| Recommendation:
FIRST, if you do not own the inverse ETFs ProShares UltraShort Gold (GLL) and ProShares UltraShort Silver (ZSL): I recommend allocating 5% of your available Gold and Silver Trader funds to each position and buy at the market. Then place a protective sell stop on a good-till-cancelled basis at $92.77 for GLL, and at $95.29 for ZSL. SECOND, if you are already long shares in ProShares UltraShort Gold (GLL) and ProShares UltraShort Silver (ZSL): CANCEL AND REPLACE your protective sell stop in GLL at $85.09 and raise the protective sell stop to $92.77, STOP. This order is good-till-cancelled. And CANCEL AND REPLACE your protective sell stop in ZSL at $82.19 and raise the protective sell stop to $95.29, STOP. This order good-till-cancelled. That way, you reduce downside risk. |
Dear Member,
Before I get started, I have an important announcement to make: All members are cordially invited to a five part series of online conferences I’m putting together for you. I’m calling the series my “Gold War Rooms” and the sessions are free to all members of my Gold and Silver Trader service.
The series begins on August 19, and there’s nothing you need to do. I’ll send a reminder just before the event starts to air so that you won’t miss a beat of it, or any of the four events that will follow.
Be sure to attend them. I have loaded the sessions with all kinds of educational content ― valuable information I want you to have to help you make as much money as possible as the precious metals and mining sectors begin to form their next bull runs.
Now, on to the markets. In the short-term, gold and silver continue to weaken, largely as I expected. Gold is now trading below the $1,285 support level and silver below its key short-term support at the $19.50 area.
What’s driving the precious metals lower? I could come up with any number of reasons. But in my view, it all has to do with the large bottoming process that is occurring based on gold and silver’s unique trading cycles and their technical chart patterns. To put it simply, gold and silver will not form a major bottom until the majority of investors are shaken from the tree.
That, coupled with previous analysis that I’ve shown you, tells me we’re likely to see gold and silver move still lower.
That’s GREAT news for the existing inverse ETFs that I previously recommended: ProShares UltraShort Gold (GLL) and ProShares UltraShort Silver (ZSL).
As of yesterday’s close, they are showing open gains of 6.44% and 6.70%, respectively. Not bad. But I expect more gains are forthcoming.
Now, on to mining shares. I expected some softness in mining shares as we came into the August 6 cycle low that I forecast. And indeed, mining shares fell yesterday, a bit more sharply than I expected. As a result, you should have been stopped out of your shares in Yamana Gold (AUY) when it hit my protective sell stop at $9.07.
That stinks, but it was a very modest, tightly managed position and the loss only amounted to roughly $118, or about 9.6% based on a hypothetical trading account of $25,000.
Tight money management is key right now. As important bottoms begin to form in metals and mining, some increased volatility is to be expected.
So tight money management is imperative. It allows you to take the inevitable small losses that come along, so that you can stay in the game with the majority of your capital intact and be ready to let the profits run when the time is right.
Meanwhile, the open order to buy shares in Exeter Resource Corp. (XRA) at $0.76 or better, good till cancelled, has not yet been filled.
No problem. Exeter’s share price has fallen back to the $0.83 level. Hold your open order, I expect it should soon be filled. If and when filled, I will apprise you as to how to manage your downside risk.
There are many new trading opportunities shaping up. But right now, I want to err on the side of caution as the early part of August is showing a lot of cyclic activity on my trading models.
In a nutshell, that means we should expect increased volatility and several fake-out type moves. I don’t want you to get caught in those fake outs, hence my reason for being a bit cautious right now.
Now, to some recent questions from members.
Q: As a new member, what actions are recommended? Are the ETF shorts still a buy at these levels, likewise AUY?
A: Always refer to either the website or the latest issue for my current recommendations. For instance, as noted in the above, both the inverse ETFs GLL and ZSL may be purchased. Yamana Gold (AUY) is off the radar screen right now, but Exeter Resource Corp. (XRA) may be purchased using a limit order to buy the shares at $0.76 or better.
Q: Larry, I love your service. Thanks for the list of miners to avoid. Will you also provide a list of miners that will have the cash and resources to thrive?
A: Absolutely. Be sure to attend my Gold War Rooms — free for all members of Gold and Silver Trader — beginning August 19. You’ll receive the details soon in your inbox.
Q: Can you provide initial price targets with your entry recommendations so that I understand the risk/reward ratio?
A: At times where I have a definite profit objective, yes. But there will be many times when I simply won’t be able to do that for a variety of reasons. But far more important is the risk side of trading. That I will always give you, via a protective stop.
Q: According to the Quick Start Guide and Larry’s Law #1, let’s say my account equity is $100,000 and you issue a buy signal using 5% of that equity, which equals $5,000.
Further, let’s say the current share price is $10 and you recommend a sell stop price of $8. The difference is $2. If you divide $5,000 by $2, you come up with 2,500 shares to purchase.
But if the current price is $10 and you buy 2,500 shares, that would equal $25,000, which is $20,000 more than the 5% of my account equity. What am I not understanding?
A: Great question! The bottom line is this: Sometimes I will base the trade on the amount of money at risk using the stop, and sometimes, like the recent trades, I will recommend investing a portion of your funds based on a percentage of your total funds and the share price at which the security is trading.
Which method will I use and why? It has a lot to do with not only risk, but what the general markets are doing. For instance, right now I am expecting a bottom in the precious metals.
That means there will be a lot of volatility and wild swings. That said, I am opting right now to basically limit the risk further by using the latter method, which means that one does not overinvest in any one position.
That is a risk-reducing method as well, it’s just different, again, largely because of the volatility I expect. In addition, it helps to prevent putting too many eggs in one or two baskets, so to speak — by keeping the gross dollar amount invested in any one recommendation on the small side.
Q: How do you feel about IAMGOLD (IAG)?
A: I like it, but wait for my signals.
Q: What is your opinion of “after hours trading” for your recommendations?
A: For equities and ETFs, I don’t like after hours trading. The markets are too thinly traded.
Q: I bought XRA at $1.09. Should I sell now and buy back at $0.76? Or should I hold?
A: If you had followed my recommendation to buy at a limit of $0.76, you would not own XRA at $1.09. That said, please also keep in mind I cannot give individualized advice, especially where one does not follow my published recommendations.
Stay tuned and best wishes,
Larry
