Issue #176
Dear Member,
Yesterday, the Swiss referendum to back the Swiss franc with up to 20% of the country’s reserve in gold was badly defeated, putting an end to the discussion of gold as a reserve currency and a gold standard, once and for all.
After all, if even the Swiss don’t want it, then what country would?
And the Swiss are exactly right. A gold standard has never prevented booms and busts in an economy. Moreover, a gold standard has proven to be highly deflationary.
In addition, a gold standard means nothing when the powers that be, government, have the ability to change the official price of gold, at will.
As a result, gold tanked late Friday in anticipation of a “no” vote, and again this morning, gold fell to as low as the $1,140 level, before recovering. Silver has been trashed, plunging well over a dollar, smashing the $15 level.
Thankfully, you raised your stops in time last Wednesday, per issue #175, for the long positions in Direxion Daily Junior Gold Miners Bull 3X ETF (JNUG) and Market Vectors Gold Miners ETF (GDX).
You should be out of both with modest gains of roughly 27.54% and 7.08%, respectively.
A rally back up is possible in gold and silver, as they are now deeply oversold. But I doubt I will be playing it from the long side. Instead, I will be looking to get aggressively bearish on any rally, as a move to below $1,000 in gold – and as low as $12.50 in silver – is now confirmed for the early part of next year.
For now, hold all other open positions, including your two inverse equity ETFs – RWM and QID … your natural gas ETF (UNG), and your shares in ENSV.
Stay tuned and alert – I expect new recommendations this week.
Best wishes,
Larry
