil this afternoon.
Knowledge is the enemy of fear
<< <i>It's worth mentioning crude oil. I think it could go a bit lower and hit $40. I think this is a no-lose situation ... >>
Lol, sounds like Steve Stevens... Call 1-800- ... Gamblers anonymous...
The oil game seems to me to be a pretty simple: "How low are you willing to go?" game the Saudis are playing. I realize WW demand has dropped off at least a little, and given the US increase in production capacity, the Saudis aren't in control as much as before: they are still able to make the market react to their strategies. I saw a report tonight that a Saudi prince claims "$100 oil never again." That statement gives me pause, for sure, as they are very capable of driving oil to levels where they maintain their historic market share, even if that share requires the price to drop to $20/bbl.
I again realize we're in a whole new world here, but even with $45-$55 real production numbers for most of the rest of the world, whether you're talking shale, sand or straight drilling; you can't beat the Saudi's $10/bbl stated cost of getting the oil out of the ground. I really think that is going to influence oil for the rest of my life (40 year more?). Sure, there will be big gaps up and down, as well as demand-driven spikes; but I am thinking (well, hoping) that we'll see $50/bbl as a high for the next several years.
Toss in alternative energy advances (they are coming, even if a bit slow), more oil "discoveries" that extend world-wide supplies for more decades, and a really sincere dislike we Americans have for paying $3+ (heck, $2+) for a gallon of go juice...you've got a picture of a pretty extended "slump" for oil.
I've toyed with the idea of jumping in on oil...with all the piles of cash I have from my extended unemployment tour (evaluating a new job, BTW...have to move to China, though). I'm now sitting it out, thinking there might be $$ to be made, but probably not in the "get-rich-quick" thoughts I was having when I saw oil fall through $70/bbl.
Be interested in seeing where the debate goes, though...
<< <i>All The talk of "production costs" is déjà vu to the metals, lol, down, down, down..... The ring of fire, the ring of fire... >>
The POG has held (so far) at what is regarded to be the production cost.
Update on positions:
Closed my short SP500 position first thing this morning for a VERY nice gain. I'm going to see what happens with SP500 but I am looking to short it again next week. I think stocks are in real trouble.
Also glad I added to my gold position, still would like to see gold get over $1240 decisively though. Looks like it will bounce between $1225 and 1240 today.
What do you like to play on your S&P shorts or VIX volitility?
Too many positive BST transactions with too many members to list.
<< <i>Very nice call (or luck, whichever) on the S&P drop.
What do you like to play on your S&P shorts or VIX volitility? >>
My preference is futures since the gain or loss is so easy and transparent and it trades 23h/d (as opposed to options where the price changes based on several factors and it's harder to set advanced buy/sell orders and it only trades part of the day). In this case I used options though. I don't trade VIX in any way.
Looks like gold is on its way, finally some good separation from $1225, we should be done there. This should be the kickoff of what will be at least a $200 move.
I think you guys talked me out of the crude oil play I was considering. Still, I think downside is limited if you get a buy at $35 or so and can hold it a while, and a $10 move will make you $10k per contract.
For SP500, I'm looking to short any rally to the 2030-2040 area.
<< <i>
...
Update on positions:
Closed my short SP500 position first thing this morning for a VERY nice gain. I'm going to see what happens with SP500 but I am looking to short it again next week. I think stocks are in real trouble.
Also glad I added to my gold position, still would like to see gold get over $1240 decisively though. Looks like it will bounce between $1225 and 1240 today. >>
Wow, you certainly have a hot hand, big winner short /ES and another big up move today in /GC.
I took a loss this morning on Best Buy (BBY), where I was short strangles (short both puts and calls) and it tumbled on a weak outlook. Overall, I am holding my own.
Just thought I would point this out for those who remember the recent gold volatility discussion from last year's thread.
Which way did gold go to cause this spike in vol?
(Just think of city streets clogged with a hundred thousand horses each generating 15 lbs of manure every day...)
Meanwhile I think it's safe to say that the energy in gold has finally flipped. We should be in for much more upside for the rest of the year. I have been having trouble finding a spot to add to my position.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>bought DSLV at 47.73. >>
Interesting play now that silver is at a 16 week high ($18.02) and starting to nibble on the Sept 18th candle where it dropped from $18.50 to $17.60 in one day. But the SOTUA, new moon, and the $1300 gold barrier could provide some cover. The $1.50 gold gap at $1304 back from the mid-August push down is a strong pull. I suspect that gets filled before this recent rally ends.
Lots of room up to the SLV weekly cloud
<< <i>bought DSLV at 47.73. >>
Good luck!
I opt'd for the physical purchase vs ira purchase this time around.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
GLTA
100% Positive BST transactions
Today could possibly be a recognition day where the neckline of the 3 month gdx "W" pattern breaks out. It projects up to $26-$27. Big 2.5% gap up at $26.67. So while GDX has run into resistances here, the bigger picture suggests more potential. Definitely not a bad idea taking 1/3 to 1/2 off the table on this trade. The PM sector might be aiming for a peak to coincide with the ECB QE announcement. Davos this week as well. Next week is the usual FOMC/OpEx crapola.
Weekly BB hit but bands are flaring open too
PV weekly chart
Bottom of 2014 triangle runs into upper weekly cloud just under $25.00
3X leveraged ETF's are risky . Do your own research please!!
100% Positive BST transactions
Knowledge is the enemy of fear
Why would anyone risk a huge loss for a tiny gain? Again, high probability, and a pretty good annualized rate of return. Using a roulette analogy, the guy betting on 00 wins huge if his number comes up, but the odds are strong in favor of the house. The way out of the money call buyers and put buyers are very much like the guy betting on 00, long odds, but the possibility of a big payoff if they hit it.
<< <i>Sold some GLD strangles today for March expiration. For those that don't trade options, that is a bet on a trading range for GLD. In my case, I have about 13% up or down before pain starts to become acute. This is a high probability trade, low risk, low reward. The downsides are that the margin requirements are relatively high for a small amount of premium, and if GLD crashes or goes to the moon, losses can become huge.
Why would anyone risk a huge loss for a tiny gain? Again, high probability, and a pretty good annualized rate of return. Using a roulette analogy, the guy betting on 00 wins huge if his number comes up, but the odds are strong in favor of the house. The way out of the money call buyers and put buyers are very much like the guy betting on 00, long odds, but the possibility of a big payoff if they hit it. >>
I have seen to many of those 'high probabilty' trades blow up to ever take that kind of risk.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
I was finally able to add to my gold position on the dip today as well as roll forward to the April contract. Immediate term I'm looking for $1310-1330 before a likely retracement, unless I get surprised tomorrow and ECB news sends gold down for some reason.
<< <i>
<< <i>Sold some GLD strangles today for March expiration. For those that don't trade options, that is a bet on a trading range for GLD. In my case, I have about 13% up or down before pain starts to become acute. This is a high probability trade, low risk, low reward. The downsides are that the margin requirements are relatively high for a small amount of premium, and if GLD crashes or goes to the moon, losses can become huge.
Why would anyone risk a huge loss for a tiny gain? Again, high probability, and a pretty good annualized rate of return. Using a roulette analogy, the guy betting on 00 wins huge if his number comes up, but the odds are strong in favor of the house. The way out of the money call buyers and put buyers are very much like the guy betting on 00, long odds, but the possibility of a big payoff if they hit it. >>
I have seen to many of those 'high probabilty' trades blow up to ever take that kind of risk. >>
Thank you for your comment. Options are not for every one. I'd guess maybe about 10% of individual stock market participants do anything with options, and most of them only do conservative strategies. Yes, sometimes the high probability trades blow up. Those that read my trading blog (signature link) have read about some of my huge percentage losses. Yes, the roulette ball sometimes does land on 00. Otherwise no one would ever bet on that. If a trader isn't prepared to pay out the long shot, sometimes at long shot odds, they aren't ready to sell the naked options.
That said, all those huge casinos in Las Vegas were built by being on the right side of the odds. All those betting on 00 and similar poor odds bets are the ones that paid for all that construction and overhead. Over the long run, we are all dead, but until then, I enjoy being on the right side of the odds and will continue to take money from the 00 side.
Let me add, that it is ironic that you, the finance industry professional, singled out my conservative low risk, low reward trade to reply to. This thread has folks trading triple leveraged ETFs, buying options, and trading futures on full margin. Of those reporting actual trades, I am almost certainly the most timid, most conservative, some would say "chicken" trader posting.
<< <i>bought DSLV at 47.73. >>
Hey derryb, still have your DSLV????
Too many positive BST transactions with too many members to list.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Here's the daily chart:
Good call.
Knowledge is the enemy of fear
Anyway, back in January I sold some short strangles in GLD (selling short both puts and calls, which is a bet on a trading range). On Friday 3/13, I close the trade for a tiny profit. I might be able to swing a Happy Meal at McDonalds with my profits
Knowledge is the enemy of fear