Gold and silver cracking support.
Update on positions including yesterday’s
mining share recommendations …
Dear Member,
Gold and silver are cracking support levels this morning with gold breaking back below the $1,300 mark and silver below the $19.40 level. Just as I expected.
I am writing this issue before this morning’s unemployment figure is released at 8:30 am. You should expect some wild swings today, but the short-term trend is now down for the metals, regardless of what the actual unemployment figure is for July.
This is important because it signals what my models have been saying all along: That one more leg down in the precious metals lies dead ahead.
We should see further declines next week in both metals. And there is still a very good chance we will see new, but final lows in the precious metals heading into late August, early September.
Right now, you should have open positions in ProShares UltraShort Gold (GLL) and ProShares UltraShort Silver (ZSL) with protective sell stops set at $85.09 and $82.19, respectively, on a good-till-cancelled basis (GTC).
These positions are now surging. Hold them, but stay alert, I will soon raise the protective stops.
Yesterday, you should have acted on my two mining company recommendations to buy shares in Exeter Resource Corp. (XRA) and Yamana Gold (AUY).
Yamana Gold was easily filled as the stock wallowed in the morning due to the not-so-surprising news that the company wrote off some bad debt.
Don’t let that worry you. Nearly all miners are now writing off bad debt. What will make the difference between a good and a bad mining company in the next phase up has more to do with the types of reserves and resources the company has and how management is working to reduce production costs. On those fronts, Yamana is a winner.
Hold your shares in Yamana Gold (AUY) with a protective sell stop, good till cancelled, at $9.07.
You should NOT have purchased shares in Exeter Resource Corp. (XRA). Reason: The share price exploded higher shortly after my recommendation was published.
Clearly, many members ignored my instructions to buy the shares at a limit price of $0.76 or better, and instead, bought shares at the market bidding the stock dramatically higher.
Sorry to be blunt, but that is a no-no and simply foolish. As you no doubt saw from yesterday’s price action in Exeter, the stock skyrocketed higher — to as high as $1.13 — but by the close of trading it had fallen all the way back to $0.89.
If you purchased the shares at the market, you likely paid well over a dollar a share and lost money, right from the get go.
Note that when I recommend a limit price, it is for good reason. Stick to my limit price and do NOT enter a market order. By ignoring my limit order, you are, at best reducing your profit potential, and at worst, risk turning a potentially profitable trade into an outright loss.
For the record, since it was not possible to be filled based on my limit order, this service has no official position in XRA at this time.
Maintain your open order to buy Exeter Resource Corp. (XRA) at $0.76 or better, good till cancelled. With gold and silver headed lower you should see this limit order get filled soon.
Now, on to some recent questions from members, many related to Exeter Resource Corp. …
Q: If a stock that you are recommending should only be bought with a limit order and it is moving higher, how do I ever get to participate in this type of order?
A: You wait for the price to settle back down and come to you! More often than not, that’s what happens. In some cases, but not until I see further action, I may opt to raise the limit price. But here too, wait for my signals and ALWAYS stick with my new limit price if I recommend one.
Q: What to do with the explosion higher in XRA’s share price?
A: Maintain an open order to buy at $0.76 or better, on a good-till-cancelled basis. Revise it only if and when I recommend a change.
Q: Does buy “at $0.76 or better to open” mean to wait until the price of the stock is below $0.76? Or does it mean once it reaches $0.76 or higher?
A: It means to buy at $0.76 or better, in other words, cheaper. Conversely, an order to sell at $XX or better means to sell at a price of $XX or higher.
Q: Recently your website showed an open gain of nearly 7% in ZSL and more than 2% in GLL. How can that be when I purchased both in the $105 range?
A: The website reflects the fill prices for recommended orders based on the market activity one hour after the order is sent to you.
Q: Can you provide more specific information about why you recommended dumping the 10 mining shares you recently wrote about?
A: Each has its own unique reasons, but in general, they are overly indebted, their cost of production is too high, and/or they are contemplating hedging at these lower metal prices. In the case of the silver companies, I believe their downside is high right now as I see silver soon plunging to the $15 – 17 level.
Q: How can you recommend buying mining shares when you also think gold and silver prices are headed lower?
A: Mining shares typically bottom before the metals, sometimes way before.
Q: If the Dow takes a tumble, won’t it also take down mining shares?
A: Not necessarily. Mining shares often buck the Dow because they are a contrarian type of investment.
Q: I have not heard you mention anything about SPXU for shorting the S&P 500 as of late. Why?
A: You must be thinking of another service, my Power Portfolio. My Gold and Silver Trader service is dedicated exclusively to the metals.
Q: Can I use options to track your recommendations?
A: You may use any vehicle you wish. However, this service will not be using options, and I do recommend you try to follow this service as closely as possible.
Stay tuned and best wishes,
Larry
Position Tracker
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