Dear Member,
Gold and silver continue to fall. No surprise. As I mentioned the other day, extreme volatility should be expected. I also kept the recent recommendation to buy shares in the PowerShares DB Gold Double Long ETN (DGP) extremely light; at no more than 10% of your trading funds and with a tight stop.
If you’re stopped out, don’t sweat it. While none of us like a loss, when gold is making a major turning point, as it is now, jockeying for the right positions almost always means taking a small loss here and there until you get the right position.
I have kept the risk down to a tiny 1% should you get stopped out. That’s how you trade. Keep your risk tightly managed, and when the winners come along, let those profits run.
Now, importantly, here’s what I am seeing in gold. There is massive support at the $1,178 level, which is where gold is right now. Should that give way on a closing basis today, then it’s likely gold will fall next week to the next level of support at the $1,115 area and possibly even as low as the $1,060 area.
If it looks like that’s going to happen, I will probably recommend a bearish position, but not until Monday. The key will be what gold does at the close today. It’s the last trading day of the month, of the week, and of the quarter. So the signals I get today will be extremely important.
No matter what, we are within striking distance of a major bottom in the precious metals. The only question now is whether we get one more leg down and whether or not to play it. I’ll know by the close of trading today.
Interestingly, silver is actually up today, while gold is down. This kind of fractured market, if you will, also indicates that a major turning point may be at hand. It does not preclude another leg down for gold and silver, but when markets begin to fracture like this, or split away from each other, it is definitely a sign that something important is afoot.
If, for whatever reason, you did not buy shares in the PowerShares DB Gold Double Long ETN (DGP), do not buy now. Cancel any outstanding orders.
If you are long the PowerShares DB Gold Double Long ETN (DGP), maintain your protective sell stop at $24.36. If stopped out, stand aside and wait for my next signals, which are likely to come Monday morning.
Lastly, some subscribers have had trouble purchasing DGP due to some brokers not handling this particular ETN. I will bear this in mind going forward.
However, if your broker does not handle ETNs or inverse ETFs, I suggest switching to a broker that does. That way you will be able to fully capitalize on my recommendations.
Best wishes,
Larry
