Issue #169
| For each $25,000 of capital you are trading:
1. Sell ALL of your shares in VelocityShares 3X Long Gold ETN (UGLD), at the market, and cancel your protective sell stop at $10.39. 2. Buy 50 shares of ProShares UltraShort Silver (ZSL) at $106.00 or better. When filled, place a good till cancelled protective sell stop at $97.87. ******************************************************************************************************************************************* For the following, please be sure to read 3a. 100 shares of VelocityShares 3X Inverse Gold ETN, symbol DGLD, at the market. Place a protective sell stop, good till cancelled, at $61.85. OR … 3b. 10 January 2015 SPDR Gold Shares put options with a strike price of $118, symbol GLD150117P00118000, at $3.20 or better, to open. This order is good till cancelled. |
Dear Member,
I don’t like the recent action in gold. After a rally to roughly the $1,255 level, gold has now sunk back below an important cyclical trend line (see chart).
That means gold may have alread y played out the bounce I expected.
Therefore, it’s time to exit the UGLD position and reverse to a bearish position.
If I am correct, and gold (and silver) are about to start their next legs down, they could be doozies, bringing gold down to below $1,100 and silver to below at least $16, and possibly even below $15.
Here’s what I recommend. Per the above table, after exiting your shares in UGLD …
For silver, I simply recommend purchasing shares of ProShares UltraShort Silver (ZSL), per the recommendation above.
But for gold, I recommend purchasing either …
A. 100 shares of VelocityShares 3X Inverse Gold ETN, symbol DGLD, per the recommendation above, or …
B. 10 January 2015 put options on SPDR Gold Shares ETF, with a strike price of $118, symbol GLD150117P00118000, again, per the specific instructions in the above table.
Personally, I would opt for the put options. Reason: I think they will give you more leverage for the decline I see coming, since the options are only 1 strike price out of the money.
In addition, your risk is strictly limited to the cost of the puts (roughly $3,200), plus broker commissions and fees. Meawhile, you’ll be controlling roughly $11,900 worth of GLD, giving you almost 4-to-1 leverage.
The final decision is of course yours. And naturally, you must have an existing options account in order to trade options.
If you do not have an options account, then I would simply opt for purchsing DGLD.
Lastly, if you are not able to purchase leveraged inverse ETFs, for whatever reason, then for the gold trade, simply purchase shares in PowerShares DB Gold Short ETN (DGZ).
Hold all open positions, with their related stops, and stay tuned.
Best wishes,
Larry
