Dear Member,
It looks like gold now wants to make a run at the $1,400 resistance area, and possibly higher. It’s broken above the $1,338 level and appears to be establishing at least a short-term uptrend.
Whether or not the final low is in place remains to be seen. Cycles still point to a January low, but when tagging an important historic low, there can be variation in the long-term cycles, as much as two or three months on either side of the forecast cycle bottom (January) ― meaning it could come early, as might be happening now, or later.
I doubt the low will come past January, no matter what, for a variety of reasons. Therefore, the odds that the cycle low is coming early increases, which is precisely why I think the break above the $1,338 level may be very significant.
Naturally, as a result of the rally, you should have been stopped out of your recent positions in the ETFs ProShares UltraShort Gold (GLL) and ProShares UltraShort Silver (ZSL).
That stinks, but losses are part of the territory, and it’s important to accept them for what they are: Losses that provide vital clues to help make important strategy decisions.
That said, I have an important announcement to make. I have decided to add the power — and well defined limited risk — of buying options to the Gold and Silver Trader service, for a variety of reasons, including …
1. Greater trade selection. Since this service focuses on the precious metals, you need as much instrument diversification as possible. Options on the precious metals and their related mining shares and ETFs helps add more instrument selection.
2. Buying select options at certain times is a great way to get more aggressive, yet with well defined limited risk. That’s especially true since we could be at or very near a bottom, but one that is not perfectly confirmed yet, so I would like this service to get more aggressive.
3. I want you to make the most money possible in gold and silver. I can’t think of a better way to put this service on steroids than to add select options at appropriate times.
Right now is one of those times. Since there is the potential for a major bottom having already formed, yet it is not confirmed by my models, I want to get you positioned for a possible major run higher in gold. But I also want to hedge that position with a little insurance. Options allow you to do both.
In fact, now is a perfect time to deploy a well-honed selection of buying two different options at the same time. Options to take advantage of the upside in gold, and shorter-term options to protect you in the event there’s more downside.
The short-term options represent the insurance side of the strategy. You pay a modest premium to buy some insurance against unknowns. You can never lose a penny more than what you invest in that insurance, including your broker’s commissions and fees, yet you’re protected.
Meanwhile, the longer-term option side of the strategy gives you unlimited profit potential, but with strictly well-defined limited risk. That way, the strategy is lopsided in your favor: Unlimited profit potential, with downside protection, and limited risk, all the way around.
I am honing the strategy now and expect to release it no later than this coming Monday. A few things though:
First, download an updated manual for the Gold And Silver Trader now by clicking this link. The updated manual includes a new section on options.
Second, make sure your account is ready to trade options. In most cases, it can be as simple as filling out a few more forms with your broker and it should take no more than a day or two to get approval.
While most of the options I recommend will be buys, make sure you get approved for occasional naked option writing, or selling calls and puts short, which I may also do from time to time.
Third, note that I will also act on this upcoming trade. Once I have honed the precise strategy, you will receive the trade recommendation immediately. But one-half hour after you are able to make the trade, I will also act on the very same trade in an account controlled by me at Interactive Brokers. That account is where I trade futures, warrants, equities and options and is part of my other trading service, Power Portfolio. I will recommend this trade to subscribers of that service. I will also post the confirmations of the trade to the Gold and Silver Trader members’ website, so the trade is completely transparent.
No matter what, you will have the opportunity to act on the trade before I do. I am simply making this trade with my own money to show you how confident I am in it. Naturally, when it is time to exit the trade, I will give you an alert and provide you with the opportunity to be able to act before I do, and again, I will post the confirmation of my trade.
Right now, we need to see gold hopefully trade a bit lower to test support levels. Either way, please be advised that I expect to issue this initial option trade no later than Monday.
Therefore, please download the revised manual now, and also take the appropriate steps with your broker to ensure your account is authorized to trade options.
Stay tuned and best wishes,
Larry
